REPUBLIC OF THE PHILIPPINES 
House of Representatives 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ____________ 
Introduced by REP. MERCEDES K. ALVAREZ, MNSA 
EXPLANATORY NOTE 
The current maritime issues against our neighboring countries have grown enough 
to require the State to strengthen its defense assets and capabilities to continuously 
secure our territory and natural resources.  
This bill seeks to revitalize and institutionalize a Philippine Self-Reliant Defense 
Posture Program, which has started its birth during the 1970s and even reinforced by 
initiatives such as the Armed Forces of the Philippines (AFP) Modernization Law. 
This bills also proposes the development of a National Defense Industry which will 
prioritize domestic manufacturing and sales, utilize domestic resources in the 
manufacture of military equipment and armaments, generate local employment, and 
reduce foreign exchange outflow and import tax burdens. It also aims to taper the 
military’s dependence on foreign governments for defense requirements. 
As this bill has been approved on Third and Final Reading during the Eighteenth 
Congress, immediate passage of this is highly recommended. 
MERCEDES K. ALVAREZ  MNSA 
Sixth District, Negros Occidental 
December 12, 2022
5:01 pm
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REPUBLIC OF THE PHILIPPINES 
House of Representatives 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ____________ 
Introduced by REP. MERCEDES K. ALVAREZ, MNSA 
AN ACT 
INSTITUTIONALIZING 
A 
PHILIPPINE 
SELF-RELIANT 
DEFENSE 
POSTURE 
PROGRAM AND PROMOTING THE DEVELOPMENT OF A NATIONAL DEFENSE 
INDUSTRY PURSUANT THERETO 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. -  This Act shall be known as the “ Philippine Self-Reliant 
Defense Posture Program Act”. 
SEC.2. Declaration of Policy. - It is hereby declared the policy of the State to 
promote and spur the growth of an independent national defense by establishing a self-
reliant defense posture program that shall prioritize the development of the country’s 
national defense capabilities, including a competent domestic defense industry. 
     In view thereof, the State shall endeavor to develop a National Defense Industry, 
hereinafter referred to as Industry, as an indispensable element of national defense. The 
State recognized that: 
(a) The industry plays a vital role in nation-building in the achievement of the national
vision of an independent and self-reliant sovereign state, capable of providing its
own resources for defense, security, and national survival, specifically during war
and other national emergencies;
(b) The active participation of development of collaborative partnerships with the
private sector is an important strategy in the development of a viable, world-class
defense industry and that the grant of incentives for such participation can help
ensure the sector’s meaningful contribution thereto;
(c) The continued observance of the “Filipino First “ policy in developing the
Philippines’ defense capability is consistent with the country’s national security
aspirations; and,
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(d) The Philippines has adequate human and other resources that can help ensure 
the adequate supply of affordable, globally-competitive, high-quality defense 
implements, equipment, machinery, systems and solutions, conduct defense 
technology research, provide and develop defense-related technology, as well 
as engineering and design education and training services that are necessary to 
the development of the Industry. 
(e) Science and technology, academic research and development institutions , and 
technology transfer all play an important role in the development of effective 
defense capabilities, the undertaking of successful defense missions, and the 
achievement of peace and meaningful modernization. 
  
Therefore, to foster the progressive growth of the industry and hasten defense self-
sufficiency, the government shall strengthen and revitalize the Self-Reliant Defense 
Posture Program (SRDP), incentivize private sector participation in the Industry, 
rationalize defense acquisition, and create the Office of the Undersecretary for 
Defense Technology Research and Industry Development 
 
SEC.3. Definition of Terms. – As used in this Act: 
(a) Acquisition refers to the management and procurement process of the 
government that helps ensure the proper and timely investment in 
technologies, programs and product support necessary for the purposes of 
the Philippine Armed Forces in promoting national defense and security. It 
shall include the acquisition of raw material, competent human resources, 
critical components and material; 
(b) Countertrade refers to international trade by exchange of goods rather than 
by currency purchase; 
(c) Critical components refer to components, systems, subsystems, 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. 
(d) Highest rated bid refers to the offer with the highest calculated rating based 
on the criteria and parameters not limited to capability, quality, timeliness of 
delivery, life cycle cost, after-sales support, transfer of technology, warranty, 
prerequisites and price; 
(e) In-country enterprise refers toa Filipino-owned enterprises engaged in the 
manufacturing, servicing and operation of material in the Philippines, or to a 
foreign-owned enterprise engaged in the manufacturing-servicing, and 
operation of material, and which has located a substantial portion of its 
production activities within the Philippines; 
(f) Integrated logistics support refers to an integrated and iterative process for 
developing material and a support strategy that optimizes functional support, 
leverages existing resources, and guides the system engineering process to 


quantify and lower life cycle cost and decrease the logistics footprint, making 
the system easier to support; 
(g) Material refers to military technology, materials and equipment, including 
arms and ammunition and combat clothing; 
(h) Minimum local content refers to the minimum percentage of intermediate 
goods used in the manufacturing processes to be sources from in-country 
enterprises; 
(i) National defense refers to the policies, measures and initiatives intended to 
provide the necessary protection to the State against external and internal 
threats; 
(j) National security refers toa state or condition wherein the people’s welfare, 
well-being, way of life; government and its institutions; territorial integrity; 
sovereignty; and core values are enhanced and protected; 
(k) Servicing refers to the process of maintaining repairing or overhauling 
material; 
(l) Strategic Investments Priorities Plan (SIPP) refers to the government’s list of 
priority areas and preferred activities that shall be entitled to tax incentives 
under law 
      SEC. 4. Self-Reliant Defense Posture Program. – The Self-Reliant Defense 
Posture Program is hereby established and instituted as the tool of the State to 
undertake the development of a national defense industry. The underlying concept 
of self-reliance shall be manifested in the continued preference on local production 
when feasible, of material for the country’s defense forces through the partnership 
between the military and civilian establishments, and taking the recourse to 
importation only for those requirements that cannot be locally produced with the 
ultimate objective of acquiring the technology for the production of these material. 
Paramount to the attainment of this objective is the responsibility of the military and 
other government agencies to provide technical and financial assistance to civilian 
defense manufacturers. 
 
      SEC. 5. National Defense Industry. – The National Defense Industry shall be 
developed in accordance with the following principles: 
(a) The foreign support for defense requirements shall be subject to this Act and 
the policies approved by the President; 
(b) To develop the defense capability of the country, the State shall: 
(1) Rely primarily on and give preference to in-country enterprises, allocate 
substantial resources and manpower to defense research, and provide 
relevant technical and financial assistance to the private sector; 
(2) Utilize to the fullest the country’s natural resources as the source of the 
country’s defense needs, and rely on material readily available, produced, 
manufactured or otherwise created locally; and, 
(3) Use material from foreign sources only when such material cannot be 
locally produced, 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 material; 
(c) In order to reduce foreign exchange outflow, generate local employment 
opportunities, and enhance technology transfer to the Philippines, the 
Secretary of national Defense, hereinafter referred to as Secretary, shall, as 
far as practicable, incorporate in each agreement involving the government 
the manufacturing, servicing or operation of material special foreign exchange 
reduction schemes and countertrade, in-country manufacture co-production, 
or other innovative arrangements or combinations thereof. 
 
      SEC. 6. Incentives. – 
(a) Any provision of law to the contrary notwithstanding, foreign and local 
enterprises engaged or proposing to engage in the manufacture, 
servicing and operation of material for the government may be 
registered and may avail of the incentives under and subject to the 
conditions in the National Internal Revenue Code of 1997, as 
amended:  Provided, That the manufacture, servicing, and operation 
of material for the government as an industry sector, or its subsectors 
shall undergo the standard processes involved in the identification of 
preferred activities under the Strategic Investments Priorities Plan 
(SIPP) and shall be accompanied by a cost- benefit analysis showing 
the need for incentives. 
(b)  Government financial institutions shall support the industry by 
formulating and extending financial products that would hasten its 
development. 
 
SEC. 7. Rationalization of Defense Acquisition. – 
(a) Any provision of law to the contrary notwithstanding, the Secretary, on 
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 judicial person, with or without public bidding, for the 
manufacture, servicing or operation of material or components 
thereof, facilities, utilities and appurtenances thereto 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, procurement of services of local providers, servicing or 
operation of material or components thereof, facilities, utilities and 
appurtenances thereto which are necessary for national defense and 
which are determined by the Secretary as not requiring public bidding, 
shall only be awarded to in-country enterprises; Provided, That such 


material or components thereof, facilities, utilities and appurtenances 
thereto can be locally produced, manufactured or otherwise created. 
(c) In the event that a public bidding is required by the Secretary, and the 
manufacture, servicing, or operation of material or components 
thereof, facilities, utilities and appurtenances thereto which are 
necessary for national defense cannot be locally produced, 
manufactured, or otherwise created, and whenever several bidders 
shall participate in the bidding, the following principles shall be 
observed in the evaluation of the criteria on price, when comparing 
foreign enterprises with in-country enterprises: 
 
(1) In the event a public bidding utilizes the standard of lowest and 
calculated and responsive bid, the 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, the bids of in-country enterprises shall be considered 
as having won the criteria of price as long as such bids shall 
not be more than fifteen percent (15%) in excess of the bid of 
such foreign enterprise. 
(d) In the vent that public bidding is required by the Secretary, and the 
manufacture, servicing or operation of material or components 
thereof, facilities, utilities and appurtenances thereto which are 
necessary for national defense cannot be locally produced, 
manufactured or otherwise created, and only foreign enterprises 
participate, the Department shall have the ultimate objectives of 
acquiring and transferring technology and knowledge, and generating 
local enterprise towards the eventual local production of such material 
or components thereof. 
(e) Nothing in this Act shall prohibit or restrict lawful government-to 
government transactions for the manufacture, servicing or operation 
of 
material 
or 
components 
thereof, 
facilities, 
utilities 
and 
appurtenances thereto, which are necessary for national defense. 
(f)  The Department, in consultation with representatives of in-country 
enterprises shall 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. To support the economic and employment generation 
thrusts of the country, all manpower needs of the industry requiring 
the engagement or hiring of civilian labor shall be sourced locally and, 
as far as practicable, be Filipino. 
(g)  Logistics support must be incorporated in all contracts on defense-
related acquisitions. 
 


SEC. 8. Multi-Year Contracts and Other Contractual Arrangements.-  
For the purpose of material acquisition, notwithstanding existing laws to 
the contrary, and subject to Section 13 of this Act, the Department and its 
bureau 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 Department of 
Budget and Management (DBM), make the corresponding appropriation 
for the ensuing fiscal years: Provided further, That the Department shall, 
in consultation with the DBM, issue implementing guidelines to ensure 
consistency with the Revised AFP Modernization Program and this Act: 
Provided furthermore, That the Department and its bureaus shall 
coordinate and conduct acquisition planning for the purpose of 
implementing multi-year contractual arrangements and other multi-year 
obligations. Provided finally, That the DBM shall expedite the issuance of 
multi-year obligation authorities necessary: 
 
SEC. 9. Performance Undertakings. – The Department of Finance 
(DOF) is authorized to recognize the obligations of the Department and 
its bureaus with respect to acquired material 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. 10. Countertrade. – Countertrade for defense-related acquisition 
shall be significant, meaningful and must be of benefit to the Industry. 
 
SEC. 11. Exemption from the SLCC requirement. – In-country 
enterprises participating in the acquisition of material by the Department 
and its bureaus shall, upon the effectivity of this Act, be exempt from the 
single Largest Completed Contract (SLCC) requirement as provided for 
under Sec. 23.5.1.3 of the revised rules and regulations issued to 
implement Republic Act No. 9184, otherwise known as the Government 
Procurement Reform Act. 
 
Sec. 12. Creation of the Office of the Undersecretary for Defense 
Technology Research and Industry Development. – There is hereby 
created in the Department an Office of the Undersecretary for Defense 
Technology Research and Industry Development. 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 
partnership, and setting up domestic and foreign collaborations, and 
advising, recommending policies, rules and regulations to the Secretary 
on all matters pertaining to the development of the industry and the 
implementation of this Act. Such 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 ti the President 
and the Congress: 
 
(a) An annual report on the acquisitions made under this Act; and,  
(b) 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 National Economic and Development Authority (NEDA), the 
Commission on Audit, and the Congress shall discharge oversight functions 
over the implementation of the program in the following manner: 
 
(1) The NEDA shall conduct an annual review of the status of all 
defense-related acquisitions exercised by the Secretary in 
Section 7 of this Act, identify causes of delays, the reasons for 
bottlenecks, actual and prospective cost overruns, determine the 
continued viability of the SRDP and the industry , and submit its 
findings and recommendations to the Congress not later than 
June 30 of each year; 
 
(2) The Commission on Audit shall conduct an audit on each ongoing 
and completed acquisition and render a report to the Congress 
thereon not later than June 30 each year; and, 
 
(3)  There shall be a Congressional Oversight Committee composed of 
the Chairpersons of the Committee on National Defense and 
Security of both Senate and House of Representatives who shall 
serve as Co-Chair persons of Oversight Committee, the 
Chairpersons of the Committee on Wats and Means of both Senate 
and House of Representatives who shall serve as Co-Vice-
Chairpersons, 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 in minority to be designated by 
the leaders of the majority an minority in their respective chambers. 


 
Sec. 15. Cooperation of Government Agencies – The DBM, DOF, BOI, 
Government Procurement Policy Board (GPPB) and other government 
agencies are enjoined to support the provisions of this Act. The Department 
and its bureaus, in procedures to support the objectives of the SDRP and 
the acquisition of material under this Act. 
 
Sec. 16. Appropriations – The amount necessary for the effective 
implementation of this Act shall be charged to the appropriations of the 
Department of National Defense under the current General Appropriations 
Act. Thereafter, such sum as may be necessary for its continued 
implementation shall be included in the annual General Appropriations Act. 
 
Sec. 17. Role of the GPPB – The GPPB shall continue to fulfill its functions 
as provided I Republic Act No. 9184, subject however to the provisions of 
this Act: Provided, That in no case shall the GPPB interpret Republic No. 
9184 or any subsequent general law on procurement as overriding any of 
the provisions of this specific law. The Secretary shall continue to serve as 
a member of the GPPB. 
 
Sec. 18. Rule of 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 pf said contracts or the law in force at 
the time such rights were vested. 
 
Sec. 19. Implementing Rules and Regulations; Supplementary 
Regulations - The Secretary shall issue the necessary  rules and 
regulations and standard forms for the effective implementation of this Act 
and issue supplemental regulations to facilitate its implementation. 
 
Sec. 20. 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. 21. Repealing Clause. – Sections 1 and 2 of Presidential Decree No. 
415, Authorizing the Secretary of National Defense to Enter into Defense 
Contracts to Implement Projects Under the Self-Reliant Defense Programs 
and For Other Purposes, as amended by Presidential Decree No. 1081 are 
hereby repealed. The following laws, orders and regulations are hereby 
modified or supplemented, as the case may be, in accordance with this Act: 


 
(a) An exception to Government Procurement Policy Board 
Resolution No. 06-2003 in relation to its amendment to Section 1 
of Presidential Decree No. 415 shall be observed with respect to 
provisions of the specific law; 
 
(b) An exception 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, entitled “An Act to  Give Native 
Products and Domestic Entities the preference in the Purchase 
of Articles for the Government” shall be observed with respect to 
provisions of this specific law; 
 
(c) An exception to Republic Act No. 9184 insofar as it covers 
procurement of material shall be observed; 
 
(d) An exception to Republic Act No. 1884 entitled, “An Act to 
Establish a Government Arsenal, Provide for its Operation and 
Other Purposes”, insofar as the exercise of the responsibility of 
the Office of the Undersecretary of Defense for Munitions in 
research and development; and, 
 
(e) Section 9 of Republic Act No. 7898 entitled, “An Act Providing for 
the Modernization of the armed forces of the Philippines and for 
other purposes”, as amended by section 5 of Republic Act No. 
10349 entitled, “An Act Amending Republic Act No. 7898, 
Establishing the Revised AFP Modernization Program and for 
Other Purposes” us hereby modified. 
 
All other provisions of existing laws, orders, and regulations 
contrary to or inconsistent with this Act are hereby repealed or 
modified accordingly. 
 
Sec. 22. Effectivity. – This Act shall take effect after fifteen (15) 
days from its publication in the official Gazette or in a newspaper 
of national circulation. 
 
Approved,