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Wednesday, November 4, 2020

Philippine Air Force to restart acquisition of Maritime Patrol Aircraft under the Long Range Patrol Aircraft Project

The Philippine Air Force (PAF) is preparing to re-introduce one of its long-forgotten projects, which it now plans to re-implement under Fiscal Year 2021.

The PAF's Long Range Patrol Aircraft (LRPA) Acquisition Project is originally a Horizon 1 phase priority project under the Revised AFP Modernization Program (RAFPMP). But the project hit several setbacks after a successful start a few years ago.

As part of the proposed procurements submitted by the Department of National Defense (DND) to the Senate during its FY2021 budget hearing, the LRPA project was among those proposed to be included as part of the Php5 billion Unprogrammed Appropriations to the AFP Modernization Program.

The Leonardo ATR-72MP (or P-72A) which is among those offered to the PAF. Photo taken from Defpost.


The Airbus C-295ASW Persuader, the original aircraft that the PAF was almost getting until the tender failed. Photo from Airbus.


Flashback:

The Long Range Patrol Aircraft Acquisition Project was among those that started well when Horizon 1 phase was implemented, but ended miserably and neglected due to changes in priorities.

The intention was for the Philippine Air Force to acquire it's first two (2) new maritime patrol aircraft (MPA) that would be used for maritime surveillance, anti-ship and anti-submarine warfare (ASuW & ASW), intelligence gathering, and command & control (C2). The aircraft are  to fly further beyond the country's Exclusive Economic Zone (EEZ), can be armed, and will be the primary manned surveillance asset of the PAF and Armed Forces of the Philippines in general. The allocated budget (ABC) for the project was Php5,976,000,000.00.

The LRPA Acquisition Project was among the first project that was implemented by the PAF due to the expected long acquisition period. It was decided by DND back then that the acquisition will be via Two-Stage Public Bidding, with the procurement process starting as early as 1st quarter of 2014. It was expected that the winning bidder would be able to deliver both aircraft within 34 months after the release of Notice to Proceed (NTP), or opening of Letter of Credit (LOC).

In the first bidding attempt, none of the participating companies were able to pass the 1st first stage of the bidding


Another attempt was made in 2016, and only Airbus Military was able to pass the first stage and considered eligible to proceed to the second stage that was suppose to be held in a couple of months. But after several negotiations in between and conducting the second stage bidding, Airbus Military also failed the 2nd stage bidding, effectively declaring the process a failed bidding

The C-295ASW Persuader, this example with the Chilean Navy. Photo taken from Airliners.net.


The failure was due to effects of the poor performance of the Philippine pesos against the US dollar and the Euro, wherein the peso value of the ABC was deemed insufficient to allow Airbus Military to deliver two fully compliant MPAs. Instead, Airbus proposed to deliver 1 fully compliant aircraft, and 1 incomplete aircraft (no Anti-Submarine Warfare capability) with the same bid amount they provided in the 1st stage bidding. But based on the government's procurement rules under RA 9184, this is unacceptable, thus Airbus' submitted bid was considered non-compliant, and they were declared disqualified.

With no other bidder in the project, the LRPA Acquisition project was considered a failed bid as of 2017, after more than a year of process.


A third attempt again happened in 2017 but was also considered another failed bidding, after none of the bidders passed the initial requirements under the first stage bidding.

With the failed biddings, the DND is now allowed by law to proceed to a Limited Sourced Negotiated Procurement, which means it can now go directly to several of its shortlisted suppliers/manufacturers and get their best offer. This means the DND can now go directly and negotiate with Airbus Defense & Space, which appears to be the PAF's preferred supplier for the LRPA with their Airbus-CASA C-295MPA Persuader, similar to those sold to the Chilean Navy.

Further reading is advised, through our previous blog entries on the LRPA's technical specs:

"PAF'S Long Range Patrol Aircraft - Tech Specs, Post-Bidding Report and Updated Analysis" - first posted 29 May 2015.


Possible LRPA Negotiated Procurement:

According to MaxDefense's earlier blog entries since 2014, despite the PAF's interest on  refurbished Lockheed P-3C Orion maritime patrol aircraft from either US, Japan or Australia, the PAF is actually more interested in getting new aircraft, although they remain open on the potential acquisition of used P-3C Orions to boost the fleet.

The 3 failed biddings in the past means the DND can now go directly and negotiate with interested proponents as allowed by law. This does not need to be just Airbus Military which almost bagged the project a few years ago with their Airbus-CASA C-295MPA Persuader. It now depends on the revised selection process conducted by the PAF's Technical Working Group (TWG), which already changed leadership and membership over the past 6 years. 

The Airbus C-295ASW Persuader of the Chilean Navy, which has an anti-submarine capability including the presence of magnetic anomaly detector (MAD) and munitions firing capability for anti-submarine torpedoes or anti-ship missiles. The PAF's original LRPA requirement also calls for these capabilities.
Photo taken from Airliners.net.


But this does not close the door on the chance that the project would still be procured via a Public Bidding. This would now be dependent on the DND, which should issue a new Acquisition Decision Memorandum (ADM) on how to proceed with the project.

At this point in time, MaxDefense has no information yet as we have not receive any info on a new ADM for the project released by the DND for the project, although we expect to know about it once its released.

Among the delays in the LRPA was attributed to the PAF's insistence of sticking to the specs rather than reducing the aircraft's capability to meet the budget. It was actually a good decision by PAF since they know how difficult it is for them to request for additional funding to fill-up systems that were fitted for but not with the aircraft.
Credits to original source of photo. 


New Information as of November 2020:

Due to the long dormancy of the project, there appears to be a lot of changes in the project. 

First of, the head and members of the Technical Working Group has changed. So expect a different mindset on what to expect with the technical specifications. Majority of those who previously were in the group have already moved up in position although some of them are expected to remain.

Because of this, there is a possibility that revisions on the Technical Specifications could be made. Basis could be on what prompted the project to fail back in 2017.

Cost is another factor. Since 2017, it is expected that the cost of the same maritime patrol aircraft offered in 2016-2017 could have already increased by at least 5-15% due to inflation and other reasons.

Budget:

But one thing has not changed - the budget in pesos. It still remains that same at Php5,976,000,000.00. Back in 2016, the US dollar equivalent of that amount was around US$125.8 million. But in 2017, the US dollar value went down to US$118.5 million, or a difference of US$7.3 million which is a huge amount.

Right now, the US dollar value of Php5,976,000,000.00 is around US$123.4 million. This is close to the 2016 US dollar value, but it does not necessarily mean the PAF can now afford the original offer made by Airbus Military. This now remains on what they would offer with the budget.

MaxDefense also received information a few months ago that should the budget still be an issue, the PAF could be willing to drop the need for a Magnetic Anomaly Detector (MAD) which is a feature that would allow the PAF's LRPA to detect submarines, in addition to using disposable sonobuoys dropped from the aircraft.

Aircraft Platform Offers:

There were several offers made again to the PAF as it actually kept the LRPA project open to proponents to provide offers. 

Offers came from actual aircraft manufacturers themselves like Airbus, PT Dirgantara Indonesia, and Leonardo. But the PAF also got offers from system integrators like Elbit Systems, IAI-Elta, PAL Aerospace, and Saab.

As for platforms, the PAF is said to be inclined to use turboprop aircraft models, and among those are the Airbus-CASA C-295, the PTDI-CASA CN-235-220, the Bombardier Q400 Dash-8, and the Leonardo ATR-72.

Airbus-CASA C-295 and PTDI-CASA CN-235-220:

Another concern that the PAF has raised was the use of a platform that is cheaper but can attain similar range and endurance requirements, and cannot be converted to a cargo aircraft if the PAF's current airlift fleet becomes short of assets. This appears to be a lesson learned on its previous maritime patrol aircraft, the Fokker F27-200MPA Enforcer, which back in the early 1990s, were converted to troop carriers when the PAF started to lose its airlift assets. 

One of the Fokker F27-200MPA Enforcer maritime patrol aircraft of the PAF, this example already written-off from an accident in the late 1980s, operating only less than 10 years. Photo taken from Airliners.net.


Apparently, the PAF prefers a platform that do not have a modular pallet system, which effectively affects some of the offers including the Airbus-CASA C-295MPA and the PTDI-CASA CN-235-220MPA from Indonesia's PT Dirgantara Indonesia, both of which can be easily converted to transport aircraft due to its modular cabin design. 

But this also becomes an issue in terms of commonality. Logic actually points for the PAF to strongly consider using the Airbus-CASA C-295 platform due to its commonality with existing C-295M transport aircraft that is seen to rise to 7 aircraft once the ongoing Medium Lift Aircraft Phase 2 project moves forward with Airbus' offer.

PTDI's CN-235-220MPA also appears to still be haunted by the same reason of its non-selection a f ew years ago, due to the dimensions and performance of the aircraft not meeting the specified requirements. It also is too short to accommodate 4 operator consoles as required by the PAF's specs.

But compared to most of the offerings, the PTDI CN-235-220MPA has so far confirmed that Magnetic Anomaly Detector can be installed on both aircraft, and there is still enough extra funds to even allow them to provide the PAF with extras.

The proposal to go for platforms that do not have modular systems and a cargo ramp also boosts the chances of the other platforms being offered, the Bombardier's Q400 Dash-8 from Canada, and ATR's ATR-72 platform from Italy.

While Bombardier itself has not made a pitch for the LRPA project, several companies like Elbit Systems proposed to use the Q400 Dash-8 platform as well as the ATR-72 platform, on top of Leonardo's own offer of the ATR-72MP.

Leonardo ATR-72 and Bombardier Q400 Dash-8:

Based on studies made by the PAF, the ATR-72 platform is more desirable due to its lower operating cost and fuel consumption, and cheaper aircraft platform price. While the Bombardier Q-400 Dash-8 performs better in terms of speed and flight characteristics, the PAF believes that the ATR-72 is already good enough for its requirements.

Leonardo has its own offer using the ATR-72 as the platform, called the ATR-72MP (also called the P-72A), which can also be scalable and upgraded to the ATR-72ASW which can perform anti-submarine warfare missions that the standard ATR-72MP cannot do.

The ATR-72MP, this example with the Italian Air Force. Photo taken from Leonardo's website.

The only problem with the ATR-72MP/ASW is Leonardo itself. Apparently the PAF has been unsatisfied with Leonardo's aftersales support on their fleet of AgustaWestland AW109E Power armed helicopters, and has also received the same feedback from the Philippine Navy with its fleet of AW109E Power and AW159 Wildcat naval helicopters.

The Bombardier Q400 is actually used by Saab for its Swordfish MPA, as well as by Canada's PAL Aerospace for their Maritime Patrol Aircraft offering. The Q400 is also an option aircraft platform for both IAI-Elta and Elbit Systems' own MPA offerings.

Elbit Systems is also open to use the ATR-72 aircraft as a platform in place of the Q400. It is unconfirmed though if Airbus is willing to use the ATR-72 for its MPA system, considering ATR is a joint venture of Airbus and Leonardo.

Final Decision?

So far for now, nothing is final so the race could still be anyone's game. There could also be other reasons that could potentially pop out during the negotiation with the proponents.

For example, results of other projects that involve the same proponents (ie. Leonardo being involved in other helicopter projects, PTDI involved in other transport aircraft projects, etc.).

Contrary to what naysayers believe, MaxDefense Philippines does not back any of the proponents, and normally we just support what the end user selects, like in the case of the Philippine Army's Light Tank Project which was already decided almost a year before the winning proponent was awarded.

We always believe that the end user knows what they need better than anyone else, including the DND.

To summarize the pros and cons of each platform:

1. Airbus C-295MPA  / ASW Persuader:
    Pros: commonality with existing C-295M fleet of the PAF.
    Cons: ASW variant could be too expensive and beyond PAF's budget, slower than ATR-72 and Q400.

2. PTDI CN-235-220MPA:
    Pros: cheapest among the platforms offered, can provide ASW capability.
    Cons: shortest cabin space, slowest speed, 1 less operator space (as per PAF's info)

3. Leonardo ATR-72MPA / ASW:
    Pros: cheaper than C-295MPA, potentially able to provide ASW capability within PAF's budget
    Cons: PAF's poor satisfaction of Leonardo's aftersales support

4. Bombardier Q400 Dash-8 MPA / Saab Swordfish Q400:
    Pros: fastest and best performing platform
    Cons: shortest range, narrowest cabin, most expensive platform to operate and sustain, aircraft manufacturer is not the integrator (Saab, PAL Aerospace, IAI, etc).

MaxDefense believes though, based on details and factors on the requirements as well as information from sources, that the race is most likely between Airbus' C-295MPA or C-295ASW, and Leonardo's P-72A. 

The Saab Swordfish MPA system can also use the Q400 platform aside from the Global 6000 jet. Photo from Saab.

Project Summary:

Long Range Patrol Aircraft Acquisition Project:

Note: Edited as of 03 November 2020.

* End User: Philippine Air Force (300th Air Intelligence and Security Wing)

* Quantity: 2 maritime patrol aircraft

* Modernization Phase: Horizon 1 Phase Priority Projects of RAFPMP

* Project ABC: Php5,976,000,000.00

* Acquisition Mode: To be confirmed, awaiting ADM from DND.

* Source of Funding: AFP Modernization Program Trust Fund, to be paid via Multi-Year Obligatory Allocations (MYOA).

* SARO Release: To follow

* Winning Proponent: TBC

* Product for Delivery: TBC


* Contract Price:
 TBC

* Residual Price: TBC

* First post by MaxDefense: 29 May 2015

* MaxDefense Searching Hashtag: #PAFLRPAAcquisition

* Status: Project restarted, initial funding to be provided in 2021.

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First edit and release: 04 November 2020
Copyright MaxDefense Philippines


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