The Department of Budget and Management has the core mandate of releasing multiple Special Allotment Release Order for different agencies in the government, including the Armed Forces of the Philippines, Philippine National Police, Philippine Coast Guard, and other military and uniformed agencies.
Details and developments are available in the link below.
1. What is a Special Allotment Release Order?
- A SARO or Special Allotment Release Order is a document issued by the Department of Budget and Management or DBM, an authority issued to one or more identified agencies to incur obligations not exceeding an amount during a specified period for the purpose showed. It shall cover expenditures the release of which is subject to compliance with specific laws or regulations or are subject to separate approval or clearance by a competent authority. Here is the reference.
2. How does this related to defense?
- A military acquisition of weapons and assets would not be complete without the budget, let alone the releases provided under the Capital Outlay of a certain agency or any of the military branches of the Armed Forces of the Philippines. Hence, a release of Special Allotment Release Order or SARO signifies that a project is being materialized, and the delivery of the goods under an acquisition project gets guaranteed.
3. What is Multi-year Contracting Authority (MYCA)?
- This term applies to projects that are being funded beyond a single General Appropriations Act, broken down into annual project cost. Also known as the Multi-year Obligational Authority or MYOA. Most of the big-ticket projects that the Armed Forces or the Law Enforcement Agencies undertake can take years to produce, especially in production made in maritime vessels that take time getting produced in a shipyard.
4. How does the Multi-year Contracting Authority or MYCA works?
- It works as an installment payment, whereby a Capital Outlay project that comes with millions, if not billions of pesos, comes with an annual allotment payment through a milestone that a project has achieved through time, with different Special Allotment Release Order or SARO releases that shows that another milestone of a project has achieved.
For instance, if another SARO has released for a certain defense project, it does not mean that there will be an additional order of items like for an attack helicopter as an example, but it intends to settle down remaining payments that are payable under this project, making the whole acquisition process complete.
5. What is Capital Outlay?
- A Capital Outlay is just one of four main budgetary item categories of the government that focuses more on acquisition projects like those for the Armed Forces of the Philippines, with the other three being the Personnel Services or 'PS', Maintenance and Other Operating Expenses or 'MOOE', and Financial Expenses, or 'FE'.
You can see this definition in a circular released by the Government Procurement Policy Board from 2009 in a link highlighted here. The definition is also available at this National Budget Circular released by the Department of Budget and Management in a link highlighted here.
6. What does it mean if the Department of Budget and Management posted a SARO release on a certain military hardware for the Armed Forces of the Philippines?
- This means that a certain acquisition project or procurement program is on its way to award, as a budget release through the SARO is required before the finalization of the deal and eventually getting it to the point of having a contract signed between the winning bidder and the end-user, subject to the usual procurement rules and regulations under the Government Procurement Reform Act of 2003, better known as the R.A. 9184.
7. Why there are multiple SARO releases under a single acquisition project?
- There are multiple SARO releases under a single acquisition project, as the mode of payment comes under Multi-Year Obligations Authority or MYOA, or what is now called as "Multi-Year Contracting Authority" or MYCA. This also gets emphasized further that in a big-ticket capital outlay project, SARO releases come according to the milestones that a military acquisition project has achieved, meaning that the delivery of goods has successfully achieved, or steps of the construction of military hardware (keel-laying or launching of naval warships) have achieved.
Note: The webpage is still being built with additional information relevant to the subject and is still being compiled. Thank you for understanding, and sorry for the inconvenience.
Updated as of 02-11-2024.
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