Overview
The Armed Forces of the Philippines (AFP) has a 15-year modernization program that started in 2012 and will continue through 2027. The Republic Act (RA) 10349 (or the Revised Armed Forces Modernization Act) was enacted to strengthen the AFP’s capability to address counterterrorism, maritime domain security, and internal threats. It was designed to protect defense modernization efforts from shifts in the country’s political climate. The third milestone or horizon period (2023-2027) has a projected budget of $4 billion. There are opportunities for selling aircraft, ships, unmanned vehicles, intelligence and surveillance systems, communications, personal protective equipment, and weapon systems. The U.S. is a key supplier of defense equipment to the Philippines but faces stiff competition from Israel, South Korea, Turkey, Italy, Spain, France, Sweden, and Germany. China is also gaining momentum in the market.
Opportunities
The AFP Modernization’s estimated spending for Horizons II and III is expected to be $4 billion. The AFP is preparing its list of equipment for Horizon III procurement until the new administration determines new priorities. Initial reports have indicated that it will include procurement of more combat utility helicopters, heavy-lift helicopters, larger unmanned aerial systems (UAS), and advanced communications equipment.
In addition to its modernization program budget, the Philippine Security Forces (AFP, all Service Commands and the Philippine Coast Guard) receive an average of $120-125 million annually in U.S. grant funds, inclusive of Department of State Foreign Military Fund (FMF) and International Military Education and Training (IMET) and Defense Security Cooperation Agency (DSCA) Building Partnership Capacity (BPC) programs 333, 332b, and MSI (i.e., Maritime Security Initiative). This is separate from defense-related construction projects and Defense Threat Reduction Agency (DTRA) projects in the Philippines. Additionally, as a U.S. grant recipient country, the Philippines has acquired ships (such as High-Endurance Cutters), aircraft (C130H/T models), and vehicles via the U.S. Government’s Excess Defense Articles Program (EDA). Foreign Military Sales (FMS) and all U.S. grant assistance are handled by the Joint U.S. Military Assistance Group (JUSMAG) Philippines.
Procurements through the Direct Commercial Sales (DCS) process require a thorough understanding of the Philippine Government procurement system. U.S. firms interested in supplying the AFP need to find a local representative and conduct a capability brief to the appropriate service command. The local representative must be familiar with the procedures, nuances, and documentary requirements of the Government Procurement Reform Act (GPRA). Foreign companies can bid directly for large defense procurement projects. However, a local representative is still required to monitor project development, funding source, budget release, changes in specifications, procurement schedule, and other relevant information.
Resources
- Department of National Defense
- Armed Forces of the Philippines
- Philippine Government Electronic Procurement System (PHILGEPS)
- Joint U.S. Military Assistance Group (JUSMAG) Philippines
Contact Information
Thess Sula, Commercial Specialist, U.S. Commercial Service Philippines
Email: Thess.Sula@trade.gov