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Thursday, December 21, 2017

How Did Thales Became Involved in the Philippine Navy's Frigate Project in the First Place?

The Department of National Defense, specifically its head Defense Sec. Delfin Lorenzana, has admitted in his statement yesterday 20th December 2017, that the reason why he relieved Vice Admiral Ronald Joseph Mercado as the Philippine Navy's Flag Officer in Command (FOIC), was because VAdm. Mercado was in conflict with the Defense Department's orders to proceed with Hyundai Heavy Industry's insistence to use the Hanwha Systems Naval Shield Combat Management System for the Frigate Acquisition Project (FAP). There are many sources online but readers may refer on the clickable links HERE, HERE, and HERE.

It was stated in many reports, and in MaxDefense Philippines Facebook page posts that VAdm. Mercado was indeed in favour of using the Thales Nederland TACTICOS Combat Management System, which both the DND and Hyundai are not in favour to use.

But it was made to appear in reports that VAdm. Mercado was the only one insisting on the use of Thales TACTICOS.

But in the first place, how did Thales come into the picture of the Frigate Acquisition Project? Did Thales just suddenly came out of nowhere and became VAdm. Mercado's preferred supplier in an instant? Who brought in Thales in the first place?

MaxDefense would like to clarify this misrepresentation of the issue.

The photo above shows a 3D render of the Philippine Navy's Future Frigate as posted by Hyundai Heavy Industries in their website on October 2016. The additional captions were made by MaxDefense Philippines based on the information coming directly from HHI's bid submission on the FAP's 2nd Stage Bidding. Pitz Defense Analysis provided the labelling works on MaxDefense's behalf. This photo was posted in our blog entry dated October 24, 2016 when HHI and DND signed the contract for the FAP.
Original photo taken from Hyundai Heavy Industry's website. Thanks to Pitz Defense Analysis for the assistance.

First of all, Thales Nederland came into the picture because Hyundai Heavy Industries was the one who brought them into the project. Among those submitted by HHI during the 2nd Stage Submission and Opening of Bid Envelopes (SOBE) last December 2015 was a proposal to use a Thales combat management and sensor suite for the future PN frigates, as indicated in their Baseline Configuration List submission.

As MaxDefense discussed as early as October 2016 in the blog entry "Finally, the Contract Signing for 2 New Light Frigates between Philippine Navy and Hyundai Heavy Industries", MaxDefense already mentioned the subsystems approved by the Philippine Navy for the frigates, and it includes the Thales Nederland TACTICOS Combat Management System. The PN's FAP Technical Working Group (TWG) was the one who insisted the use of Thales TACTICOS. The list MaxDefense provided in that blog entry came directly from the Baseline Configuration List submitted by Hyundai last December 2015 to the DND's Bids and Awards Committee and did not just came out of nowhere.

For further reference, even India's Garden Reach Shipbuilders & Engineers (GRSE) submitted a full Thales Nederland combat management and sensor suite which is more comprehensive than those submitted by Hyundai.

So it was not VAdm. Mercado nor the Philippine Navy who brought in Thales into the project. It was Hyundai. So why did Hyundai, and even GRSE, brought in Thales into the project?

That is because Thales' products were compliant to the project's Technical Specifications, which was confirmed by the PN's Technical Working Group for the Frigate Acquisition Project. So why did Hyundai offered Thales only to backtrack later on when the contract was already awarded to them? Is this a case of "Bait and Switch" which, as many in the defense industry know, the Koreans are very well known of doing?

Evidence can be seen below on the position paper submitted by the Philippine Navy to higher authorities showing that the PN FAP TWG "sustained its preference of TACTICOS" for a number of reasons, mostly because Hanwha Naval Shield did not meet the project's Technical Specifications. For the record, this position paper was made in early 2017 when the contract was already signed and the Critical Design Review (CDR) already happening (hense, the FAP PMT Chairman position and not TWG which only applies before project starts), and did not come from VAdm. Mercado, but MaxDefense will reveal further details soon.

Above is an excerpt from just one of the position papers submitted by the Philippine Navy's Frigate Acquisition Program Project Management Team (FAP PMT) on their sustainment on using Thales TACTICOS as the project's Combat Management System. Other reasons for the decision was blurred for now, but will be discussed in the future as it holds key information on why TACTICOS was being consistently pushed by the PN including former FOIC VAdm. Ronald Joseph Mercado.
Thanks to our sources outside the Philippine Navy for providing this important document. (YES, it came from a different source which will surprise everyone when we post it later on.)

VAdm. Mercado's insistence to use the Thales TACTICOS has basis, being the one chosen by the PN's Technical Working Group since 2016, and according to further position papers submitted by the PN's Techical Inspection and Acceptance Committee (TIAC) and Project Management Team (PMT) which succeeded the TWG after the project proceeded with the Critical Design Review last January 2017, shows that the PN did not deviate from its position and still continued to insist on the use of Thales TACTICOS CMS.

VAdm. Mercado's position has legal basis, and has complete black and white documentation. Any investigation on the issue can easily see these evidences if investigators just request for a copy from the Philippine Navy.

MaxDefense will discuss more about the issue in future blogs.

Also, may I take this opportunity to inform everyone that there is a fake MaxDefense Philippines Facebook page that copied the cover photo, profile photo, group name, and even the layout of our page. The difference with this fake group and the original one is that our membership is more than 82,000 people, while the fake one was at 14 people as of this noontime. It also comments on Facebook regarding the FOIC relieving and frigate issues with an opposite stand to ours.

Thank you for your continued support of MaxDefense in uncovering the truth.


  1. incompetence is just astonishing. My guess is that there is a large sum of kickbacks for them to do this...

  2. Granting that the Tacticos was the original specified cms on the contract, it doesn't automatically mean that something is wrong or amiss when the DND consented to Hyundai to change it to the Hanwha cms. You do not have to impute malice to the action of the DND since there could be some contravening reasons for their decision. That is the impression I was getting in all the articles coming from you and the other defense bloggers. If V. Adm. Mercado was indeed forum shopping or trying to lobby with retired PN officers even after a decision has been made and finalized then that is already insubordination. He should be relieved. As for the reason for the change of the system, I can only surmised that it has to do with the cost just what you have been putting emphasis on this blog. You already posted that the proposed Corvette for the next acquisition actually costs more than the light frigates so it can be assumed that the Thales cms' cost may have escalated from the time of the contract signing. The Hanwha cms may have been the compromise. You have also been writing that the cms was not the only system specs that was changed and probably for the same reason.

    1. I say kudos to the V.Adm, why the hell would you stoop down to a notch with the specs when all the while the original was already above board.

      It was approved before, and within budget getting it replaced with an inferior system something smells fishy.

      This is why AFP MOD during the first program failed, too many people keep on meddling. In fact had PNoy's team didn't screw up with Arroyos programs the PN would have had 2 Maestrales by now plus a bunch of second hand but well maintained AIFV's, Howitzers and mortars.

      Anyway I hope this get resolved and soon, regardless which systems actually gets installed but hopefully the Tacticos still gets to be the system.

  3. Violation of RA9184. The supplier/contract cannot change its bid after getting the award and contract for the project.

    1. Well apparently it happened, thank God we have a bullish defense blog and or people willing to risk life and career just to open it up for public consumption otherwise this would not have been reported.

  4. There’s a lot of cover up that had happened to ensure that HHI would win the contract even though GRSE is the lowest bidder. I think DND didn’t want GRSE to win so they connived with HHI. If GRSE will use TACTICOS then DND and HHI need to convince the navy and the media that HHI is the best choice and Instead of using HANWHA they submitted TACTICOS too on the post qualification process so that DND can justify to the NAVY that HHI is the best choice even though it’s not the lowest bidder. And then DND rewrote the contract stating that “HHI has the right to change the systems as long as it matches the specifications” That’s how you bend the rules.

  5. The problem lies on the contract itself....whoever made that contract gave HHI alot more room to manuever....the contract should have been more should have included each specs/system/configuration that was originally proposed by HHI and agreed upon by our government.

    Maybe the Navy was made to believe that the original specs was the one included in the contract....i guess if its the DND who made that contract....they did a poor and awful job....either intentionally or just basically incompetent fools .

    Infos are slowly getting out....hopefully facts will be known....too early to assume who is at fault....but I still believed the DND should have pushed what the Navy wants...the Navy are the ones whose gonna fight and die on those war machine not the DND.

  6. While according to a Pagebook Defense Page, "Pwede na Yan"

  7. Ironically, no one has commented on a clear clarification and obvious rail-roading of VADM Mercado by the DND. All of a sudden, a whole bunch of unknown and relatively accounts across a variety of Social Media platforms rushes to the defense of the DND; obvious shills to the process. What's truly sad is the obvious argument they all raise; "The DND is right no matter what, and PNY."

    What's PNY you say? It's the worst kind of cultural flaw in a country that desperately needs to modernize it's military. "Pwede Na Yan." In other words, so many people are willing to throw away future capabilities to blindly deliver a flawed product at a price that contractually REQUIRES more quality. It's the worst kind of Lack of Moral Fiber, and must be burned out of the thinking in order to deliver true, measurable and sustainable change.

    1. PNY isn't the issue, the real issue is meddling, a lot of people seems to know more than the other hence we get these cycle of delays.

      Frankly I don't care if its Tictacos/Hanwa/or even if its made by CDR King. This project has been going on since Arroyo, and Arroyo actually have a faster program the Maestralez up until the time PNoy's team screwed it up and we ended up re-writing everything.

      A law must be passed to solve this meddling issue, if found guilty should be sent to prison reclusion perpetua. Why because further delays such as this program is all hell breaks loose we have relics to use.

  8. We are with you,sir! We support the future of AFP modernization!

  9. This is a big ISSUE on RA9184 and the DND have legal department but still stick on this idea maybe they are thinking that they can defend them selves when investigation occur i attend so any seminar about RA9184 from different branch of gov't even from COA actually i fill bored sir Max when they make some presentation/report about RA9184 because i feel i already know the important things on this law , or maybe i know how it works , and i can say that these procurement law is not good for defense acquisition ,because of LOWER bidder issue that does not hit the right material for defense need, corruption is the number one factor about this problem, i think HHI promise something on DND when they successfully fulfill this very obvious CORRUPT decision., well goodluck to the navy by the way sir., at first when i watch this issue on news and read from your FB/blog i already knew they are making mistake on this issue that can lead them to investigation and for sure just like COA always saying on us., TO ALL ACCOUNTABLE PEOPLE YOU WILL GO TO JAIL.

    from # Maxdenfense Fan and Follower :)

  10. I hate it that we were so near yet now it seems so far. Why do they have to spoil the Filipino's dream of having the first capable frigate???

  11. Sir max! Madaming magkakatrabaho sa admin ni duterte nyan..pila pila na yung sumasakay sa issue para mataliwas sa least alam na naten kung sino yung para sa bayan adroth, RHK, yung Ionnos Kratos na PN cyber warrior kuno at UDMC puro cover up ang alam..ingat ingat tayo at ingay ingay din..maraming kakampi mga corrupt at incompetent sa DND at AFP.

  12. Holy cow, , we must report ban that [fake news] page

  13. (Small correction sa Headline please...) "HOW DID THALES (BECAME- it should 'BECOME")


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