The SAAB Gripen and the Marketing Over Philippine MRF Program

The Philippines with its Air Force is recently having its squadron of FA-50PH LIFT jets procured. And it is a well-taken note that the Second Horizon which is next year is eyeing for Multirole fighters that among the possible jets procured, the JAS-39 Gripen is being talked among the defense community as the best possible MRF that may take out in the deal given the attributes which explain its idealistic preference seen as a multirole fighter that the organization seeks.

Pitz Defense Analysis Note: The Philippine Air Force and the Defense Department may change the outputs of the Multirole fighter jet program or may have a different set of results on the set that at present, this project is still on the "drawing board" stage with request still needs approval as per posting. Hence, this article reflects the defense community's viewpoints that give relevance which gives the SAAB Gripen being the best possible contender in the deal. This, in any connection, was not sponsored for and by the said Swedish Company.

OVERVIEW

Gripen E's First Flight. From SAAB website

Just recently, the Swedish weapons and arms company SAAB has its latest version of fighter jet which is the JAS-39 Gripen E tested on its first flight. This comes to the hopes that such a fighter jet as being marketed by SAAB shall be the affordable and effective Multirole fighter jet in the military weapons market. And with that apparently, several articles have even compared this jet with its successive first flight to the Lockheed-Martin F-35 jet where the same article describes it as a troubled project.

As per the Philippine military procurements meanwhile, it is taken note that the AFP Modernization Program calls for 48 units of fighter jets for the whole Modernization Phase wherein it gives the vision of the armed forces to have an effective Philippine Air Defense System (PADS) as the main feature of the Philippine Air Force Flight Plan 2028 which eventually lowered down to a squadron due to problems regarding funding with an option to go for second-hand platforms. At present, the Multirole fighter jet project is in the planning phase where it is now on its way for materialization for Horizon 2 (2018-2022). All of these remain to be seen where the budget allocation shows an obstacle to the project itself. See more: Horizon 2 and the Budget Obstacle.

With these things being stated out, the JAS-39 Gripen was known across the defense community where several members envision an air force with such jets in the inventory or rather, having a nice viewpoint that in such a project (if proceeds smoothly), obtaining a multirole fighter jet will be the best thing the Philippine Air Force will have in the future. In this topic, the discussion will be aiming at the statistics, technicalities, and specifications that have led to the making of this discussion which is lovelily discussed among those who love military and defense issues.

STATISTICS AS A COST-EFFECTIVE FIGHTER

Given the chart at face value, it gives the idea that the cost
gets minimized starting from the first Gripen Edition.
Source: http://www.gripenblogs.com/default.aspx?page=72

The JAS-39 Gripen is regarded as a cost-effective fighter jet, with SAAB marketing it as such. It is ideal for countries with a sufficient but not excessive defense budget, such as the Philippines.

Moreover, SAAB is being aggressive in its marketing efforts that will push its product among the nations and their governments which include the Philippines. This, just like any other company, goes with the hopes that they will gain several respective markets which in turn correlates to more sales for the units and gain more for after-sales and upgrades to the discretion of the end-user. 

At present, JAS-39 Gripen is operated by several nations which include Sweden, South Africa, Hungary, the Czech Republic, the United Kingdom (through Empire Test Pilot's School), Thailand, and soon, Brazil which ordered a number of the latest Gripen E version which won their assessment with plans of local production together with Embraer S.A, which is the one who will supplement A-29 Super Tucanos to the Philippine Air Force. 

As specified in this article from a certain Brazilian Press, it was reported that their Government prefers this jet considering that it was the cheapest on the deal alongside the offers of the United States' Boeing F/A 18 and France's Dassault Rafale F3. Aside from that, the design phase of the New Generation (NG, or later classified as E/F version) and only having a single engine also influence the decision of the Brazilian decision-makers. The said deal with the Brazilians will be financially covered through a loan in which both sides agreed on a 25-year payment term for the said fighter jets.

The deal is enticing which the same thing may happen across the board as SAAB markets these jets across the nations which have the potential to procure fighter jets for its defense postures like in the case of the Philippines where the company opened its office in the country which signifies its push for their products to penetrate the market like the Philippine Air Force where its respective personnel or even the local aviators with flying experience sees it as a practical choice for the air force to have where it becomes a topic across local military and defense community. 

Nevertheless, it is still up with the main decision-makers whether these jets be purchased upon assessing it up to the standards which it holds such potential therein.

With the Philippines embarking on a project that will further improve its capabilities and SAAB's marketing of its product, it is nice to understand deeper with regards to the company and its product like the JAS-39 Gripen which pertains to its development and the rationale behind the success of the company and the fighter jet that it markets which just other aerospace companies, provides the capability a nation needs to defend its sovereignty against various threats, both internal and external.

THE DETAILS ABOUT THE COMPANY

SAAB is hoping to have a firm market in the Philippines
which may take place should the JAS-39 Gripen be chosen.
Source: Wikimedia Commons

The success of the company and its product points from the developments of the past. SAAB Group, first known as Svenska Aeroplan Aktiebolag (Swedish Aeroplane Company, Ltd) was founded in 1937 in Sweden in the city of Trollhättan. In 1950, the company became what is SAAB is today through the merger of two aerospace companies in Sweden.

Being a defense-related industry, SAAB produces a lot of products from the span of its existence from half almost a century in which its products include sensors like the Sea Giraffe and Erieye radar systems, Naval Vessels through SAAB Kockums like the Visby-class Corvettes and A-26 submarines as well as military aircraft like the SAAB 340, Saab 35 Drakken, SAAB 37 Viggen, and the recently-produced JAS-39 Gripen.

Aircraft manufacturing began in the 1940s, during the Second World War. Sweden was neutral at the time, which explains why the planes SAAB developed at the time, such as the SAAB 17 and 18, although designed as war machines, didn't saw action. Nevertheless, in the span of the history of the company's existence, their know-how on military equipment increases as well as their reputation in which some projects and development on their products as well as their marketing put this Swedish defense-industrial complex on the map where several nations purchased several military weaponry from SAAB. 

SAAB's products form the portion of the military equipment of the Swedish Armed Forces (Försvarsmakten) which are active in service as well as serving its role to defend this Scandinavian Nation from various threats that may come into its territory. That gives the firm stance that this nation uses its indigenous or locally-produced and enhanced military weaponry wherein it comes with conformity about the products being in-service in a host country as well as on several nations that were sold, like in the case of the JAS-39 Gripen having operated by around six to seven nations.

Being successful in leasing or procuring in those nations aforementioned, SAAB is aggressively pursuing to have more nations with respective fighter procurement programs chose their JAS-39 Gripen in the sense that, just like any other business, aims to have additional sales on their portfolio in terms of units sold as well as on the spares and after-support programs in which both of these things bring profit to the company. Add to that, having more units in the market means more sources for spare parts which are essential for every operator to have in terms of maintaining the planes or rather, keeping them operational. 

IN THE PHILIPPINE AIR FORCE'S MRF PROGRAM
See more: SAAB Advertorial - Gripen for the Philippines

A JAS-39 Gripen Fighter jet flying at sunrise.

The Philippines in the Second Horizon first wanted to pursue two squadrons of Multirole Fighters for its Air Force. With a restrained budget in its helm with the insufficient 150 billion peso allocation in place, it lowers the number of units planned for the Multirole fighter program from two squadrons or 24 units down to a squadron or 12 units. These pertain statistically for the option of purchasing brand new, with another option opting for second-hand ones, most probably outsourced from countries like the United States.

Even with the restrained budget, it still does not stop the Philippine Air Force in pursuing its aim to procure multirole fighter jets in which will drastically enhance the capabilities of the organization further as well as this will define the organization and its mandate of providing close air support for the ground troops, giving immediate transport in the air for deploying troops and goods especially in times of disaster and distress and most of all, defending the Philippine Airspace against various threats that pose danger to the citizens of the republic, especially if such threats come from the sky.

The determination is given by the air force still gives suppliers like SAAB a window to enhance the capabilities the Philippine Air Force needs wherein it needs to compete with the United States through General Dynamics/Lockheed Martin's F-16 fighter jet platforms. These platforms though are tough to consider considering that the F-16 has more users than JAS-39 Gripen presently have where the former obtains a lot of sources for spare parts which is a good necessity for the units to keep operating. Nevertheless, the latter still have a chance where some other nation may opt to buy these jets which increases the spare parts pool in the same way as the T/TA/FA-50s being marketed to other nations which in turn will indirectly benefit the Philippines in terms of after-support/maintenance of the jets to keep it operational. 

Aside from the Philippines, there are other potential buyers or say, another set of nations that may end up obtaining JAS-39 Gripen fighter jets from SAAB as they market their fighter jet product to these countries. According to SAAB in its Annual Gripen Seminar 2017, as reported by Mönch Publishing Group, they market these nations which include Botswana, Croatia, Malaysia, Slovakia, and the Philippines for the C/D variant while  Belgium, Canada, Colombia, Finland, and Switzerland for the E version.

Despite SAAB's marketing efforts, the decision will ultimately be made by the Defense Department, particularly in the case of the Philippine Air Force, which has expressed a strong desire for multi-role fighter jets, even if only a single squadron for Horizon 2. Nevertheless, all hopes and dreams for the air force are there where multirole fighter jets will finally make the organization much more capable where they can effectively conduct their mandate which is to protect the skies like the Navy and Coast Guard protecting the coastline, the Army protecting the land and the Police protecting the welfare of the people.

SUMMARY, HOPES, AND THINGS THAT MAY LIE AHEAD

The Philippine Air Force's desire for MRF is split between
Lockheed Martin F-16 and JAS-39 Gripen.

SAAB is attempting to increase sales of their JAS-39 Gripen multirole fighter jets, which will assist a specific country's air force in improving its capabilities to protect its airspace and territory from various threats that may jeopardize the peaceful lives of its citizens.

With Multirole fighter jets being one of the priorities set by the Philippine Air Force, suppliers like SAAB and its American counterparts are willing to sell their wares wherein in both ways, will definitely enhance the capabilities needed by the Air Force as well as the aspirations of obtaining this weaponry to become true. This desirable outcome for SAAB may still depend on what the planners have to say where at present, the project still needs approval with regards to their request. Hence, the hopes and dreams about the project are still here where the Philippine Air Force is adamant to have this project despite the small project in a manner that several projects needed to cut or postpone to the Next Horizon. Just to take note, this will be the most ambitious project in the organization and by that manner, SAAB JAS-39 Gripen is apparently the favorite jet for PAF to have, although competition is still in place.

Once these items are in place, the FA-50PH Lead-in Fighter Trainer will complement a squadron which is also considered to be a light-fighter aircraft by some. Should this ambitious project push through, the time will finally come that the Philippine Air Force will obtain dedicated Multirole fighter jets designed to do its job of enhancing the mandate of PAF which is to protect the skies as well as to eliminate targets through precision bombing. With SAAB pushing doing the marketing, it may be their chance that they may be the ones who will supplant the project, should things be going in their favor.

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Budgeting the Armed Forces and their Needs

Buying multiple military assets is one thing to talk about, and budgeting it is another. On considering that financial matters sourced from taxpayer money are the lifeline of the government and its divisions like the military, it is good to understand what it means to budget the armed forces to maintain its assets as well as to improve its capabilities along the way.

INTRODUCTION

One aspiration of the Philippine Defense Community for the AFP is that for the organization to get a decent air force complete with assets like MRFs and Close-air support aircraft. Photo source.

The AFP Modernization Program goes at a full swing, with purchases of military assets are on its way. Several of those are already delivered like the FA-50PH and the Tarlac-class LPDs, a portion is still on its ways like SPIKE-ER missiles and AW-159 antisubmarine helicopters, and the remainder is still materializing based on what the budget provides.

A typical plan or program sometimes does not go smoothly as it is intended to be. It comes with unintended issues so as to the compatibility, systematic problems and legalities needed to resolve. And to add it up, let us not forget to factor this very, an important element for a successful military purchasing or maintenance program have to be. 

Having the much-needed funds is essential for the military to keep operating and doings its ultimate mandate, which is to defend the entire nation from both external and internal threats. The same things with other entities such as the police force, Government Agencies, Private Companies and so on where expenses are incurring and incentives are gaining, in a sense that it flows to the fundamental so as to how the national economy performs. Requesting of funds for procurement comes with a stringent process, similarly a corporation does its annual Capital Expenditures or CAPEX or Capital Outlay or CO to improve and enhance its operational capabilities. 

The complexities of the procurement process or even the financial aspects of it raise the misconception of one particular budget to another, especially to the people who don't understand how the government works and the stringent process it coincides. Such mindsets and knowledge are needed to get clearer to understand the rationale of the steps that deals with military purchases and the components that affect it.

Hence, the armed forces, just like any government agency, rely on the funds that are sourced by the taxpayer's money collected where the justification is there to why funding comes with a stringent of process and sorts with accountability in mind. And with it, there are definitely a lot of things to discuss with regard to this topic alone, from legalities such as taxation to procurement process like bidding.

IN THE NEWS

The Armed Forces by nature need additional funds to maintain its military assets, personnel and as well as to grow more. Credits to the photo owner.

From the Defense budget itself to the revised taxation system and its procedures, the news provided welcomes the year with multiple advantages and disadvantages pointed wherein throughout the whole period, both good and bad news is coming out of its way. Somewhat by any measure, discussions about financial matters in the government, especially for the military, are good things to ponder upon.

The first comes in the news is something that has been felt since the first day of this year. It pertains to the newly passed tax reform law more known as "Tax Reform for Acceleration and Inclusion" or TRAIN. In this article provided by the Philippine Star dated November 2017, Senator Angara apparently said in his statement with the reporters that around 13% of the allocation earned from this tax reform will be given to the AFP Modernization Program.

To add it further, the government-owned news outlet Philippine News Agency (PNA) discloses that the military is to be provided with the "Php 25 Billion" budget for its Modernization Program. To take some note, the budget comes from the GAA or the General Appropriations act wherein it passes budget hearings across the panel until it reaches congress and senate floors where in the end, it will get signed by the President and eventually tasked the Department of Budget and Management (DBM) for disbursement of the funds. 

By mere sense, having such amount is deemed not enough to have where, also given in the PNA article, the capabilities of the Armed Forces of the Philippines still have a long way to go in which Horizon 2 projects (2018-2022) are being laid to mitigate the problem. 

Lest to say, it is good to know that the President apparently, still from the article given, is adamant to support the whole Modernization Process where aside from earning respect from the other nations, this will make the Philippines more protected as well as having a minimum credible deterrence needed to defend its very sovereignty as well as the safety of its citizens.

The headlines provided are somewhat tidbits to what lies further into the AFP Modernization Program and the assets that the military are attaining to enhance its capabilities where, there is more than just the general definition on financing or budgeting as well as on legal and technical matters where all of these things are needed to factor out so as to the feasibility and its effectiveness, as well as the accountability of the projects given.

Thus, the understanding about the process works is the prime necessity so as to how military assets are purchased and all of its aspects in which it will be effective to the mandate of the armed forces where in turn, taxpayer's money, in this case, are definitely worth the price. Add to that, this will eliminate any notions of wishlists and the like that are being made by a typical civilian without the deeper knowledge about it except -- the ones that documentaries and movies depicted, in which it is misleading at some sense.

THE BUDGETING LEGALITIES, PROCEDURES, TYPES AND OTHERS

The Government Budget Process only revolves on the four phases
which it repeats annually.

The Philippine Government has the mandate to govern the nation as well as to take care of its national interest, protecting and deciding what is best to its citizens, and to defend its sovereignty which coincides to the freedom of the citizens obtained all under the 1987 Constitution. 

And by that sense, the Government, in order to do its mandate, needs to provide funding to respective agencies which it was done through the process that is done to appropriate for the next period as well as other ways of funding it. Before tackling it, it is worthy to understand first about the source of government funds in which projects such as those of the Philippine Armed Forces Modernization are derived upon.

Taxation

Being one of the main powers of government (alongside eminent domain and police power), taxation as what "accountants" and "lawyers" say is the lifeblood of the government. The saying bears reality in it considering that with amount of taxes paid, either in the form of excise tax imposed on goods or income tax imposed on individuals, the government in return provides its services which are beneficial to the citizens as well as it sprouts economic growth that eventually improves the way of life in the nation and also, it coincides more funding inflows so that more services will deliver to the people. It definitely goes both ways. 

One of the services that the Government delivers pertains to national security which is something the Armed Forces plays its role. And for that to keep in place, it needs to keep funded for its assets to be utilized upon patrolling territories at land, sea and sky as well as salaries and benefits for the soldiers and support services to have and of course, to give way to its growth in a way of modernizing its capabilities which is a necessity now that various threats are arising where the lives of innocent citizens lies at stake. 

It was taken once again in the headlines that the Government passed the Tax Reform for Acceleration and Inclusion bill where a senator said that 13% of the tax collected from it will be going to the Armed Forces. However, here is the thing about it:

There is no such thing as 13% allotment or a clause pertaining to it attached in the tax reform bill. The senator's words are simply words coming from his mouth and are not bindable unless such provisions are applied to the bill. As far as this is concerned, it only covers about the price increase on commodities while decreasing the income tax burden to the typical taxpayer. To be honest, there are at times some sense of aggravation when prices of primary necessities are increasing because of this revision on taxation. 

It is the lifeblood of the government so as to keep its services coming including purchasing military weapons in which a citizen may appreciate to see in the armed forces. Hence, a typical taxpayer's contribution through surging prices will be much that felt should the AFP Modernization Program keeps on rolling alongside big, ambitious projects of the present administration which includes the "Build, Build, Build" program.

See more: ABS-CBN's multimedia article bearing the statistics for the Revised Tax Law.

Since there is no such thing as the so-called 13% allotment, the Government still have its way to have the taxes allocated to its agencies which include the Armed Forces of the Philippines under the arm of the Department of National Defense. The next three things that will be discussed are pertaining more to disbursements. These are The Annual Budget through the General Appropriations Act (GAA), Multi-Year Obligational Authority or MYOA and The Revised AFP Modernization Act Trust Fund.

Annual Budget through the General Appropriations Act (GAA)

Here are the partial stats with regards to the 2018 National Budget.
DND gets a share worth Php 145 Billion. Photo from Rappler.

The Government, in order to account its expenditures and for the finances to be disbursed in accordance to the agreed amount an agency need, is doing its annual budget which is better known as the General Appropriations Act or GAA. In Government Accounting terms, this means a bill with expenditures of different institutions and government organizations are collated together which it will be passed through readings and resolutions, as well as a number of revisions taking place prior to having it in effect by taking it signed by the President.

Read more: The Budgeting Process, Department of Budget and Management [pdf file]

The GAA is simply part of the larger procedure of the budgeting process that is usually done by the Government where its exercise is critical for the agendas that the administration is achieving which include the Armed Forces Modernization. This is where the government, its agencies and the branches within the military set priority for budgeting ranging from expenditures to procure newer assets for capability enhancement. 

Add to that the economic conditions of the nation that allows for more budgets to be released which in turn more benefits for soldiers, more spare parts to procure for maintenance and of course, dictating the number of assets to purchase which suits the needs of the nation as well as the nature of threats given. Just to take note, the quantity and quality of assets to be procured are dictated by the number of factors where funding is one of those things alongside logistics, reliability, number of users and specifications that the bids and awards committee provided to the suppliers participating in a deal through a bid or through a Government-to-Government approach or G2G.

Considering that this involves the money that is collected from taxes of the people's earning or through commodities, it is of no surprise that the government is specific in its budgeting cycle in where it revolves in four, essential processes: preparation, legislation/authorization, execution, and accountability. To have an in-depth understanding of these things, have time reading and learning through this document provided by the Office of the Ombudsman.

To put the processes in layman's term based on the provided document, budget preparation pertains to a process where various agencies may prepare their respective budget proposals in line to the parameters and guidelines set by the Department of Budget and Management (DBM) through its Development Budget Coordination Committee which it was based on economic conditions and revenue generated by the government given in a certain period. 

From this phase comes the number of budget hearings where agencies are defending or giving justification so as to the reason such program shall be pursued or in the case of the Armed Forces, purchasing newer assets as well as adding benefits for the troops and expenditures for asset maintenance (which includes spare parts) and facility improvements which are just essential as the first two. 

This, in the end, will be collated by the Budget Department which eventually makes its way to the President for it to be endorsed in the Congress where the second phase comes in. This step is known as budget legislation where the proposal is first reviewed where it also comes with another round of budget hearings where once again, agencies like the Philippine Armed Forces under the Department of National Defense will defend so as to the justification of the funds needed for their expenditures and for the Modernization Program to roll smoothly. 

This goes with the news having Secretary Delfin Lorenzana seeking more funding for larger, sophisticated military purchases as well as for other things concerned. As both the Congress and the Senate provide the common grounds for the budget or the bill that pertains to it, the said bill will be submitted to the President, making it into what is known as General Appropriations Act which it covers expenditures and agency improvements for the annual period. After this comes the budget execution phase where it is now on the role of the DBM to disburse the appropriated funds to the respective agencies through the Notice of Cash Allocation Releases or NCAs. 

And finally, with the budget being released comes the budget accountability phase where a Government Audit Agency like the Commission of Audit plays the role to oversee financial performance of various government institutions like the Armed Forces to determine the way funding is used as well as to check whether the budget is used properly or in the right way in the sense that the money spend really worth the services the government provides to the people which includes national security matters in which the AFP plays its role.

This is one way for having the military well-budgeted and to keep weapons procurements rolling alongside boosting troop morale by providing them additional benefits and facilities such as housing which are covered by Annual Appropriations Budget. Aside from this, there is another way of providing funds where this process is usually done for big-ticket asset procurement like the ones under the Modernization Program. That is, the MYOA or the Multi-year Obligations Authority.

Multi-year budgeting through the MYOA

This is another manner that the government budgeted its projects where, given the words alone, gives the general perspective that this includes financing for the project more akin to typical purchases with installment term of payment, only that this will be done upon achieving the milestones varying on the terms agreed by the government and a contractor (either local or foreign) which is written in a contract.

The Multi-Year Obligational Authority or MYOA in the case of the Armed Forces' Modernization program is definitely defined in the Republic Act 10349 or the Revised AFP Modernization Law of 2012 as well as to the original AFP Modernization Law which is the Republic Act 7898 which dated way back President Fidel Ramos's period, in 1995. In these two laws pertaining to modernization, the former provides the Congress seeking appropriation needed for funding multi-year contracts of the military with the certification provided by the office of the President. The latter meanwhile, does not provide the intervention of the President but rather, the Congress will still appropriate the said funding for multi-year contracts with the issuance of multi-year obligatory authority by the DBM serving as its basis to do so.

This concept definitely helped the Armed Forces rolling the Modernization Program where it produced several results, especially in purchasing enormous assets that were once inexistent in the AFP's inventory a decade earlier. Definitely speaking, this goes to the advantage of considering that this relatively saves up time for annual biddings and the cost it corresponds. And add unto that, big-ticket assets may definitely have the guarantee to be purchased where funding is guaranteed upon the milestones stipulated in the contract where the government and the supplier have agreed upon unless unfavorable economic conditions sets in that will set things up into jeopardy. 

As the Philippine economy grows, annual budget increases and multi-year stipulations and terms in place, these things will help attain and eventually achieve the AFP's goal to have its capabilities up-to-date as well as having the nation getting its minimum deterrence which will have other countries respecting Philippine sovereignty more than what is attained at present.

It is highly appreciated that this concept was improved alongside the lack of capabilities the Armed Forces need to address even at the present date where more big-ticket military items of Horizon 2 slowly comes in. With this concept, it gives the assurance for the Armed Forces for military purchase it needs to improve its capabilities, which further enhances its mandate of protecting national security. There is still one source of funding that the AFP gathers for its modernization process. This is, The Revised AFP Modernization Act Trust Fund. 

The Revised AFP Modernization Act Trust Fund (RAFPMPA-TF)

From a military base to a district full of skyscrapers, this is what Fort Bonifacio is today.
Source: HarryLeaks

This trust fund was made alongside the Republic Act. 10349 of the 2012 Revised AFP Modernization Act. The amount of money that will accrue there will be used "only" for the AFP Modernization Program, where it includes expenses that will incur in bidding processes and on the purchases of the assets themselves. 

The source of the funding is akin to the R.A. 7898 provisions where it involves the sale, lease or joint development of military reservations which it resulted back then in the nineties where the land Fort Bonifacio once stands was sold to investors which eventually became what is now "Bonifacio Global City" in Taguig. 

It was known once again in a news last year that President Rodrigo Duterte wanted to lease Fort Aguinaldo in order to raise funds for the AFP personnel benefits that will boost their morale as well as for the AFP Modernization Program. Although there are no updates after the said news report, it may still have the funds directed to the trust fund should these proposals have pushed through. Add to these is the presently "uncertain" EDCA or Enhanced Defense Cooperation Agreement with the United States wherein several military bases will cater to U.S. Forces at the term of 10 years. The said agreement, if followed up on, is in line to the Modernization trust fund on the premise of joint development of military installations - except that there will be no monetary transactions taking place except for both the US and the Philippines funding and building facilities wherein the end of the term will be turn-over to the AFP.

Going back to the so-called plan of leasing Fort Aguinaldo to the investors last year, this may come as not the first time that took place in the said military installation wherein 2006 there was the same plan for selling the portion of the land of the military base in which it was almost put to the situation as those of Fort Bonifacio 11 years earlier. Just to take note, there isn't as much as modernization progress at that period unlike what the military is experiencing at present.

Hence, this trust fund is somewhat a supportive effort supplanted by the Revised AFP Modernization Fund where, alongside GAA and MYOA, this source of fund definitely helps the Armed Forces keep its growth through numerous weapons projects rolling.

MODERNIZATION BUDGET FOR HORIZON 2 - UPDATES
See More: Horizon 2 and the Budget Obstacle

Let us take note once again that the year 2018 symbolizes the end of the First Horizon of the Revised AFP Modernization Program and the start of the Second Horizon which obtains a bulk of big-ticket military projects larger than its predecessor. 

Once again, this year's budget allocation for the Modernization Program has definitely amounted to Php 25 Billion of what is apparently given by source like on this link wherein the whole amount allocated for the whole Horizon is at around Php 150 Billion where, if calculated, gives us a fixed amount of 25 Billion Pesos per year considering that one horizon spans at five years as well as seeing it allocated among the branches of the AFP at around Php 50 Billion each.

The amount allocated is definitely not enough to have considering that the number of Horizon 2 projects requires an amount of funding larger than what is presently allocated in order for the procurement proposals under the period push through. Apparently speaking, the Department of National Defense seeks at around Php 500 Billion budget for these big-ticket projects to materialize and eventually to purchase military assets AFP needs which it further enhances the capability of the Armed Forces more than what Horizon 1 has to offer. With such a budget in place, there will be chances that the armed forces may change its procurement line-up in conformity to the resources that have only provided. In order for us to understand as to the inefficiency of the budget, let us have this graph provided in the Philippine Air Force Flight Plan 2028 presentation.

A single branch alone needed such kind of amount like this in
order to attain its costs.

Based on the digits provided in the graph, looking at the amounts is definitely enough to say that there is a wide gap between the allocated budget and the budget required for the modernization to take place. Add to these, with the budget allocated, it may give difficulties in purchasing large assets such as the Multi-role aircraft which have the project amount of around Php 43.2 Billion as well as a single corvette amounting to Php 14 Billion. Nevertheless, the hopes and dreams are still there where the chances of revisions or change of plans may still take place for the better. However, with this also comes to the chances that the Horizon 2 lineup may change to the conformity of the small budget provided, putting most of the significant assets of big-ticket items in danger of putting out of the picture where the opportunity will be missed out.

Those things are a bit disappointing to feel or to see should those things turned out unfavorable. But then again, it is still very early to judge things out especially with the budget considering that we are still in the first month of the first five years of Horizon 2. And with that, there are still chances that plans can still get carry out as it is intended to be. All that it takes is sheer optimism, combined with prayers enshrined with hopes, dreams, and aspirations that things will turn out well.

CONCLUSION AND THINGS ON THE JOURNEY AHEAD

The Armed Forces of the Philippines is embarking on a new horizon which in it comes to an enhanced shopping spree of weapons that surpasses that of more of the first horizon. The government policies on taxation as well as on budget appropriations, together with the plans and decisions made by high-ranking officials, play the role of making procurement plans a reality.

There really are times that planning and procurement programs encounter with the problem, especially on matters that are needed to supplant it, such as funding. Apparently speaking, taxation reforms like the TRAIN and the economic growth of the nation at around 6.5 to 7.0% may eventually have its way to the AFP Modernization procurement projects especially the ambitious, big-ticket ones should more funding may get approved by the Congress with the justification of defending national sovereignty as the horizon timeline passes by. So far as those are concerned, the Defense Department at present will its share wherein the plans to buy attack helicopters, light tanks, upgrading armored personnel carriers like the M-113 and military personnel benefits alongside assets that are already purchased and was proven their worth within the Armed Forces.

At the start of this horizon, there is the dream and hope that most, if not all the projects covered in this period will turn itself into reality which for sure, morale within the ranks will boost a bit further as well as urging other aspirants to serve for the nation either for civilian or military career. Shall these plans go smoothly as it goes without a hitch, we may eventually say that people's taxes and military planners's sweat and determination are indeed paid, and definitely worth it.

(c) 2018 PDA

First total revamp edition (c) April 2022 PDA.

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Knowing the Thales TACTICOS Combat Management System

Understanding the nature of Combat Management Systems is one thing to consider when it comes to knowing combat warships. Being used by numerous navies of the world, this product from a certain French Company gains reputation where various people sought to integrate it on naval combatants therein.

OVERVIEW

The architecture or structure of Thales TACTICOS in a ship.
From Thales Nederlands Presentation.

On the previous topics here on Pitz Defense Analysis Website, we discussed about the South Korean company Hanwha and its product the Naval Shield ICMS where it was agreed by both Hyundai Heavy Industries (HHI) and Department of National Defense - Philippines (DND) that such Combat Management System is to be used on the future Philippine Frigates with HHI project numbers P-159 and P-160.

Read related article: Knowing the Hanwha Naval Shield Integrated Combat Management System

This system was partially offered by India's Garden Reach Shipbuilding and Engineering (GRSE) and Hyundai Heavy Industries (HHI) throughout the bid of the frigates wherein the former have the lowest bid amount. However, it was taken note that Hyundai won the bid where contract signing took place October 24, 2016. 

At first, Hyundai is adamant that they were offering the Thales TACTICOS as the primary Combat Management System for the ships. However, the said company switched it with the Hanwha Naval Shield ICMS in which subsystems are also being switched along which it sparked arguments on both sides of the equation in which apparently speaking, it was presumed that it violated R.A. 9184 or the Government Procurement Reform Act of 2002. 

The said switch was also the reason of the surprise reports that the Flag Officer in Chief (FOIC) of the Navy Vice Admiral Ronald Mercado was removed from the said position before his retirement on March 2018 as the result of Defense Secretary Lorenzana's loss of confidence and trust over the Vice Admiral where it was tantamount to insubordination. 

To take note once more, this article is not meant to add more fuel to the already-raging fire that has swept across the defense community where varying opinions are sprouting all over as well as having arguments with regards to the said issue.

Instead, this article focuses more on this product of a certain European defense firm which gains its own reputation with numerous navies using it as well as its reliability being known across the defense community. That is the Thales TACTICOS Combat Management System.

PRESENT IMPACT

These are the ships in the class across various navies that uses
Thales TACTICOS as a CMS. Hence, it's great reputation.

At present, Thales claims that their product is on-board 160 ships of various classes and sizes that are serving around 20 navies of the world. These are ranging from small patrol boats to large destroyers serving the United States Navy, Denmark Navy, Colombian Navy, Indonesian Navy, Japanese Navy, and apparently speaking, several ships in the Korean Navy like Gwanggaeto the Great class destroyer and Dokdo-class Helicopter Carrier which apparently speaking, partly as the result of the Samsung Thales development where Naval Shield derived upon.

For a brief review, it was taken note that the Hanwha Naval Shield was derived from the TACTICOS Baseline 0 which it was indigenously improved until it reaches its form at the present moment. By that nature alone, the former was influenced by the latter which at present provides the backbone for the Korean Navy to obtain. However, it is also worthy to take note that the number of users Hanwha Naval Shield presently obtains does not go at par to the immense number of the users that Thales TACTICOS have. This was one of the arguments that the Philippine Navy presented in its so-called "position paper" provided by another defense page.

The TACTICOS' number of users was used as an argument
in the Navy Position Paper. Obtained via MaxDefense PH.

However, such stance was definitely set aside with Hyundai Heavy Industries providing the Hanwha Naval Shield ICMS for the Philippine Frigates. Nevertheless, despite those things, Thales provides these systems across ASEAN in particular Malaysia with its Katsuri-class Corvette, Thailand with its Krabi, T991 and T994-class patrol boats as well as Khamronsin-class corvettes and Indonesia through its Diponegoro-class corvettes and Martadinata-class [PKR 10514] frigates, both Sigma-derived vessels built by both Damen Schelde and PT PAL.

Hence, the system given this information provided is trusted among key ASEAN navies aforementioned alongside other nations that used it. To understand the rationale behind its success and overwhelming reputation, it is worthy to understand the company and the development of TACTICOS.

DEVELOPMENT AND PERFORMANCE
Read the article: Thales TACTICOS PDF file.

Let us take note once again even way back to the Hanwha Naval Shield ICMS discussion that the composition of a Combat Management System or its compatibility depends on the design of the ship or the specifications a certain navy is looking after for its combat fleet. And with Thales TACTICOS used across various navies, it can be said that it comes with different system components which varies across different classes of the ship as well as on the specifications that rely on the end user's necessity or need.

The said combat management system was produced by a Thales Subsidiary named as the Thales Nederlands B.V. which is situated in the town of Hengelo, Netherlands. In its history, it was started in 1922 as the NV Hazemeyer's Fabriek van Signaalapparaten which purpose is to produce fire control systems for Royal Netherland Navy ships HRMS Java and HRMS Sumatra. The company was co-owned by Floris Hazemeyer and then Siemens & Halske which is simply known as Siemens at present.

The company continued while being in exile throughout the Second World War as the German Wehrmacht invaded the whole of the Netherlands which was known back then as Holland. After the conflict, it continued under the name N.V. Hollandsche Signaalapparaten (or simply, Signaal) which was once owned by the Netherland Government and then Phillips where it retains as it is throughout the Cold War while improving their technology. It was at then at the downfall of the Iron Curtain in the East that Phillips decided to end its ownership over Signaal where it met its current owner Thales which was once known as Thomson-CSF.

The history of TACTICOS traces back to the early nineties where it was known back then as "SEWACO/TACTICOS" or say, SEWACO is abbreviated from its longer name, the "SEnsor, WeApon, and COmmand" subsystem. This was designed to what defines a combat management system which is to gather combat or tactical information from the ship's sensors (radar and sonar) and to assess the threat it posed to the vessel where the people on board will have time to thwart the threat as well as to retaliate against the threat upon the discretion of the commanding officer or someone higher at the chain of command. 

Its brain was called the STACOS or Signaal TActical COmmand System where its name derives from what Thales Nederlands is before which is the Signaal. The subsystem provides the complexities of this combat management system that defines its nature at present where variants of SEWACO was produced upon until what it is known today as the TACTICOS. 

See data: Evolution from SEWACO to SEWACO-FD and eventually, Thales TACTICOS - Forecast International Document dated November 2004. 

This company produces a number of things especially for naval vessels like the Thales TACTICOS. In fact, there are a number of Thales-based products that are proposed on the Frigate bid done by both Garden Reach Shipbuilding and Engineering and Hyundai Heavy Industries with the latter simply changed it later on in favor to other systems with Hanwha Naval Shield being its Combat Management System.

This is the specs first offered by Hyundai before the revisions.
Check the number of Thales systems in the infographic.
(Photo from Hyundai, Infographic made by Pitz Defense Analysis
with information obtained from MaxDefense)

As given on the diagram above that was provided upon with details given about the ship, the partial specifications given obtain sensors, data links and of course the Combat Management System supposedly to be supplanted by Thales prior to the revision of specs. Things like Tactical Data Link are essential where it secures communication and coordination especially among the users that are using it like the North Atlantic Treaty Organization or NATO. 

At present, Thales TACTICOS comes with variants which it is called "TACTICOS Solutions Family" which it can suit a vessel depending on its purpose. That is ranging from a typical Coast Guard Offshore Patrol Vessel to a fully-armed destroyer.

The TACTICOS Solutions Family Variants:

TRINITY - A specific, highly modular solution to provide small patrol craft and fast interceptor craft with C2 and action support. Based on a clever combination of low-cost building blocks that can be packaged into a lean yet mean combat system with sensors and machine gun(s).

Commander - Commander integrates sensor and open-source information to generate a sharable local, operational and strategic situation picture. It represents the next level in maritime safety mission systems. A proven system in harsh circumstances (e.g. Arctic) and ideal for both civilian and military users.

TACTICOS 100 - Designed to provide stable and reliable command and control capabilities for short-endurance Maritime Security Operations in littoral waters. Support is available for electro-optical fire control for a medium caliber gun (up to 40mm).

TACTICOS 150 - The first choice for ocean-going maritime security agencies. It provides capabilities for both littoral and high-seas operations against pirates, smugglers and terrorists. TACTICOS 150 supports long-endurance oceanic patrols and work with a variety of off-board assets including sea boats, boarding teams, helicopters and unmanned vehicles.

TACTICOS 300 - TACTICOS 300 provides defense and security capabilities for today’s multi-role navies. Aimed to equip any naval ship up to patrol ships with typically 4-6 operator positions. Its focus is to perform point defense tasks (guns) with support for Maritime Security Operations (MSO).

TACTICOS 400 - Over and above the capabilities of TACTICOS 300, the focus of TACTICOS 400 is to provide point defense with guns and missiles, plus surface to surface missile capability, supported by a full range of MSO capabilities. It is typically designed to equip surface combatants (corvettes &  frigates) with 6-12 operator positions.

TACTICOS 500 - The focus of TACTICOS 500 is to provide layered air defense with guns and missiles; support concurrent engagements (air, surface, and subsurface). It supports a task force staff and provides coordination for area defense with typically 12-20 operator positions.

TACTICOS 1000 - The TACTICOS 1000 is an addon that provides the ability to perform very wide area defense against ballistic missiles.

THE PHILIPPINE FRIGATE CONNECTION

Republic of Korea Navy FFX-1 Incheon-class Frigates.

With its number of users spread across the navies of the world, it is no doubt that at several points a number of suppliers during the bid are willing to supply such system which apparently, goes in favor to the people in the ranks.

Just so we know, and to understand it further, it was discussed in the Naval Shield Article that it was derived from Thales TACTICOS baseline 0 at that time that Samsung Thales is still in existence. By that sense, Thales helped improve indigenous Combat Management Systems long before the breakup of partnerships and eventually having Hanwha standing on its own while offering its systems as part of the Frigate program.

Also to that, two competing bidders were offering it where it includes Hyundai Heavy Industries prior to its changing of systems in favor of Hanwha Naval Shield. By that case, it was an enticing deal that these two leading bidders have where both are offering this sophisticated system which is considered "alien" in the case of Philippine Navy in which at present doesn't have such complex technology installed in any of its ships. 

In those deals that the Philippines almost have Thales TACTICOS as its Combat Management System, only to be retracted later on to the one which is made in Korea whereby any sense, still is an improvement than what the fleet obtains at present.

Add to that, the length of the development of TACTICOS ranging back to SEWACO of the 1990s is an advantage considering that integration and improvements at that period up to present may have it more enhanced than the Hanwha Naval Shield that was developed in 2000s in a Samsung Thales partnership. That definitely provides leverage for the former in which their systems were widely used.

With the experience and its record, it may be good to say that Thales TACTICOS is a better option than the Hanwha Naval Shield ICMS and it may be better if Hyundai sticks to the former rather than switching it to the latter. Nevertheless, both of such combat management system will improve the capabilities of the Navy fleet that is slowly modernizing from its mainstay of World War 2 era vessels.

SUMMARY

The Thales TACTICOS is indeed recognized as the preferred Combat Management System chosen by a number of Navies of the World. This is the result of the years of research starting from the nineties which make it as it is today.

The Philippines almost got a hand of it throughout the bidding which this was replaced by a system produced indigenously by a company once partnered with Thales as chosen by the shipbuilder. By this case, the Hanwha Naval Shield ICMS will be seen more on the new combat frigates of the Navy than Thales TACTICOS where improvements are still there as a sign that the fleet is becoming modernize as part of the initiative of the Armed Forces to enhance its capabilities to have a minimum credible force. 

Nevertheless, this does not mean that Thales or its product may not see action in the Philippines again. Chances are, with more procurement projects that are on its way, it may find its way to a naval ship should a shipbuilder once again prefer to have the TACTICOS as the Combat Management System. Hence at present, it is ought to see and hope for the Armed Forces to do its mandate as well as to see the newer Frigates of the Navy whether it and its components are up to the expectations which it can do its mandate. 

The thing is, there is the desire that the military shall obtain the most capable assets they may procure at the best of capabilities of the decision planners and committees such as the Technical Working Group under the Bids and Awards Committee obtain with the sense that the money paid is indeed worth it. Lest to say, the hopes and dream is still there now that the Horizon 2 of the AFP Modernization Program is on the roll with more assets coming on its way, serving the purpose of defending the nation and its sovereignty.

(c) 2018 PDA, first edited 03-20-2023.

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An Inspiring and Aspiring 2018 to All

This is a message from Pitz Defense Analysis for a promising #RespectHumbleExcellentAspiring2018 to all of our readers across the country and the rest of the globe.

OUR MESSAGE

The year 2017 brought us the excellence, hopes, and dreams where it gives us the positivity to move forward as well as to keep on educating the people with regards to defense-related issues and events as well as on technicalities that it emphasizes upon for the reader to understand.

But this year is also a bit challenging considering that this page also comes with opposition from several detractors saying that we are only re-stating points without any deep insights. Nevertheless, those things are learned upon and are the driving force that is a necessity where civilian-based viewpoints supplanted with sources are provided thoroughly where points are given.

Nevertheless, it is we the citizens of the nation that obtains the power to do change for the better in which it can attain by starting to change over the self. Also with that, we are doing our roles as well as our jobs altogether with the main purpose of helping the self, the family, the community, and the nation. Add to that the pursuance of careers is a catalyst for nation-building that coincides growth not only for the economy but also to the Armed Forces where soldiers, accountants, pharmacists, doctors, engineers, and others work hand in hand regardless of being in the Government or in Private Sector.

Aside from that, let us reminisce about the fact that 2018 also means the start of Horizon 2 which embodies the bulk of the AFP Modernization Program. It is on our viewpoint an interesting horizon to witness considering that it obtains the number of interesting projects at sight like the procurement of Multi-role fighter jets for the Air Force, Brand New Corvettes for the Navy, Light Tanks for the Army, among others.

Once again, we are once again hoping and dreaming just like we do for 2017 that it will bring the best in us or rather, better than what it was for what the year 2017 brought upon. Let there be a fruitful, prosperous, inspiring, and promising year ahead as well as Respectable, Humble, Excellent and Aspiring 2018 to one and all where hopes and dreams are to attain with sacrifice, discipline, better opportunities, and proper priorities in mind in which the whole nation benefits.

Read more: Horizon 2 and the Budget Obstacle

From us here in Pitz Defense Analysis, Have an inspiring, prosperous 2018 to one and all!

#PDA #PitzDefAnalysis #HopesAndDreams #Respect #Humble #Excellent #Aspiring #Responsible

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