Philippine Navy to Receive 3 More Missile-Ready Multi-Purpose Attack Crafts under Horizon 1 Phase

The Philippine Navy (PN) has quietly moved ahead and implemented the acquisition of another project under the Horizon 1 phase of the Revised AFP Modernization Program.

Based on the Philippine Navy's recent publicly-released documents, as well as confirmation from MaxDefense source, the Philippine Navy has pushed through with the Multi-Purpose Attack Craft (Series 2018) acquisition project, which is a "2nd List of Horizon 1" project that was approved for acquisition.

The MPAC Mk. III built by Propmech-Lung Teh JV. The same design, with probably minor changes, will be used for the 4th batch of MPACs to be acquired by the Philippine Navy.
Photo provided by MaxDefense source.

Another Horizon 1 MPAC?
To avoid confusion, here is how it goes:

The Philippine Navy's Horizon 1 phase, which was approved for implementation in 2014, previously had a Multi-Purpose Attack Craft (MPAC) Acquisition Project with an Approved Budget for Contract (ABC) worth Php270 million. This was also called the "MPAC 3" during its pre-delivery phase. This was awarded to a Joint Venture of Propmech Corporation and Lung Teh Shipbuilding Co. Ltd. The former is a Filipino-owned company while the latter is a boatbuilder from Taiwan.

The boats acquired from this project, now known as the MPAC Mk. III Series 2014 (specifically the BA-488, BA-489, and BA-491) were delivered mid 2017, and are now being installed with weapon systems acquired from Rafael Advance Systems Ltd. of Israel as they are scheduled to conduct the Philippine Navy's first ever test firing of a surface-to-surface missile this coming July, as revealed by PN FOIC VAdm. Robert Empedrad recently.

Now...

This project we are discussing is part of the Philippine Navy's "2nd List of Horizon 1", an extension program of the Horizon 1 phase that was approved for implementation only in early 2016, has an acquisition project for another batch of MPACs. The Philippine Navy, based on new bid documents, appears to call this project the MPAC Mk. III Series 2018, to differentiate it from the MPAC Mk. III Series 2014 project. For convenience, let's call it as how the PN does, although MaxDefense expects the term "MPAC 4" to be used as well.

This project has an ABC of Php270 million (similar to all other MPAC acquisition projects), and involves the acquisition of three (3) brand new MPACs that can be armed with missile systems similar to those of MPAC Mk. III Series 2014.

It was only several weeks ago that MaxDefense was able to confirmed who led the tender for the MPAC4 contract, which is the Joint Venture of Propmech Corporation and Lung Teh Shipbuilding. The Department of National Defense (DND) has yet to complete Post Qualification Inspection on Propmech-Lung Teh, but based on the Special Allotment Release Order (SARO) made by the Department of Budget and Management (DBM) under SARO-BMB-D-17-0024343 approved on 15 December 2017, the value is expected to be at Php269,799,999.99. This amount was released on 18 December 2017 based on the DBM's SARO release records.

One of the MPAC Mk. III Series 2014, BA-488, as seen here in 2017 undergoing tests before delivery to the Philippine Navy. The same design will be used for the MPAC Mk. III Series 2018, wherein 3 units will be delivered.
Photo provided by MaxDefense source..

The MPAC Mk. III Series 2018:

With this MPAC Mk. III Series 2018 already established, let's go further into details.

MaxDefense received information, as well as support from released documents from DND website that this 4th batch of 3 new MPACs will be using the same design as the MPAC Mk. III delivered by Propmech-Lung Teh last year, with probably only minor changes as specified by the Philippine Navy

This would make it easy for both Propmech-Lung Teh JV and the Philippine Navy to get this project out the drawing board and into design final approval since there won't be a need for a major redesigning like what happened on earlier MPAC projects where MPAC Mk. I differs in design from MPAC Mk. II, which also differs in design and purpose as the MPAC Mk. III.

While this contract only includes the boats itself, there is a separate project called the MPAC Combat Systems and Capability Upgrade, which is divided into 2 lots with a total combined approved budget of contract (ABC) worth Php722,000,000.00. The said budget was confirmed through SARO released by DBM in June 2018. And this is among the HORIZON 2 projects recently approved by Pres. Duterte for implementation.

As straightforward as the title of the project, it was meant to provide the MPAC Mk III. Series 2018 with weapon systems and capability enhancements. The same case happened on the MPAC Batch 3 aka MPAC Mk. III Series 2014 where the boats (awarded to Promech-Lung Teh JV) were acquired separately from the weapons system (awarded to Rafael Advance Systems).

Propmech - Lung Teh Joint Venture previously won the bidding to supply the MPAC acquisition under Horizon 1 phase. The end result is the MPAC Mk. III Series 2014, which were delivered in 2017. They are currently being installed with the weapon systems from Rafael, and will test fire a Spike-ER missile this July 2018.
Photo provided by a MaxDefense source.

The MPAC Mk. III Series 2018, like its earlier counter-part, was designed primarily as a small missile-armed patrol boat, rather than as an assault boat. It lacks the front opening bow and ramp that allows easy egress and ingress of troops, and will have less passenger capacity due to the presence of a control system for the weapon systems.

The MPAC Mk. III Series 2018 are expected to have the same dimensions as the earlier Mk. III variant, which are as follows:

Length: at least 17 meters long
Displacement: less than 30 tons (without the weapon systems)
Maximum Speed: at least 45 knots
Range: at least 300nmi at transit speed
Propulsion: 2 diesel engines coupled to water jet system
Complement: 2 officers and 5 crew memebers, plus 8 fully equipped troops.
As-delivered Standard Weapons: 2 M60 7.62mm light machine guns in addition to those to be delivered separately under the MPAC Combat Systems and Capability Upgrade Lot 1 project.

The expected layout of the MPAC Mk. III could be like the one shown on the photo above. Aside from the Typhoon mounts, the boat can also be armed by 2 M60 7.62mm machine guns.
Photo taken from the old Timawa.net forum.

MPAC Mk. III Series 2018 Additional Works:

It also appears that unlike the acquisition of the MPAC Mk. III Series 2014, this current batch will need some additional work on the boat iself, and its already apparent that the Navy is solving this issue.

Due to the rising costs, it could have been difficult for Propmech-Lung Teh JV to win the MPAC 4th Batch without the need to make sure it is profitable and reasonable for them to bag the project. Being commercial in nature, it is normal for the proponent to make sure they will earn from this project.

Propmech-Lung Teh JV's tender price is actually only Php200,000 less than the allocated budget for the project. But it appears that there were a lot of un-included items, probably intentionally removed by the PN TWG from the technical specifications, due to price escalations over the years.

To cover this, the DND released a separate project called the Lot 2 of the MPAC Mk. III Combat Systems and Capability Upgrade, which covers the Mission Essentials Equipment and the MPAC Mk. III Series 2018 Integrated Logistics Support (ILS). Out of the Php722 million intended for the project, Php60 million was allocated for this work's Allocated Budget of Contract (ABC).

Normally, the MPAC acquisition already  should have the items included in this lot, specifically the ILS, communications equipment, shock mitigating seats for passengers, and the ballistic panels and glass on specific areas of the boat.

MaxDefense has reason to believe that Propmech-Lung Teh JV, or any other boat-builder cannot deliver 3 fully functional MPACs with ILS for Php270 million or less. Costs has finally caught up with the times, and the PN has no choice but to adjust its Combat Systems and Capability Upgrade to include these items just to allow the MPAC acquisition to push through without hassles.

Submission and Opening of Bid Envelopes (SOBE) for this MPAC Mission Essentials and ILS Lot 2 
was scheduled on 14 June 2018, and although we still do not have a confirmation who bagged the project, MaxDefense believes it is fitting for Promech Corporation to win the project since they are familiar with the boats and are the most capable of providing the ILS to their own product.

While we still do not know the winning bidder's submitted amount, it is safe to say that the current MPAC 4th Batch, without its weapons system, costs a little less than Php330,000,000.00 for all 3, or
a little less than Php110,000,000.00 each.

Shock-mitigating seats are among those to be procured under the MPAC Mk. III Series 2018 Combat Systems and Capability Upgrade Lot 2 Mission Essential Equipment and ILS. It appears that Propmech-LungTeh JV did not include this in their contract  to deliver the MPAC Mk. III Series 2018.
Photo taken from Propmech's video.

MPAC Mk. III Series 2018 Combat Systems:

There is still little information on the other part of the MPAC Mk. III Combat Systems and Capability Upgrade Lot 1, which is expected to be the project for the procurement of weapon systems for the MPAC Mk. III Series 2018.

Originally it was supposed to have an ABC of Php722,000,000.00 and will only be 1 lot, but the changes in the MPAC Series 2018 acquisition required the Philippine Navy to source out additional funding to cover for the need to acquire lacking equipment on the MPACs. Since only Php722,000,000.00 was released for the entire project, Lot 2 was deducted from the overall budget, leaving Php662,000,000.00 for the Lot 1.

So far, what MaxDefense is sure is that it would be for the acquisition of Remote Controlled Weapons System (RCWS), Multiple Launching System for short-range surface-to-surface missile launchers, and the missiles itself.

While it appears that the Philippine Navy is still in the pre-procurement stage on this project-lot, MaxDefense has strong reason to believe that this would be a Government-to-Government (G2G) acquisition involving Israel and Rafael Advance Systems Ltd. If this is the case, MaxDefense believes that Rafael may again offer the Rafael Spike-ER missile, Typhoon MLS-ER missile launching system, and Mini Typhoon 12.7mm RCWS mount.

The difference from the last Horizon 1 MPAC Combat System project is the allocated budget. While the weapons for the MPAC Mk. III Series 2014 for Php594 million, this time the budget allocated was Php662 million.

MaxDefense believes that the cost increase may be attributed to price escalation and inflation, a poorer US dollar - Philippine pesos exchange rate, and the possibility that the PN wanted to acquire more surface-to-surface missile rounds than before. Each MPAC was designed to carry 4 ready-to-fire missiles in the launcher, plus 10 more rounds located on the boat's storage. MaxDefense won't be too specific, but the previous deal with Rafael did not cover the acquisition of a full 14 rounds per boat.

The Rafael Mini Typhoon 12.7mm RCWS (top) and the Rafael Typhoon MLS-ER (above) are expected to be acquired again to arm the MPAC Mk. III Series 2018 boats under a G2G deal with Israel.
Top photo taken from Rafael's website, bottom photo taken from Philippine Navy's FB page.

Summary:

1. Multi-Purpose Attack Craft Series 2018 Acquisition Project

End User: Philippine Navy (Littoral Combat Force)
Modernization Phase: RA 10349 Revised AFP Modernization Program HORIZON 1 (2nd List)
ABC: Php270,000,000.00
SARO Release: SARO-BMB-D-17-0024343, released 18 December 2017
Lowest Proponent: Propmech Corporation - Lung Teh Shipbuilding Co. Ltd. Joint Venture
Bid Price: Php269,799,999.99
First post by MaxDefense: 30 December 2017


2. Multi-Purpose Attack Craft Mk. III Series 2018 Combat System and Capability Upgrade Lot 2 - Mission Essential Equipment and ILS

End User: Philippine Navy (Littoral Combat Force) - for MPAC Mk. III Series 2018
Modernization Phase: RA 10349 Revised AFP Modernization Program HORIZON 2 (Priority List)
ABC: Php60,000,000.00
SARO Release: SARO-BMB-D-18-0012925, released 01 June 2018;
Winning Proponent: still for public bidding.
Contract Price: TBA


3. Multi-Purpose Attack Craft Mk. III Series 2018 Combat System and Capability Upgrade Lot 1 - (unnamed sub-project)

End User: Philippine Navy (Littorla Combat Force) - to be installed on MPAC Mk. III Series 2018
Modernization Phase: RA 10349 Revised AFP Modernization Program HORIZON 2 (Priority List)
ABC: Php662,000,000.00
SARO Release: SARO-BMB-D-18-0012925, released 01 June 2018;
Winning Proponent: none yet, still awaiting procurement process decision
Contract Price: TBA
First post by MaxDefense: 31 May 2018.



MaxDefense will provide more information in the future, considering the project is still in the early stages and might be delivered only by late 2019. The MPAC Weapon System is also another project worth discussing in the future, as we await for more information regarding the deal.




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U P D A T E S:
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25 September 2018:

The Department of National Defense has finally released the Notice of Award (NOA) for the Multi-Purpose Attack Craft Mk. III (Series 2018) Combat System and Capability Upgrade Lot 2 - Mission Essential Equipment and ILS to Propmech Corporation last 11 September 2018. This is after Propmech was declared the Single Calculated Responsive Bidder last 30 August 2018.

This is so far, the first Philippine Navy project awarded under the Horizon 2 phase.

Propmech Corp. was expected to win this bidding due to their ongoing participation in the construction of the MPACs. The requirement is for the winning bidder to do the works in Lung Teh's boatyard in Taiwan, which means only Propmech can do it with practical ease compared to other potential bidders.

A copy of the Notice of Award (NOA) provided by DND to Propmech Corporation.
NOA taken from DND's website.

While the NOA is out, the Contract and the Letter of Credit are still pending with the DND, although MaxDefense expects the Contract to be signed probably by October 2018. MaxDefense will provide updates once it gets confirmation that the Contract has been signed, and if the LOC is provided, which is the basis of Project Start.