EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
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S E N A T E  
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Senate Bill No. 
304
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Introduced by Senator Juan Miguel F. Zubiri
AN ACT PROVIDING FOR THE DEVELOPMENT OF A NATIONAL DEFENSE 
INDUSTRY THROUGH THE STRENGTHENING AND REVITALIZING OF THE 
SELF RELIANT DEFENSE POSTURE (SRDP) PROGRAM, INCENTIVIZING IN ­
COUNTRY ENTERPRISES, RATIONALIZING DEFENSE ACQUISITION, AND 
CREATING THE OFFICE OF THE UNDERSECRETARY FOR DEFENSE 
TECHNOLOGY RESEARCH AND INDUSTRY DEVELOPMENT UNDER THE 
DEPARTMENT OF NATIONAL DEFENSE, AND PROVIDING FUNDS THEREFOR
EXPLANATORY NOTE
■^e Self Reliant Defense Posture (SRDP) Program was first implemented in 1974 
as the Government's response to the Muslim secessionist movement in Mindanao and 
support for the immediate and growing military hardware requirements of the Armed 
Forces of the Philippines. Through Presidential Decree No. 415, the Government then 
under former President Ferdinand Marcos, aimed to develop a local defense industry 
that can address and provide the materiel needs of our own military forces.
This bill aims to revitalize the SRDP Program, incentivize in-country enterprises 
rationalize defense acquisition and create the Office of the Undersecretary for Defense 
Technology Research and Industry Development under the Department of National
Through the PDIDA, we hope to limit Philippine dependence on allies for the 
provision of defense requirements and develop the defense capability of the country as 
well as reduce foreign exchange outflow, generate local employment opportunities and 
enhance technology transfer to the Philippines.
In view of the foregoing, the passage of this bill is earnestly sought.
JUAN MIGUEL F. ZUBIRI


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
S E N A T E
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*19 JULIO A9«5
Introduced by Senator Juan Miguel F. Zubiri
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AN ACT PROVIDING FOR THE DEVELOPMENT OF A NATIONAL DEFENSE 
INDUSTRY THROUGH THE STRENGTHENING AND REVITALIZING OF 
THE SELF RELIANT DEFENSE POSTURE (SRDP) PROGRAM, 
INCENTIVIZING IN-COUNTRY ENTERPRISES, RATIONALIZING 
DEFENSE ACQUISITION, AND CREATING THE OFFICE OF THE 
UNDERSECRETARY FOR DEFENSE TECHNOLOGY RESEARCH AND 
INDUSTRY DEVELOPMENT UNDER THE DEPARTMENT OF NATIONAL 
DEFENSE, AND PROVIDING FUNDS THEREFOR
Be it enacted by the Senate and the House o f Representatives o f the 
Philippines in Congress assembled:
SECTION 1. Short Title. -  This Act shall be known as the "Philippine 
Defense Industry Development Act of 2019" or the "PDIDA" for brevity.
SEC. 2. Declaration o f State Policy. -T h e  State declares the development 
of the National Defense Industry as an indispensable element of national 
defense. Towards this end, the State shall recognize the following:
1. 
The vital role of the Industry in nation-building and that with respect to 
government acquisition and incentives, the Industry is a class on its own that 
must be prioritized;
2. 
The necessity of an independent and self-reliant sovereign state, capable 
of providing its own resources for defense, security and national survival as a 
matter of national strategy, specifically during war and other national 
emergencies;
3. 
The consistency of the Filipino First Policy in developing national defense;


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4. 
The indispensability of the active participation of and collaborative 
partnerships with the private sector in the strengthening of national defense of 
the country; and
5. 
The capability of the Philippines in ensuring the adequate supply of 
affordable, globally-competitive, quality and accessible defense implements, 
equipment, machinery, systems and solutions, and in giving priority to 
stimulating 
and 
maintaining 
defense 
technology 
research, 
science 
and 
technology education, training and services, and defense industry development.
For this purpose, the Government shall strengthen and revitalize the Self 
Reliant Defense Posture (SRDP) Program, incentivize private sector participation 
in the Industry, rationalize defense acquisition, and create the Office of the 
Undersecretary for Defense Technology Research and Industry Development 
which are all intended to foster the progressive growth of the Industry and 
hasten defense self-sufficiency of the country.
Further, the State recognizes the important role of science and 
technology, academic research and development institutions, and technology 
transfer for developing effective defense capabilities to respond and accomplish 
defense missions and to drive genuine modernization.
SEC. 3. Definition o f Terms. -  For purposes of this Act, the terms below 
shall be construed to mean, except when explicitly indicated or where the 
context clearly indicates otherwise, as follows:
a. Acquisition shall refer to the bureaucratic management and procurement 
process dealing with the investment of the country in technologies, programs 
and product support necessary to support national defense and security and 
support its armed forces. It shall include the acquisition of raw material, critical 
components and materiel.
b. AFP shall refer to the Armed Forces of the Philippines.
c. Board shall refer to the Board of Investments.


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d. Countertrade shall refer to international trade by exchange of goods rather 
than by currency purchase.
e. Critical Components shall refer to components, subsystems, systems, and 
related special tooling and test equipment essential to the production, repair, 
maintenance, or operation of weapon systems or other items of equipment 
identified as being essential to the execution of any National Defense and 
National Security strategy.
f. Departm ent shall refer to the Department of National Defense.
g. DOF shall refer to the Department of Finance.
h. GPPB shall refer to the Government Procurement Policy Board.
i. Governm ent to Governm ent Transactions shall refer to contractual 
arrangements between the Philippines and other sovereign nations for the 
acquisition of materiel and other defense-related acquisitions.
j. Highest Rated Bid shall refer to the offer with the highest calculated rating 
based on the criteria/parameters not limited to capability, quality, timeliness of 
delivery, life cycle cost, after-sales support, transfer of technology, warranty, 
perquisites and price.
k. In-country Enterprises shall refer to (1) Filipino-owned enterprises 
engaged in the manufacturing, servicing and operation of materiel in the 
Philippines, or (2) foreign-owned enterprises engaged in the manufacturing, 
servicing and operation of materiel provided however that such foreign-owned 
enterprises shall locate a substantial portion of their production within the 
Philippines.
l. Industry shall refer to the National Defense Industry.
m. Integrated Logistics Support refers to an integrated and iterative process 
for developing materiel and a support strategy that optimizes functional support, 
leverages existing resources, and guides the system engineering process to


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quantify and lower life cycle cost and decrease the logistics footprint, making the 
system easier to support.
n. 
M anufacturing 
refers to the process of converting raw materials, 
components, or parts into finished materiel, whether using manpower, machines 
or a combination thereof.
o. Materiel shall refer to military technology, materials and equipment, 
including but not limited to arms and ammunition and combat clothing.
p. Minimum Local Content refers to the minimum percentage of intermediate 
goods used in the manufacturing processes to be sourced from in-country 
enterprises.
q. National Defense refers to the policies, measures and initiatives intended to 
provide the necessary protection of the State against external and internal 
threats.
r. National Security refers to the policies, measures and initiatives intended to 
protect the interests of the country and to protect the State from ail forms of 
crises.
s. NEDA shall refer to the National Economic and Development Authority.
t. Operating refers to the process of functioning or operating of materiel or 
facilities, utilities and appurtenances thereto which are necessary for the 
manufacture, servicing or operating of materiel or components.
u. Plan shall refer to the Investment Priorities Plan as provided in the Omnibus 
Investment Code.
V . President shall refer to the President of the Republic of the Philippines.
w. Private Sector refers to the part of the country's economic system that is 
not under direct government control.


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X . Program shall refer to the SRDP.
y. 
Raw M aterials refer to the basic material from which materiel is 
manufactured.
2 . Secretary shall refer to the Secretary of National Defense.
aa. Servicing refers to the process of maintaining, repairing or overhauling 
materiel.
bb. SLCC shall refer to the Single Largest Completed Contract requirement as 
provided in the implementing rules and regulations of Republic Act No. 9184.
cc. SRDP shall refer to the Self Reliant Defense Posture as provided under 
pertinent laws.
SEC. 4. The National Defense Industry. -  For the interest of the nation, 
the National Defense Industry shall be developed in accordance with the 
following:
a. 
The dependence of the country on foreign support for defense 
requirements shall be limited in accordance with this Act and/or the 
policies approved by the President;
b. 
To develop the defense capability of the country, the State shall rely 
primarily on and give preference to developing In-Country Enterprises, 
allocating substantial resources and manpower to defense research, 
utilizing to the fullest the country's natural resources as the source of the 
country's defense needs, and providing relevant technical and financial 
assistance to the private sector;
c. 
To develop the defense capability of the country, the State shall rely on 
materiel produced, manufactured or otherwise created locally;
d. 
To develop the defense capability, the State shall only use materiel from 
foreign 
sources when such 
materiel cannot be locally produced.


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manufactured or otherwise created: Provided, That importation from such 
foreign sources shall be for the ultimate objective of acquiring technology 
for the production of such unavailable materiel;
e. 
In order to reduce foreign exchange outflow, generate local employment 
opportunities and enhance technology transfer to the Philippines, the 
Secretary shall, as far as practicable, incorporate in each agreement 
involving the Government and the manufacturing, servicing or operation 
of materiel special foreign exchange reduction schemes and countertrade, 
in-country manufacture co-production, or other innovative arrangements 
or combinations thereof; and
f. 
The Program shall be developed in accordance with the provisions of this 
Act.
SEC. 
5. Incentives. -  (A) Any provision of law to the contrary 
notwithstanding, foreign and local enterprises engaged or proposing to engage in 
the manufacture, servicing and/or operation of materiel for the Government may 
be registered and may avail of the incentives under and subject to the conditions 
in Executive Order No. 226 otherwise known as the Omnibus Investments Code: 
Provided, That, notwithstanding Article 27 thereof, manufacturing, servicing 
and/or operation of materiel shall be included in the Investment Priorities Plan 
every year by operation of law after the effectivity of this Act until otherwise 
removed by the Board or the President: Provided, further. That the removal of 
the manufacturing, servicing and/or operation of materiel from the Plan 
subsequent to the effectivity of this Act shall not be interpreted as a bar or 
restriction on the Board from later including the manufacturing, servicing and/or 
operation of materiel in the Plan.
In the interest of National Security, the Board shall adopt a special 
procedure in the processing of applications for registration by enterprises in the 
Industry and offering goods or services to the government under the Program.
(B) Government financial institutions are highly encouraged to support the 
Industry by formulating and extending financial products that would benefit its 
hastened development.


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(C) In addition to the incentives provided in E.O. 226, foreign and local 
enterprises engaged in the manufacture, servicing and/or operation of materiel 
registered with the Board shall enjoy exemption from customs duties and 
national internal revenue taxes payable on the importation of raw materials and 
critical components by registered enterprises for the purpose of producing 
materiel.
SEC. 6. Rationalization o f Defense Acquisition. -  (A) Any provision of law 
to the contrary notwithstanding, the Secretary, in behalf of the Government, is 
hereby authorized to enter into contracts, under such terms and conditions as 
may be agreed upon, with any natural or juridical person, with or without public 
bidding, for the manufacture, servicing or operation of materiel or components 
thereof, facilities, utilities and appurtenances thereto which are necessary for the 
manufacture, servicing or operating of such materiel or components thereof 
necessary for national defense: Provided, That in the exercise of such authority, 
the Secretary shall comply with the reportorial requirements under Section 13 of 
this Act.
(B) Any provision of law to the contrary notwithstanding, contracts for the 
manufacture, servicing or operation of materiel or components thereof, facilities, 
utilities and appurtenances thereto which are necessary for the manufacture, 
servicing or operating of such materiel or components thereof necessary for 
national defense which are determined by the Secretary as not requiring public 
bidding shall only be awarded to in-country enterprises: Provided, That such 
materiel or components thereof, facilities, utilities and appurtenances thereto can 
be locally produced, manufactured or otherwise created.
(C) In the event that public bidding is required by the Secretary, and the 
manufacture, servicing or operation of materiel or components thereof, facilities, 
utilities and appurtenances thereto which are necessary for the manufacture, 
servicing or operating of such materiel or components thereof necessary for 
national defense cannot be locally produced, manufactured or otherwise created, 
and whenever several bidders shall participate in the public bidding, in the 
evaluation of the criteria on price, when comparing foreign enterprises with in­
country enterprises:


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1. 
In the event a public bidding utilizes the standard of lowest and calculated 
and responsive bid, bids of in-country enterprises shall be considered as 
having a price less than that proposed by foreign enterprises as long as 
such bids shall not be more than fifteen percent (15%) in excess of the 
bid of such foreign enterprise; and
2. 
In the event a public bidding utilizes the standard of highest rated bid, 
bids of in-country enterprises shall be considered as having won the 
criteria of price as long as its bid shall not be more than fifteen percent 
(15%) in excess of the bid of such foreign enterprise.
(D) In the event that public bidding is required by the Secretary, and the 
manufacture, servicing or operation of materiel or components thereof, facilities, 
utilities and appurtenances thereto which are necessary for the manufacture, 
servicing or operating of such materiel or components thereof necessary for 
national defense cannot be locally produced, manufactured or otherwise created, 
and only foreign enterprises participate, the ultimate objective of the Department 
will be technology transfer and the acquiring of knowledge for eventual local 
production.
(E) Nothing in this Act will prohibit or restrict lawful government to government 
transactions for the manufacture, servicing or operation of materiel or 
components thereof, facilities, utilities and appurtenances thereto which are 
necessary for the manufacture, servicing or operating of such materiel or 
components thereof necessary for national defense.
(F) In Section 5(C), 5(D) and 5(E), the Department in consultation with 
representatives of in-country enterprises will issue reasonable regulations on the 
minimum local content for all defense-related acquisitions. The Department may 
consult with other government agencies to determine such minimum local 
content.
Further, in order to support the economic and employment generation 
thrusts of the country, all defense acquisitions requiring the engagement and/or 
hiring of civilian labor shall mandatorily require that all labor needs be sourced 
from local sources and shall, as far as practicable, be Filipino.


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(G) In Section 5(C), 5(D) and 5(E), Integrated Logistics Support must be 
incorporated in all contracts concerning defense-related acquisitions.
SEC. 7. Multi-Year Contracts and Other Contractual Arrangements. -  For 
the purpose of acquisition of materiel, notwithstanding existing laws to the 
contrary, and subject to Section 13 of this Act, the Department and its bureaus 
shall be authorized to enter into multi-year contracts and other multi-year 
contractual arrangements: Provided, That Congress shall, upon issuance of a 
multi-year 
obligation 
authority 
by 
the 
DBM, 
make 
the 
corresponding 
appropriation for the ensuing fiscal years: 
Provided, 
further. That the 
Department, in consultation with DBM shall issue implementing guidelines to 
ensure consistency with the Revised AFP Modernization Program and this Act: 
Provided, further. That understanding that the absence of multi-year contracts is 
a primary reason for the poor development of the Industry, the DBM shall 
cooperate with the Department in expediting the issuance of multi-year 
obligation authorities as necessary: Provided, finaiiy. That the Department and 
its bureaus are directed to coordinate and to conduct acquisition planning for the 
purpose of implementing multi-year contractual arrangements and other multi­
year obligations.
SEC. 8. Performance Undertakings. -  The DOF is authorized to recognize 
the obligations of the Department and its bureaus with regard to the acquisition 
of materiel as obligations of the Republic of the Philippines and to undertake to 
pay the same in the event of non-payment by the Department and its bureaus.
SEC. 9. Countertrade. -  Countertrade for defense-related acquisition shall 
be significant, meaningful and must be of benefit to the Industry.
SEC. 10. Exemption from SLCC. -  In-country enterprises participating in 
the acquisition of materiel by the Department and its bureaus shall be exempt 
from the SLCC requirement upon effectivity of this Act.
SEC. 11. Acquisition System. -  Subject to the provisions of this Act, the 
system and procedures for acquisition of materiel, with or without public bidding, 
shall be in accordance with a special law on defense-related procurement:


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Provided, That Republic Act No. 9184 or any subsequent general law on 
procurement shall apply suppletorily: Provided, further. That the Department and 
its bureaus, in consultation with the DBM and the GPPB, shall strengthen their 
systems and procedures for acquisition of materiel under this Act.
SEC. 12. Creation of the Office of the Undersecretary for Defense 
Technology Research and Industry Development. -T here is created in the 
Department an Office of the Undersecretary for Defense Technology Research 
and Industry Development directly under the Secretary. The Office shall be 
headed by an officer with the rank of Undersecretary, assisted by an Assistant 
Secretary and supported by at least three (3) directors with the equivalent rank 
of Director IV. The Office will be charged with the responsibility of managing and 
administering a databank for analysis, conducting research and development and 
technology transfer, facilitating defense industry promotion, establishing public- 
private partnerships, and setting up domestic and foreign collaborations, and 
advising the Secretary on all matters pertaining to the development of the 
National Defense Industry in accordance with this Act; and recommending 
policies, rules and regulations to the Secretary for the development of the 
National 
Defense 
Industry 
and 
the 
implementation 
of 
this 
Act. 
The 
Undersecretary, Assistant Secretary and Directors shall be appointed by the 
President of the Philippines.
SEC. 13. Reporting and Oversight. -  The Secretary shall, not later than 
the end of the first quarter of the succeeding year, submit to the President and 
Congress:
1. 
An annual report on the acquisitions made under this Act; and,
2. 
Copies of the multi-year contracts and other agreements entered into by 
the Department and its bureaus.
Pursuant 
to 
its 
constitutional 
duties, 
the 
Executive 
Department, 
particularly the NEDA, the Commission on Audit, and the Congress shall 
discharge oversight functions, to wit:
a. 
The NEDA shall conduct annual review of the status of all defense-related 
acquisitions via the authority exercised by the Secretary in Section 6 of this Act,
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identify causes of delays, reasons for bottlenecks, cost overruns, both actual and 
prospective, and continued viability, and report to Congress not later than June 
30 of each year;
b. 
The Commission on Audit shall conduct an audit on each ongoing, and 
completed acquisition and report to Congress not later than June 30 of each 
year; and,
c. 
There shall be a Congressional Oversight Committee composed of the 
Chairmen of the Committee on National Defense and Security of both the Senate 
and House of Representatives who shall serve as Co-Chairmen of the Oversight 
Committee and four (4) members each from the Senate and the House 
representing the majority and two (2) members each from the Senate and the 
House representing the minority to be designated by the leaders of the majority 
and minority in the respective chambers,
SEC. 14. Promotion and Marketing Support. -  The Government shall 
promote the export of locally-made materiel and the in-country enterprises to 
other countries, and is encouraged to provide financial marketing support for the 
purpose of such promotion.
SEC. 15. Cooperation o f Government Agencies. -  The DBM, DOF, Board, 
GPPB 
and 
other 
government 
agencies 
are 
enjoined 
to 
support 
the 
implementation of this Act.
SEC. 16. Appropriation. -  An initial funding of One Billion Pesos 
(P I,000,000,000.00) shall be appropriated to the Department for the purpose of 
implementing this Act. Subsequent funding shall be included in the annual 
General Appropriations Act.
SEC. 17. Repealing Clause. -  Sections 1 and 2 of Presidential Decree No. 
415, as amended by Presidential Decree No. 1081 is hereby repealed.
The following laws, orders and regulations are hereby modified or supplemented, 
as the case may be, in accordance with this Act;
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1. 
An exception is hereby made to Government Procurement Policy Board 
Resolution No. 06-2003 in relation to its amendment to Section 1 of 
Presidential Decree No. 415;
2. 
An exception is hereby made to Republic Act No. 10667 otherwise known 
as the Philippine Competition Law in relation to its repeal of Section 4 of 
Commonwealth Act No. 138;
3. 
An exception is hereby made to Republic Act No. 9184 otherwise known 
as the Government Procurement Reform Act insofar as it covers 
procurement of materiel;
4. 
An exception is hereby made to Republic Act No. 1884 insofar as the 
exercise of the responsibility of the Office of the Undersecretary of 
Defense for Munitions in research and development; and
5. 
Section 5 of Republic Act No. 10349 insofar as it amends Section 9 of 
Republic Act No. 7898 is hereby supplemented.
Apart from the foregoing, all provisions of existing laws, orders, and 
regulations contrary to or inconsistent with this Act are hereby repealed or 
modified accordingly.
SEC. 18. Separability Clause. -  If any provision of this Act shall be held 
unconstitutional or invalid, the other provisions not otherwise affected shall 
remain in full force and effect.
SEC. 19. Roie o f the GPPB. -  The GPPB shall continue to fulfill its 
functions as provided in Republic Act No. 9184 subject however to the provisions 
of this Act: Provided, That in no case shall the GPPB interpret Republic Act No. 
9184 or any subsequent general law on procurement as overriding any of the 
provisions of this Act. The Secretary shall continue to serve as a member of the 
GPPB.
SEC. 20. Rule o f Interpretation. -  Rights and obligations existing on the 
date of effectivity of this Act and arising out of contracts shall be governed by 
the original terms and conditions of said contracts or the law in force at the time 
such rights were vested.
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SEC. 
21, 
Implementing 
Rules 
and 
Regulations; 
Supplementary 
Regulations. -  Subject to the provisions of this Act, the President thru the 
Secretary is authorized to implement this Act, formulate and amend, whenever 
necessary, the implementing rules and regulations and standard forms necessary 
for the implementation of this Act, and issue supplemental regulations to hasten 
and facilitate the implementation of this Act.
SEC. 22. Effectivity Clause. -  This Act shall take effect after fifteen (15) 
days from its publication in the Official Gazette or at least two (2) newspapers of 
national circulation.
Approved,
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