EIGHTEENTH CONGRESS.OF THE)
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
H.No.4703

Introduced by Representative Raul C. Tupas

AN ACT PROVIDING FOR THE ACQUISITION OF
MATERIEL, SYSTEMS, FACILITIES, INTEGRATED MILITARY SYSTEMS
AND SERVICES BY THE DEPARTMENT OF NATIONAL DEFENSE AND ITS BUREAUS
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The AFP Modernization Program dates back to 1995 when Republic Act No. 7898 or
the “AFP Modernization Act” was enacted. This law was subsequently amended by Republic
Act No. 10349 or the “Revised AFP Modernization Act” passed in December 2012. Under this
law, the Armed Forces of the Philippines is undertaking a 15-Year modernization program that
started in 2012 and will continue through 2027.

The Revised AFP Modernization Program is being implemented in three phases called
Horizon | (2012-2017), Horizon I! (2018-2022), and Horizon II! (2023-2027). We are currently
in Horizon II of the modernization program but data from the AFP show that as of August 1,
2019, 32 out of the 53 projects for Horizon | or 60.38% remain uncompleted. Delays in the
implementation of the modernization program resulting to overlap between Horizon | and II
can be attributed to strict procurement laws and COA regulations.

A significant and critical component of the AFP Modemization Program is the
Capability, Materiel and Technology Development (CMTD) which focuses on the
procurement, development, or upgrading of capabilities and equipage of the armed forces to
be able to effectively perform its Constitutional mandate to uphold the sovereignty and
preserve the patrimony of the Republic. However, the present defense acquisition system that
we have in the Department of National Defense (DND) is not responsive to the needs and
challenges of national security especially when compared with the acquisition systems of other
countries.

This bill seeks to provide the following:

a. Modes of Acquisition namely, (1) Procurement; (2) Donation; and (3) Barter. Under
Procurement, the following modes are allowed: (a) open competition; (b) limited/
selective competition; and (c) single-sourced;

b. Revitalization of the Self-Reliant Defense Program (SRDP) through a local
industrial base that is sustainable to the defense needs of the country;


c. Creation of the Office of the Defense Acquisitions (ODA), a dedicated office which
shall orchestrate and centrally manage the acquisition activities of major defense
equipment with capability for R&D, procurement and training;

d. Appointment of SND and the Bureau Heads as the Head of the Acquisition Entity
(HAE) for the DND;

e. Process on the settlement of disputes;

f. Blacklisting of corporations, companies, board members, single proprietorships,
their principals, and duly authorized representatives or agents;

g. Authorization for DND and its bureaus to enter into multi-year contracts and other
multi-year contractual arrangements;

h. Exemption of acquisitions from import and other licenses imposed by other
agencies of the government;

i, Exemption of donation of defense equipment or items to the DND, which are
directly and exclusively used for its projects, undertakings, activities, services and
programs from custom duties and other taxes;

j. Exemption of the sale and/or importation of weapons, equipment and ammunitions
to and by the AFP which are directly and exclusively used for its projects,
undertakings and activities and programs under the Revised AFP Modernization
Act from Value-Added Tax, Customs Duties and other Taxes;

k. Joint Congressional Oversight Committee on Defense Acquisition.

This bill is in line with the National Defense Strategy (2018-2022) crafted by the DND

which aims to address the imperative of strengthening the Department's response to
innumerable challenges, and likewise harness opportunities of our security environment. The
National Defense Strategy gives emphasis on the DND’s future direction in ensuring
sovereignty and territorial integrity, internal stability, disaster preparedness, and global-
regional relations in peace and security. To be able to achieve all of these, the NDS specifically
states that effective implementation of DND's capacity development and capability upgrade,
as well as the passage of relevant legislative measures to bolster their strategic mechanisms
are needed.

It is but high time that we equip our military not only with the funds that they need to

implement its modemization program but also with an effective. and efficient acquisition
system.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

RAUL ge ons


EIGHTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
H.No, 4703

Introduced by Representative Raul C. Tupas

AN ACT PROVIDING FOR THE ACQUISITION OF
MATERIEL, SYSTEMS, FACILITIES, INTEGRATED MILITARY SYSTEMS
AND SERVICES BY THE DEPARTMENT OF NATIONAL DEFENSE AND ITS
BUREAUS AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled:

ARTICLE|
GENERAL PROVISIONS

SECTION 1. Short Title. - This act shall be known as the “Defense Acquisition Act
of 2019.”

SECTION 2. Declaration of Policy. — One of the basic principles declared in the 1987
Constitution is the primary duty of the Government to serve and protect its people. The
Department of National Defense (DND) embraces this duty by fulfilling its mandate to:

a. Maximize the organization's effectiveness in guarding against external and
internal threats to national peace and security;

b. Promote the welfare of soldiers and veterans, and

c. Provide an environment conducive for social and economic development

Towards this end, the acquisition of defense equipment, facilities, materiel,
ordnance, services and integrated military systems shall be given utmost priority.

SECTION 3. Governing Principles. -The Defense Acquisition Act shall be governed
by the following principles:

a. Expeditious and specialized process in the acquisition of defense materiel,
systems, military facilities and installations, and services;

The procurement process shall be simple and made adaptable to advances in
modern technology in order to ensure an effective and efficient method.

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b. Quality, reliability and sustainability of defense equipment, facilities, services,
systems, critical components, and other critical requirements through the
adoption of appropriate criteria in determining the best rated offer;

c. Confidentiality in the acquisition process of defense equipment, facilities,
materiel, ordnance, services and integrated military systems that has significant
impact to national interest and security;

d. Self-reliant defense posture to support defense requirements of the
Department of National Defense (DND) and its bureaus and promote the
development of local defense industry, reduce foreign exchange outflow,
generate local employment, and enhance technology transfer; and

e. System of accountability where both the public officials directly or indirectly
involved in the procurement process as well as in the implementation of
procurement contracts and the private parties that deal with government are,
when warranted by circumstances, investigated and held liable for their actions
relative thereto.

SECTION 4. Scope and Application. - This Act shall apply to the acquisition of
Defense materiel, services, ordnance, systems, and facilities of the Department of
National Defense and its bureaus. In so far as practicable, the Defense System of
Management (DSOM) process, as prescribed by the Secretary of National Defense
(SND), shall be used in the determination of requirements to be procured under this Act.

When acquisition is done pursuant to a treaty or International or Executive or
Defense Cooperation Agreements, said agreements shall prevail.

SECTION 5. Definition of Terms. - For purposes of this Act, the following terms,
words or phrases shall mean or be understood as follows:

a. Acquisition - refers to the acquisition of defense equipment, materiel,
ordnance, services, facilities and integrated military systems, inclusive of
computer applications and e-solutions. It is synonymous with “procurement” if
pertaining to items not covered by this Act.

b. Facilities/Infrastructure - includes the construction, improvement,
fehabilitation, demolition, repair, restoration or maintenance of naval vessels or
station and aircraft and bases, roads and bridges, railways, airports, seaports,
communication facilities, civil works components of information technology
Projects, irrigation, flood control and drainage, water supply, sanitation,
sewerage and solid waste management systems, shore protection,
energy/power and electrification facilities, national buildings, school buildings,
hospital buildings, and other related defense construction projects of the
government.


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- Materiel — refers to all items with military specifications that are necessary for

the equipment, maintenance, services, operation and support of governmental
and military activities.

. Services — refers to all defense related services.

. Systems — refers to the organization of hardware, software, materiel, facilities,

personnel, data, and services needed to perform a designated function with
specified results, such as the gathering of specified data, its processing, and
delivery to users. A combination of two (2) or more interrelated equipment's (set)
arranged in a functional package to perform an operational function or to satisfy
a requirement.

. Military specifications - refers to the project/product standard based on

local/international publication recognized and/or made by the AFP.

. Ordnance — refers to all items needed by the Navy, Air Force and Army defense

requirements.

. Head of Acquisition Entity (HAE) — refers to the Head of the agency or body,

or his duly authorized official in the acquisition of defense materiel, ordnance,
facilities, services and integrated military systems. It is synonymous with ‘Head
of Procuring Entity (HoPE)" if pertaining to procurement of items not covered by
this Act.

. Best Rated Offer — is the offer with the best calculated rating based on

criteria/parameters including, but not limited to financial capacity, technicai
capabilities, additional technical capabilities of appropriate upgrade, and others
such as life-cycle cost, after-sales support, willingness to transfer technology,
warranty, perquisites and price as determined by the end user.

j. Previous Supplier — refers to a juridical entity that has supplied the same

defense equipment, critical components, services and other critical requirements
being procured. The surviving or consolidated juridical entity resulting from a
Merger, consolidation and acquisition shall be considered a previous supplier.

. Request for Expression of Interest (REI) - refers to a letter inviting the pre-

selected suppliers identified by the Procuring Entity to be technically, legally and
financially capable to render services or to supply the requirements and
construction of facilities of the DND and its bureaus.

|. Resource Manager (RM) - is a designated senior executive official appointed

by the SND who is directly accountable to the SND for developing financially
fealistic program, budget, and spending plan proposals that comply with the
centralized policy and planning direction provided by the SND; accomplishing
established programmatic and financial management objectives established by
the SND; and, reporting performance against the established objectives;


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ARTICLE Il
ACQUISITION, PLANNING, BUDGETING AND EXECUTION

SECTION 6. Defense Acquisition Planning and Budgeting (DAPB). - The DAPB is
collaboratively developed acquisition plan with realistic financial programs that meet
identified capability requirements in a timely manner. Only priority needs and/or
Tequirements crucial to the efficient discharge of functions shall be included in the
DAPB.

6.1. Preparation of Acquisition Plan and Budget (APB). - The APB must be
consistent with the duly approved budget of the Department of National Defense
and shall bear the approval of the concerned HAE.

6.1.1 Short Term Acquisition Plan and Budget (SAPB). - It is a 3-year
defense procurement program to be funded thru General Appropriations.

6.1.1.1 For the AFP, the approving authority shall be the Chief of
Staff, Armed Forces of the Philippines.

6.1.1.2 For DND Civilian Bureaus, the approving authority shall be
the Head Bureaus.

6.1.2. Midterm Acquisition Plan and Budget (MAPB). - A 5-year
defense procurement program to be funded thru General Appropriations
and/or other sources as enumerated in the AFP Modernization Program
Act (RA7898, as amended by RA 10349).

6.2. Modes of Payment. - In order to have a uniform and standard modes of
payment, the same shall be limited to the following:

6.2.1. For Foreign Suppliers. - The modes of payment shall be limited
to Letters of Credit and Electronic Wire Transfer.

6.2.2. For Local Suppliers. - The modes of payment shall be limited to
Local Letters of Credit or Direct Payment.

6.3. Budgetary Requirements. The Secretary of National Defense shall submit
to the President, Congress and Secretary of Budget and Management the
required budgets for defense procurement.

6.4. Release of Funds by the Department of Budget and Management
(DBM). - The DBM shall release the amounts to support the funding
fequirements for the acquisition of materiel, systems, facilities and services of
the DND proper and its bureaus in accordance with the guidelines set forth by
the DBM:

6.5. Execution. - The DND and its bureaus shall utilize the allocated amount for
the acquisition of materiel, systems, ordnance, facilities and services in

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accordance with the existing government accounting and auditing rules and
regulations,

6.8, Review. - The Office of the Assistant Secretary for Financial Management
(OASFM) shall be responsible in the conduct of quarterly review and assessment
of the financial performance of the DND proper and its bureaus for the acquisition
of the materiel, systems, facilities and services based on the guidelines set forth
in the Implementing Rules and Regulations (IRR).

ARTICLE Ill
MODES OF ACQUISITION

SECTION 7. Modes of Acquisition. - The DND, based on the objective assessment,
evaluation, and approval of SND and whenever justified by the conditions provided in
this Act, in order to promote economy and efficiency, and in case of national emergency
and calamity resort to any of the following modes of acquisition:

7.1. Procurement. - The procurement of defense equipment maybe in any of
the following mode:

7.1.1, Open Competition - refers to a method of procurement which is
‘open to participation by any interested party or entity who can meet the
specified requirements. The procuring entity may enter into a framework
agreement as necessary.

7.1.2, Limited / Selective Competition - is a method of procurement
that limits the participants in the procurement process to known legitimate
manufacturers/suppliers. This mode is used mainly for security reasons;
often where the requirements have been deemed classified such that the
same may not be disclosed freely through an open competition. It
involves direct invitation to at least two (2) manufacturers by the Procuring
Entity from the list of pre-selected suppliers with known experience and
proven capability. The pre-selection shall be based upon the capability
and resources of the manufacturers to perform the contract taking into
account their experience and past performance on similar contracts,
capabilities with respect to personnel equipment or manufacturing
facilities, and financial position.

7.1.3. Single-sourced ~ refers to the mode of procurement where the
Procuring Entity negotiates with one (1) manufacturer/supplier in view of
national security and emergency and or other urgent strategic
considerations.

7.1.3.1. Government-to-Government - refers to an arrangement
involving negotiation with a State with which the Philippines has a
Treaty or International or Executive Agreements.


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7.1.3.2, Emergency Procurement - refers to the type of single-
sourced procurement of defense materiel and other defense
requirements necessary to support and sustain defense
operations, in any of the following situations,

7.1.3.2.1. During a state of calamity or emergency;

7.1.3.2.2 Where immediate acquisition is necessary either
to prevent loss of life or damage to property; or, to
rehabilitate, rebuild and develop an area which has been
damaged by an armed conflict.

7.1.3.3. Anticipated Emergency Procurement - refers to the
type of single-sourced procurement of defense materiel necessary
in anticipation of a disaster that poses an imminent danger to life
or damage to property.

7.1.3.4. Direct Purchase - refers to the type of single-sourced
method/mode that allows procurement directly from pre-selected
supplier, manufacturer, and/or contractor. It may be resorted to
under any of the following circumstances:

7.1,3.4.1. For procurement of readily available and off-the-
shelf goods not available to the Procurement Service of the
Department of Budget and Management, subject to the
threshold prescribed in the IRR.

7.1.3.4.2. In order to obtain and maintain the desired
standardization and interoperability of defense materiel
based on the defense inventory of the DND and/or its
Bureaus.

7.1.3.4.3, Procurement of Goods of proprietary nature
which can be obtained only from the proprietary source, i.e.
when patents, trade secrets, and copyrights prohibit others
from manufacturing the same item.

7.1.3.5. Assumption of Contracts. - Assumption of contract by a
specific supplier/manufacturer whenever a contract under any of
the methods of procurement of this Act is terminated or rescinded
for causes provided for in the contract and existing laws. In the
case of Open and Limited Competition, all the ranked offerors
shall be considered prior to the sending of REIs.

7.2. Donation - refers to an act of liberality whereby private companies,
institutions, local government units (LGUs), government agencies and other
foreign governments or institutions disposes gratuitously of assorted
items/equipment to the DND and its attached bureaus.


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7.3. Barter - refers to the mode of acquisition by the exchange of goods or
services for other goods or services without the use of money which may be
made with foreign governments, local govemment agencies and foreign and
local private entities.

SECTION 8. Terms and Conditions for the Use of Acquisition Methods. - The
specific terms and conditions including the limitations and restrictions, for the application
of each of the acquisition methods in this article shall be specified in the IRR.

ARTICLE IV
DOMESTIC AND FOREIGN ACQUISITION

SECTION 9. Acquisition of Domestic and Foreign Materiel. - Consistent with the
country's obligations under international treaties or agreements, materiel may be
obtained for domestic or foreign sources. However, in the interest of availability,
efficiency and timely delivery of materiel, the Head of Acquisition Entity (HAE) may give
preference to the purchase of domestically-produced and manufactured goods,
supplies and materiel that meet the specified or desired quality.

SECTION 10. Acquisition for the Development of Self-Reliant Defense
Posture (SRDP). — refers to the negotiation for acquisition of defense projects services,
system and facilities that may also be undertaken, provided, the SND has determined
that the security interest of the country is protected and not compromised by entering
into in-country production with any foreign or local manufacturer.

ARTICLE V
ORGANIZATIONAL STRUCTURE

SECTION 11. Head of Acquisition Entity (HAE). - The SND and the Bureau Heads
shall be the Head of the Acquisition Entity for the DND and their respective bureaus.

SECTION 12. Office of the Defense Acquisitions (ODA). - The ODA shall be created
to assist the Secretary of the National Defense in the implementation of this Act. The
ODA shall be headed by the Assistant Secretary for Defense Acquisitions who shall be
assisted by at least two (2) Directors under the Department of National Defense (DND).

SECTION 13. Defense Acquisition Secretariat (DAS). - There shall be a DAS, whose
organization and personnel plantilla positions shall be determined by the SND.

SECTION 14. Defense Acquisitions Division (DAD). - The DAD shall be a permanent
body composed of five (5) permanent members, with at least one (1) lawyer. The
members of DAD shall occupy plantilla positions with salary grades to be determined
by the SND. There shall also be two (2) alternate regular members and two (2)
provisional members from the end-user. The SND may create additional ad hoc
Defense Acquisitions Committees (DACs) as he deems appropriate and necessary in
accordance with this Act. Bureaus of the DND shall create their own permanent and ad
hoc DACs in accordance with this Act. All members of the DAC shall have appropriate

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competencies to be determined by the HAE, and shall undergo a comprehensive
training program.

SECTION 15. Defense Acquisition Technical Assistance Office (DATAO). - The
DATAO shall provide support to the Department in the performance of its duties and
Tesponsibilities specified in this Act and its IRR. The DND shall determine the DATAO's
organizational structure and staffing. The DATAO shall be headed by a senior official
of the Department of good moral character, unquestionable integrity, and known probity,
to be designated by the SND. All other officials and employees of the DATAO shall be
appointed by the SND, upon favorable recommendation of the Chief, DATAO.

15.1. The DATAO shall provide research, technical and administrative support
to the Department, including:

a. Research-based acquisition policy recommendations and rule-drafting;

b. Development and updating of generic acquisition manuals and standard
bidding forms;

c. Management and conduct of training on acquisition systems and procedures;

d. Evaluation of the effectiveness of the government acquisition system and
recommendation of improvements in systems and procedures;

e. Monitoring the compliance to this Act and assisting Acquisitioning Entities
improve their compliance; and

f. Secretariat support.

SECTION 16. Professionalization of Acquisition Personnel. - The ODA shall
establish a sustained training program to develop the capability of the Defense
Acquisition Division (DAD), Defense Acquisition Secretariats, Project Management
Teams (PMTs), and the Acquisition Units of Acquisitioning Entities, and professionalize
the same. The HAE shall ensure that the DAD, it's Secretariat and PMT members,
including other relevant acquisitioning personnel are sent to attend acquisition training
or capacity development program. Within six (6) months upon designation, the DAD, its
Secretariat and PMT members should have satisfactorily completed such training or
program conducted, authorized or accredited by the DATAO. The HAE is encouraged
to attend similar acquisition training and capacity development activities.

SECTION 17. Project Management Team (PMT). - There shall be PMTs created to
support the DAD which shall be composed of financial, legal and technical experts to
assist in the acquisition process.

ARTICLE VI
ACQUISITION PROCEDURES


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SECTION 18. Acquisition Requirements. - The acquisition requirements shall be
determined in accordance with the DSOM process prescribed by the SND.

18.1. Determination of the Mode of Acquisition. - The end user shall
recommend the mode of acquisition for approval of the HAE.

18.2. Best Rated Offer (BRO). - The offer with the best calculated rating based
on criteria/parameters including, but not limited to financial capacity, technical
capabilities, additional technical capabilities of appropriate upgrade, and others
such as life-cycle cost, after-sales support, willingness to transfer technology,
warranty, perquisites and price.

SECTION 19. Awarding of Contract. - The DAC shall recommend award of contract
to the supplier with the Best Rated Offer.

19.1. Contract Signing. - The HAE shall be the signing authority to enter into
a contract with the supplier with the Best Rated Offer.

Section 20. Contract Implementation. - The rules and guidelines for the
implementation of contracts which includes but not limited to the delivery, acceptance
test, extension of contract, variation of contract and payment shall be prescribed in the
IRR. The rules and guidelines shall include standard general and special conditions for
contracts.

Section 21. Contract Termination. - The rules and guidelines for the termination of
contracts awarded pursuant to the provisions of this Act shall be prescribed in the IRR.
The rules and guidelines shall include standard general and special conditions for
contracts.

SECTION 22. Warranties. - In order to ensure the integrity of the materiel acquired and
the supplier's obligation to repair or replace the same when warranted, a warranty
security shall be required from the supplier for a period as specified in the contract.

Section 23. Review and Assessment. - The HAE may create an Acquisition Review
Committee to assess the acquisition activities of the Department and its bureaus on a
quarterly basis in accordance with the guidelines and procedures provided for in the
IRR.

SECTION 24. Security and Confidentiality. -Whenever necessary, an offeror or
bidder may be required to sign a Non-Disclosure and Confidentiality Agreement.

ARTICLE Vil
SANCTIONS FOR DEFAULT

SECTION 25. Liquidated Damages. - All contracts executed in accordance with this
Act and its IRR shall contain a provision on liquidated damages which shall be payable
by the contractor or supplier in case of breach as specified in the contract.


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SECTION 26. Blacklisting. - Corporations, companies, board members, single
proprietorships, their principals, and duly authorized representatives or agents shall be
blacklisted in accordance with the grounds and procedures as provided for in the IRR.
The Period of Blacklisting shall be as follows:

a. ‘1st Blacklisting — five (5) years

b. 2nd Blacklisting - Perpetual disqualification from participating in
the acquisition process of the DND

Non-performance of obligation under warranty shall be a ground for blacklisting.

ARTICLE Vill
SETTLEMENT OF DISPUTES

SECTION 27. Protests on Decisions of the DAC - Decisions of the DAC in all stages
of acquisition may be protested to the HAE and shall be in writing. Decisions of the
DAC may be protested by filing a verified position paper and paying a non-refundable
protest fee. The amount of the protest fee and the periods during which the protests
may be filed and resolved shall be specified in the IRR.

SECTION 28. Resolution of Protests - The protests shall be resolved strictly on the
basis of records of the DAC. The decisions of the HAE shall be final.

SECTION 29. Non-interruption of the Acquisition Process. - In no case shall any
protest taken from any decision treated in this Article stay or delay the acquisition
process.

SECTION 30. Resort to Regular Courts; Certiorari. - Court action may be resorted
to only after the protests contemplated in this Article shall have been completed. Cases
that are filed in violation of the process specified in this Act shall be dismissed for lack
of jurisdiction. The Regional Trial Court shall have jurisdiction over final decisions of the
HAE. Court actions shall be governed by Rule 65 of the 1997 Rules of Civil Procedure
or its amendment as the case maybe and as applicable.

SECTION 31. Arbitration. - Any and all disputes arising from the implementation of a
contract covered by this Act shall be submitted to arbitration in the Philippines according
to the provisions of Republic Act No. 876, otherwise known as the "Arbitration Law":
Provided, however, That, disputes that are within the competence of the Construction
Industry Arbitration Commission to resolve shall be referred thereto. The process of
arbitration shall be incorporated as a provision in the contract that will be executed
pursuant to the provisions of this Act: Provided, that by mutual agreement, the parties
may agree in writing to resort to alternative modes of dispute resolution.

SECTION 32. Appeals. - The arbitral award and any decision rendered in accordance
with the foregoing Section shall be appealable by way of a petition for review to the
Court of Appeals. The petition shall raise pure questions of law and shall be governed
by the Rules of Court.

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ARTICLE IX
PENAL CLAUSE

SECTION 33, Offenses and Penalties. - The provisions of Republic Act No. 3019,
otherwise known as the “Anti-Graft and Corrupt Practices Act’, and other pertinent penal
laws shall be strictly applied against erring public officers or any person for action or
inaction in violation of the provision or intent of this Act as the competent body or court
may determine.

ARTICLE X
CIVIL LIABILITY

SECTION 34. Civil Liability in Case of Conviction. - Without prejudice to
administrative sanctions that may be imposed in proper cases, a conviction under this
Act or Republic Act No. 3019 shall carry with it civil liability, which may either consist of
restitution for the damage done or the forfeiture in favor of the government of any
unwarranted benefit derived from the act or acts in question or both, at the discretion of
the courts.

ARTICLE XI
LEGAL ASSISTANCE

SECTION 35. Legal Assistance. - The Legal Office of the DND or its equivalent for
DND bureaus, is authorized to represent in all stages of the case for the members of
DAS, DAD, and PMT or any or all persons involved in the procurement or acquisition
process immediately upon receipt of Court Notice that a civil, criminal, or Ombudsman
case, suit or proceeding is filed against them.

SECTION 36. Private Legal Assistance. - In case of inability of the legal office of the
DND or its equivalent for DND bureaus, the Acquisitioning Entity shall provide for the
lawyer's fee subject to guidelines as provided for under the IRR.

ARTICLE XII
MISCELLANEOUS PROVISIONS

SECTION 37. Multi-Year Contracts and Other Contractual Arrangements. - For the
purpose of acquisitions under this Act, notwithstanding existing laws to the contrary, the
DND and its bureaus shall be authorized to enter into multi-year contracts and other
multi-year contractual arrangements; Congress shall, upon issuance of a multi-year
obligation authority by the DBM, make the corresponding appropriation for the ensuing
fiscal years.

SECTION 38. Issuance of Import Licenses and Other Licenses. All acquisition
under this Act shall be exempt from import and other licenses imposed by other
agencies of the government. In lieu thereof, the SND shall issue an Authority to Import
and other certification that the goods, services, systems and equipment being imported
are acquired pursuant to this Act.

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532

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SECTION 39. Exemption from Custom Duties and other Taxes for Donated Goods.
The donation of defense equipment or items to the Department of National Defense,
which are directly and exclusively used for its projects, undertakings, activities, services
and programs under this Act, shall be exempted from custom duties and other taxes.

SECTION 40. Acquisition of Units Deployed Overseas. - Units deployed overseas
such as the DAFA, U.N. Peace-Keepers and the likes are authorized to acquire certain
reasonable requirements in connection with the discharge of their functions within the
country where they are deployed, subject to the guidelines provided for in the IRR.

SECTION 41. Administration of the Revised AFP Modernization Act Trust Fund. —
Section 11 of Republic Act No. 7898, otherwise known as the “AFP Modemization Act’,
as amended by Republic Act No. 10349, is hereby further amended to read as follows:

“Sec. 11. The Revised AFP Modernization Act Trust Fund. — x x x:

(a) Xxx (b) xxx (C) Xxx (d) xXx () XX x (f) XXX (Q) XXX (h) Xxx (i) xxx ()
XXX

Funds from the foregoing sources, regardless of income source, shall be directly
deposited to a special account in the general fund created specifically for the
Revised AFP Modernization Program. The corresponding allotment and cash
allocation shall be released to the DND subject to the submission of a special
budget and subject to submission of periodic report to the Oversight Committee.
Thereafter, the cash allocation shall be transferred to the Revised AFP.
Modernization Trust Fund which shall be administered by the Secretary of
National Defense in accordance with existing government budgeting and
auditing rules and regulations. The DND shall conduct periodic studies on how
to maximize the utilization of the trust fund and how additional revenues can be
generated to fund the Revised AFP Modernization Program.”

SECTION 42. Exemption from Value-Added Tax, Customs Duties and other Taxes.
— The sale and/or importation of weapons, equipment and ammunitions to and by the
AFP, which are directly and exclusively used for its projects, undertakings and activities
and programs under the Revised AFP Modernization Act, shall be exempt from the
value added tax, customs duties and other taxes.

ARTICLE Xill
FINAL PROVISIONS

SECTION 43. Joint Congressional Oversight Committee on Defense Acquisition.
— There is hereby created a Joint Congressional Oversight Committee on Defense
Acquisition to oversee the implementation of this Act. The Committee shall be
composed of the Chairman of the Senate Committee on National Defense and Security
and two (2) members thereof appointed by the Senate President, and the Chairman of
the House Committee on National Defense and Security, and two (2) members thereof
to be appointed by the Speaker of the House of Representatives.

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877

SECTION 44. Implementing Rules and Regulations: Supplementary Regulations.
— Within 60 days from the promulgation of this Act, the necessary rules and regulations
for the proper implementation of its provisions shall be formulated by the DND. The said
tules and regulations shall be approved by the President of the Philippines. The
President thru the Secretary of National Defense 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.

SECTION 45. 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 of said contract or the law in force at that time such rights were vested.

SECTION 46. Repealing Clause. - All provisions of existing laws, orders and
tegulations contrary to or inconsistent with this Act are hereby repealed or modified
accordingly.

SECTION 47. Separability Clause. — If any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and
subsisting.

SECTION 48. Effectivity Clause. — This Act shall take effect fifteen (15) days following
its publication in the Official Gazette or in two (2) newspapers of general circulation.

Approved,

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