Armor vests for Zambo troops still sitting in warehouse

MANILA, Philippines – At the height of the Zamboanga siege in September 2013, the Department of National Defense (DND) tried to rush the delivery of armor vests to its troops.

The delivery had been delayed to begin with. As early as December 2012, Serbian company UM-Merkata was awarded the contract to deliver 3,480 units of armor vests – force protection equipment, as they are called in bid documents – worth P120 million ($2.7 million)*.

About 3,000 troops were to be deployed to Zamboanga in the biggest operation of the Philippine military in recent history. They badly needed the armors as protection in the combat zone manned by an estimated 500 heavily-armed followers of Moro National Liberation Front Commander (MNLF) Habier Malik. (At least 25 policemen and soldiers were killed while 194 were wounded in the 20-day conflict.)

But the vests from the Serbian company never reached the troops, forcing the Philippine Army to request an emergency purchase of about 1,000 vests for an additional cost of P28.3 million (about $630,000). The emergency purchase was made through the Philippine International Trading Corporation, a unit under the Department of Trade and Industry. 

One year after the siege, the armor vests that the Serbian company was supposed to deliver have yet to reach soldiers in the battlefield. They are locked in a warehouse inside Camp Aguinaldo because of defects, a defense official told Rappler.

Worse, the supplier of the armors for the emergency procurement, Stone of David Tactical Equipment Company, is curiously linked to the Serbian company UM-Merkata. Christopher Manaluz, the local representative UM-Merkata, is the general manager of Stone of David.

Failed tests

What happened after the emergency purchase was made?

UM-Merkata eventually delivered the body armors to the Armed Forces of the Philippines in January 2014. But test after test showed they are defective. The vests can repel bullets but they're not thick enough to prevent internal injuries that could be fatal. 

"The samples (Soft Ballistic Panels) failed to comply with the Back Face Signature requirement since it exceeded the maximum allowable of 44 mm.... Exceeding the required BFS even without bullet penetration can cause fatal internal injuries to the user (soldier)," read the analysis portion of the May 26, 2014, Initial Technical Inspection Report.

Rappler learned that Defense Secretary Voltaire Gazmin ordered the termination of the contract after it failed the tests twice. But the Serbian supplier is still exhausting its appeal. It is the Department of National Defense (DND) that is on top of the procurement of military equipment and supplies. 

"There's still appeal, submission of a position paper. Then there's a request for arbitration. There's a clause in the contract that allows that," according to Patrick Velez, Defense Assistant Secretary for Acquisition, Installations, and Logistics.

Favoritism?

Last year's DND bidding for the armor vests was marked by allegations of favoritism. It appeared at the time that one person was set to win 3 separate contracts totalling about P2 billion (about $45 million).

UM-Merkata was also set to win in 2013 the succeeding bidding for a much bigger project – 44,0000 units of armor vests worth P1.76 billion (about $40million) following the curious disqualification of the lowest bidder Kolon Global of South Korea. 

But UM-Merkata's luck changed in 2014, coincidentally when the leadership in the DND bid and awards committee also changed.

UM-Merkata was disqualified in the P1.7-billion project because of questionable documents. Now, it also stands to lose the first project worth P120 million because of defective units.

Rappler obtained documents on the controversy-riddled bidding processes for the two projects for the military's armor vests. What is happening shows the continuing struggle inside the defense establishment, which has been notorious for corruption, to fix its systems.

Transparency of government contracts would have prevented delays because it would have allowed the public to flag down the problems that persisted in the contracts since the beginning. It is critical in a department that is getting up to P80 billion (about $1.8 million) for the revived Armed Forces of the Philippines (AFP) Modernization program.

The officials who have been on top of the first project for body armors last year were:

(BAC shuffles officers every year. In 2014, Defense Undersecretry Natalio Ecarma III succeeded Fernandez to become chairman of the BAC that was in charge of the armor vests.) 

IN CHARGE: Defense Undersecretary for Finance Fernando Manalo (center) with Assistant Secretaries Efren Fernandez and Patrick Velez. Rappler file photo

IN CHARGE: Defense Undersecretary for Finance Fernando Manalo (center) with Assistant Secretaries Efren Fernandez and Patrick Velez.

Rappler file photo

Early problems 

It was barely two weeks since he assumed as chief of staff of the Armed Forces of the Philippines (AFP) in January 2013 when General Emmanuel Bautista, now retired, raised the alarm over the first contract for armor vests that he was being asked to sign.

Bautista wrote Gazmin detailing his hesitation to sign it: UM-Merkata shortened the required warranty period. A number of crucial documents were missing. As early as then, Bautista was not satisfied with the results of the tests.

"The purpose of the Post Qualification to the Lowest Calculated Bidder is to 'verify, validate and ascertain all statements made and documents submitted by the bidder.' In this case, the Test Laboratories (Beschussamt Mellichstadt and Concordia Textiles and Test Results submitted by UM-Merkata during the Bid Opening were not validated if they were compliant to the bidding requirements because different Test Laboratories (TNO Defense adn Doo Jugoinspekt) were used during PQ Test and Evaluation," his letter read.

Gazmin's response was curt, distancing himself from the problem. "Is the CSAFP [Chief of staff, AFP] requiring me to answer this (sic) questions? What is the role of the USecs and ASecs?" read Gazmin's handwritten note in a memo sent to his deputies in the defense department.

A week later, Velez wrote Bautista to respond to the issues one by one.

With regard to the different test laboratories, Velez wrote: "The PQ team conducted document verification with the Test Laboratories. What was not conducted in the Test Laboratories was the testing by the PQ Team of the samples which were done in another testing facility."

The contract was signed another week later, on March 4. Bautista finally signed it.

Now that the project is delayed because of the tests, Velez maintained it is not the fault of the defense department. "It’s not the lapse of the DND. It’s the supplier," Velez told Rappler. He said it's possible that the units tested during the post-qualification were different from the ones delivered to Camp Aguinaldo. 

Zamboanga rush

The Zamboanga crisis would happen 6 months later after the contract signing, but the necesary force protection equipment had yet to be delivered.

UM Merkata earlier requested to move the Pre-Delivery Inspection (PDI) from July to September. But then there were problems because some members of the inspecting team from the Philippine military were apparently denied a visa to go to Serbia. 

To rush the delivery during the Zamboanga siege, DND-Defense Acquisition Office (DAO) lawyer Edita Santos suggested the cancellation of Pre-Delivery Inspection (PDI) altogether. This proved to be a mistake. Pre-delivery inspection would have shown – early on – the defects in the units and would have stopped its delivery to AFP. 

While they used the siege to justify the shortcut in the process, the timing was also off. DAO forwarded its recommendation to cancel the PDI to the Philippine Army, the end user, on September 18. Acting Army Adjutant Joel Sergio and UM-Merkata approved the recommendation on September 27 or a day before the crisis was declared over

Velez defended their move. He said the PDI is not required under the law and was only "created for the convenience of the supplier so it won't deliver the good before it is checked."

Bigger project

As the first project was hitting delays, the defense department was also battling allegations of favoritism with the succeeding project for armor vests.

In November 2013, South Korean firm Kolon Global Corporation was making noise over its disqualification in the project to supply 44,000 armor vests for the Army.

Kolon was the lowest bidder, offering to supply the armor vests for a bargain of P800 million (about $18 million) or less than half of the P1.76 billion (about $38 million) approved budget for the contract. But it was disqualified in the post-qualifiation because DND said its armor vests failed to meet two requirements: the ballistic insert (the metal plate that protects the torso from bullets) is not multi-curve and it was 5 millimeter shorter than required.

Kolon maintained that its ballistic insert is multi-curve and ergonomic and complies with the required length. The checkers must have measured the vest length straight from edge to edge. The curve should have been considered, it said.

The company that stood to benefit from Kolon's disqualification was UM-Merkata, the second lowest bidder which offered P1.2 billion (about $27 million). During this time, Manaluz's UM-Merkata and Stone of David had already won the first contract with DND and the emergency procurement of the Philippine Army. 

But UM-Merkata would lose its lucky streak by 2014. The Serbian company was eventually disqualified because its audited financial statement and net financial contracting capacity proved to be questionable. It means it couldn't show that it has the capacity to finance the big contract worth almost P2 billion.

The DND awarded the contract only in July 2014 to the 3rd lowest bidder, the joint venture of Achidatex and Colorado Shipyard. Now, there are questions about the joint venture, too. A white paper claims the joint venture could not have qualified for the project because the documents they submitted belongs to Rabintex, a separate company that has the experience and track record in supplying armor vests.

Achidatex did acquire the assets of Rabintex but not the company itself, the white paper argued. A defense official who saw the white paper said there may be an argument against the joint venture.

There is no telling what will happen to the two projects for armor vests and when they will be delivered to the battlefields. It's not only the troops in Zamboanga who needed those body armors. Every day, troops are fighting communist insurgents, terrorists, and Muslim separatists. Who knows how many lives the body armors could have saved? – Rappler.com

*(US$1=P44)