NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
s. No. 505
of is!*‘ 
■■ t-uj’
*22 JUL 13' P2 -03
RliCEiV: .! Bv
Introduced by SENATOR RAMON BONG REVILLA, JR.
AN ACT
INSTITUTIONALIZING A PHILIPPINE SELF-RELIANT DEFENSE POSTURE 
PROGRAM AND PROMOTING THE DEVELOPMENT OF A NATIONAL 
DEFENSE INDUSTRY PURSUANT THERETO
EXPfJVNATORY NOTE
The Philippines, lying at the heart of the volatile Indo-Pacific region and given 
its Involvement in maritime issues against the neighboring countries, needs to 
strengthen its defense capabilities in order to secure the sovereignty of the State 
and the integrity of the national territory. Apart from external threats, impervious 
defense force is also needed to respond to and quell internal attacks, lawless 
elements and terrorists coming from the domestic front.
This measure seeks to revitalize and institutionalize a Philippine Self-Reliant 
Defense Posture Program which can be traced back during the 1970s, and was later 
reinforced by other initiatives, including the Armed Forces of the Philippines (AFP) 
Modernization Law1. This bill also proposes the development of a National Defense 
Industry that will give preference to in-country enterprises, utilize domestic 
resources in the manufacture of military equipment and armaments, generate local 
employment, and reduce foreign exchange outflow. Lastly, it will lessen our 
dependence on foreign governments and limit outside support In realizing our 
defense requirements.
1 Opportunities and Challenges facing Philippine Defense Industrial Development,
https://ndcp.edu.ph/opportunities-and-challenges-facing-philippine-defense-industrial-development/# ednlS
1


This measure is also part of the legislative priorities outlined in the updated 
Philippine Development Plan (PDP) 2017-2022, which recognizes the need to 
manage conflict and reduce tensions in the South China Sea, as well the emergence 
of radicalized movements and violent extremismB
This proposal was already approved on Third and Final Reading by the House 
of Representatives during the Eighteenth Congress.
In this light, the immediate passage of this bill is highly recommended.
ramoni^^Trevilla, JR.


NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
o( til. 
lui'j
‘22 JUL13 P2 *04
SENATE
505
RKEiv'
S. No.
Introduced by SENATOR RAMON BONG RE VILLA, 3R.
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 Phiiippines in 
Congress assembied:
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Section 1. Short Title. - This Act shall be known as the "Phiiippine Seif-Reiiant
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Defense Posture Program Act."
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Sec. 2. Deciaration ofPoiicy. - It is hereby declared the policy of the State to
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promote and spur the growth of an independent national defense by establishing a
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self-reliant defense posture program that shall prioritize the development of the
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country's national defense capabilities, including a competent domestic defense
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industry.
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In view thereof, the State shall endeavour to develop a National Defense
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Industry, hereinafter referred to as Industry, as an indispensable element of national
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defense. The State recognizes that:
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a) The industry plays a vital role in nation-building in the achievement of the
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national vision of an independent and self-reliant sovereign state, capable
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of providing its own resources for defense, security, and national survival,
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specifically during war and other national emergencies;
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b) The active participation of development of collaborative partnerships with
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the private sector is an important strategy in the development of a viable.


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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;
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; and
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-Reliance 
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 materiel;
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


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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 to Filipino-owned enterprises engaged in the 
manufacturing, servicing and operation of materiel in the Philippine, or to a 
foreign-owned enterprise engaged in the manufacturing, servicing, and 
operation of materiel, and which has located a substantial portion of its 
production activities within the Philippines;
f) Integrated iogistics support - refer 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 quantify and lower life cycle cost and decrease the logistics 
footprint, making the system easier to support;
g) Materiei- refers to military technology, materials and equipment, including 
arms and ammunition and combat clothing;
h) Minimum iocai content- refers to the minimum percentage of Intermediate 
goods used in the manufacturing processes to be sources from in-country 
enterprises;
i) Nationai defense - refers to the policies, measures and initiatives intended 
to provide the necessary protection to the State against external and 
internal threats;
j) Nationai security - refers to a 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 
materiel;
l) Strategic Investments Priorities Pian (SIPP) - refers to the government's list 
of priority areas and preferred activities that shall be entitled to tax 
incentives under law.


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Sec. 4. Self-Reliant Defense Posture Program. - The Self-Reliant Defense
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Posture Program is hereby established and instituted as the tool of the State to
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undertake the development of a national defense industry. The underlying concept of
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self-reliance shall be manifested in the continued preference on local production when
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feasible, of materiel for the country's defense forces through the partnership between
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the military and civilian establishments, and taking the recourse to importation only
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for those requirements that cannot be locally produced with the ultimate objective of
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acquiring the technology for the production of these materiel. Paramount to the
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attainment of this objective is the responsibility of the military and other government
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agencies to provide technical and financial assistance to civilian defense
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manufacturers.
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Sec. 5. National Defense Industry. - The National Defense Industry shall be
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developed in accordance with the following principles:
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a) The foreign support for defense requirements shall be subject to this Act
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and the policies approved by the President;
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b) To develop the defense capability of the country, the State shall:
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1) Rely primarily on and give preference to in-country enterprises, allocate
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substantial resources and manpower to defense research, and provide
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relevant technical and financial assistance to the private sector;
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2) Utilize to the fullest the country's natural resources as the source of the
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country's defense needs, and rely on material readily available,
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produced, manufactured or otherwise created locally; and
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3) Use material from foreign sources only when such material cannot be
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locally produced, manufactured or otherwise created: Provided, That
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importation from such foreign sources shall be the ultimate objective of
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acquiring technology for the production of such unavailable materiel;
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c) In order to reduce foreign exchange outflow, generate local employment
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opportunities, and enhance technology transfer to the Philippines, the
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Secretary of National Defense, hereinafter referred to as Secretary, shall, as
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far as practicable, incorporate in each agreement involving the government
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the manufacturing, servicing or operation of materiel special foreign


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exchange reduction schemes and countertrade, in-country manufacture co­
production, or other innovative arrangements or combination 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 materiel 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 materiel 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.
In the interest of national security, the Board of Investments (BOI) shall 
adopt a special procedure in the processing of applications for registration 
of enterprises that desire to participate in the Industry and offer goods or 
services to the government under SRDP.
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, 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, utilizes 
and appurtenances thereto necessary for national defense: Provided, That, 
In the exercise of such authority, the Secretary shall comply with the 
reportorlal requirements under Section 13 of this Act.
b) Any provision of law to contrary notwithstanding, contracts for the 
manufacture, procurement of services of local providers, servicing or 
operation of materiel or components thereof, facilities, utilities and 
appurtenances thereto which are necessary for national defense and which


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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 a public bidding is required by the Secretary, and the 
manufacturing, servicing, or operation of materiel 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 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 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 
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 expertise towards the eventual local 
production of such materiel or components thereof.
e) Nothing in this Act shall 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 national defense.


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f) The Department, in consultation with representatives of in-country
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enterprises, shall issue reasonable regulations on the minimum local content
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for all defense-related acquisitions. The Department may consult with other
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government agencies to determine such minimum local content.
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To support the economic and employment generation thrusts of the
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country, all manpower needs of the industry requiring the engagement or
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hiring of civilian labor shall be sourced locally and, and as far as practicable,
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be Filipino.
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g) Logistics support must be incorporated in all contracts on defense-related
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acquisitions.
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Sec. 8. Multi-Year Contracts and Other Contractual Arrangements, - For the
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purpose of materiel acquisition, notwithstanding existing laws to the contrary, and
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subject to Section 13 of this Act, the Department and Its bureaus shall be authorized
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to enter into multi-year contracts and other multi-year contractual arrangements;
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Provided, That Congress shall, upon issuance of a multi-year obligation authority by
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the Department of Budget and Management (DBM), make the corresponding
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appropriation for the ensuing fiscal years: Provided further. That the Department shall,
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In consultation with the DBM, issue implementing guidelines to ensure consistency
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with the Revised AFP Modernization Program and this Act: Provided furthermore, That
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the Department and its bureaus shall coordinate and conduct acquisition planning for
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the purpose of implementing multi-year contractual arrangements and other multi-
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year obligations: Provided finally, That the DBM shall expedite the issuance of multi-
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year obligation authorities as necessary.
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Sec. 9. Performance Undertakings. - The Department of Finance (DOF) Is
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authorized to recognize the obligations of the Department and its bureaus with respect
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to acquired materiel as obligations of the Republic of the Philippines and to undertake
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to pay the same in the event of non-payment by the Department and its bureaus.
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Sec. 10. Countertrade. - Countertrade for defense-related acquisition shall be
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significant, meaningful and must be of benefit to the Industry.
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Sec. 11. Exemption from the SLCC requirement. - In country enterprises
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participating In the acquisition of materia! by the Department and its bureau shall upon
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the effectivity of this Act, be exempt from the Single Largest Completed Contract


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(SLCC) requirement as provided for under Sec. 23.5.1.3 of the revised rules and
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regulations issued to implement Republic Act No, 9184, otherwise known as the
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Government Procurement Reform Act.
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Sec. 12. Creation of the Office of the Undersecretary for Defense Technology
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Research and Industry Development - There is hereby created in the Department an
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Office of the Undersecretary for Defense Technology Research and Industry
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Development. The Office shall be headed by an officer with the rank of
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Undersecretary, assisted by an Assistant Secretary, and supported by at least three
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(3) directors with the equivalent rank of Director IV, The Office will be charged with
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the responsibility of managing and administering a databank for analysis, conducting
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research and development and technology transfer, facilitating defense industry
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promotion, establishing public-private partnerships, and setting up domestic and
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foreign collaborations, and advising, recommending policies, rules and regulations to
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the Secretary on ail matters pertaining to the development of the Industry and the
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implementation of this Act. Such Undersecretary, Assistant Secretary and Directors
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shall be appointed by the President of the Philippines.
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Sec. 13. Reporting and Oversight - The Secretary shall, not later than the end
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of the first quarter of the succeeding year, submit to the President and the Congress:
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a) An Annual Report on the acquisitions made under this Act; and
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b) Copies of the multi-year contracts and other agreements entered into by
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the Department and Its bureaus.
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Pursuant to Its constitutional duties, the Executive Department, particularly the
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National Economic and Development Authority (NEDA), the Commission on Audit, and
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the Congress shall discharge oversight functions over the Implementation of the
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program in the following manner:
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1) The NEDA shall conduct an annual review of the status of all defense-related
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acquisitions exercised by the Secretary In Section 7 of this Act, identity
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causes of delays, the reasons for bottlenecks, actual and prospective cost
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overruns, determine the continued viability of the SRDP and the industry,
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and submit its findings and recommendations to the Congress not later than
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June 30 of each year;


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2) The Commission on Audit shall conduct an audit on each ongoing and
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completed acquisition and render a report to the Congress thereon not later
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than June 30 each year; and
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3) There shall be a Congressional Oversight Committee composed of the
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Chairpersons of the Committee on National Defense and Security of both
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Senate and House of Representatives who shall serve as Co-Chairpersons
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of the Oversight Committee, the Chairpersons of the Committee on Ways
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and Means of both Senate and House of Representatives who shall serve as
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Co-Vice-Chairpersons, four (4) members each from the Senate and the
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House representing the majority and two (2) members each from the
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Senate and the House representing the minority to be designated by the
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leaders of the majority and minority in their respective chambers.
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Sec. 14. Promotion and Marketing Support. - The government shall promote
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the export of locally-made materiel and the in-country enterprises to other countries,
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and shall provide financial and marketing support for the purpose of such promotion.
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Sec. 15. Cooperation of Government Agencies. - The DBM, DOF, BOI,
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Government Procurement Policy Board (GPPB) and other government agencies are
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enjoined to support the provisions of this Act. The Department and its bureaus, in
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consultation with the DBM, and the GPPB, shall strengthen their systems and
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procedures to support the objectives of the SDRP and the acquisition of materiel under
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this Act.
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Sec. 16. Appropriations. - The amount necessary for the effective
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implementation of this Act shall be charged to the appropriations of the Department
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of National Defense under the current General Appropriations Act, Thereafter, such
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sum as may be necessary for its continued implementation shall be included in the
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annual General Appropriations Act.
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Sec. 17. Role of the GPPB. - The GPPB shall continue to fulfil its functions as
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provided in Republic Act No. 9184, subject however to the provisions of this Act:
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Provided, That in no case shall the GPPB interpret Republic Act No. 9184 or any
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subsequent general law on procurement as overriding any of the provisions of this
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specific law. The Secretary shall continue to serve as a member of the GPPB.


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Sec. 18. Rule of Interpretation. - Rights and obligations existing on the date of
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effectivity of this Act and arising out of contracts shall be governed by the original
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terms and conditions of said contracts or the law in force at the time such rights were 
vested.
Sec 19. Implementing Rules and Regulations. — The Secretary shall issue the 
necessary rules and regulations and standard forms for the effective implementation 
of this Act.
Sec. 20. Separability Clause. - If any provision or part hereof is held Invalid or 
unconstitutional, the remainder of the law or the provision or part not otherwise 
affected shall remain valid and subsisting^
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 415 
shall be observed with respect to provisions of this 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 For Its 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
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in


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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" is hereby modified.
All other provisions of existing laws, order and regulations contrary to or 
inconsistent with this Act are hereby repealed or modified accordingly.
Sec, 22. Effectivity. This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette ov In a newspaper of general circulation.
Approved,
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