Section 15Sec./Art. 15

Rationalization of Defense Acquisition. -

(a) Any provision of law to the contrary notwithstanding the Secretary of National Defense is hereby authorized to enter into contracts on behalf of the government, under such terms and conditions as may be agreed upon, with any natural or juridical person, with or without public bidding, for the development, production, manufacturing, assembly, servicing, or operation of materiel or components thereof, facilities, utilities, and appurtenances thereto necessary for national defense in accordance with Presidential Decree No. 415 titled "Authorizing the Secretary of National Defense to Enter into Defense Contracts to Implement Projects under the Self-Reliant Defense Programs and for Other Purposes": Provided, That in the exercise of such authority, the Secretary of National Defense shall comply with the reportorial requirements under Section 22 of this Act.

(b) Any provision of law to the contrary notwithstanding contracts for the procurement of services of local providers and for the development, production, manufacturing, assembly, servicing, or operation of materiel or components thereof, facilities, utilities, and appurtenances thereto which are necessary for national defense and which are determined by the Secretary of National Defense as not requiring public bidding, shall only be awarded to in-country enterprises: Provided, that such materiel or components thereof, facilities, utilities, and appurtenances thereto can be locally produced, manufactured, or otherwise created.

(c) In-country enterprises participating in the acquisition of materiel by the DND and its bureaus, and other government agencies covered under this Act shall be exempt from the Single Largest Completed Contract (SLCC) requirement and the requirement for a product to be used by at least two (2) foreign militaries.

(d) In cases where the development, production, manufacturing, assembly, servicing, or operation of materiel or components thereof, facilities, utilities, and appurtenances thereto essential to national defense cannot be made locally and several bidders participate in the public bidding, the bid submitted by foreign enterprises and in-country enterprises shall be valuated based on the criteria set by existing laws, further abiding by the standard set under Republic Act No. 12009 or the "New Government Procurement Act" or any similar law that may exist thereafter.

(e) The procuring entity shall issue a letter of credit in favor of the contract counterparty: Provided, That no payment on the letter of credit shall be made until delivery and and acceptance of the goods as certified to by the procuring entity in accordance with the delivery schedule provided for in the contract have been concluded.ℒαwρhi৷

(f) In cases where the development, production, manufacturing, assembly, servicing, or operation of materiel or components thereof, facilities, utilities, and appurtenances thereto essential to national defense cannot be made locally, and only foreign enterprises participate, the ultimate objective of the DND shall be technology transfer and the acquisition of knowledge for eventual local production: Provided, That foreign enterprises participating pursuant to this subsection shall formulate and undertake an understudy program to facilitate the technology transfer and train Filipino workers towards the achievement of this objective.

(g) The DND, in consultation with other government agencies and representatives of in-country enterprises, shall issue regulations on the minimum local content for all defense-related acquisitions.

(h) Integrated Logistics Support must be incorporated in all contracts concerning defense-related acquisitions.

(i) Nothing in this Act shall prohibit or restrict lawful government-to-government transactions for the development, production, manufacturing, assembly, servicing, or operation of materiel or components thereof, facilities, utilities, and appurtenances thereto, which are necessary for national defense.