Aussie shipbuilder hopes to fix deal with DND as OPV project hangs in the balance

Published April 30, 2022, 12:24 PM

by Martin Sadongdong

Austal, an Australian shipbuilding company and defense primer contractor, is still keen to work with the Offshore Patrol Vessel (OPV) procurement program of the Department of National Defense (DND) for the Philippine Navy (PN).

Dave Shiner, regional director of Austal Asia. (Photo by MARTIN SADONGDONG / MANILA BULLETIN)

Dave Shiner, Austal’s regional director for Asia, said that their communications lines remain open to the DND after the latter decided to find other suppliers for the OPV project due to pricing issues.

“Austal remains committed and in open dialogue with the Department of National Defense and the Philippine Navy regarding the provision of offshore patrol vessels and we would wish to support them in any capacity that we can up to the point that the contract is let somewhere else,” Shiner said.

The DND is hoping to close out a P30-billion deal with Austal for the provision of six OPVs to the PN. OPVs are highly versatile ships that are designed to perform maritime security and disaster relief operations.

However, DND Secretary Delfin Lorenzana confirmed earlier this month that he withheld the signing of the contract when Austal asked for an additional P12 billion due to the increased production cost of the ships including the materials, labor, and others.

When the DND could not provide the additional funding, Austal suggested that the number of OPVs be reduced from six to five units – a condition that Lorenzana did not agree with.

Sinan Topuz, business development manager of ASFAT Asia Pacific. (Photo by MARTIN SADONGDONG / MANILA BULLETIN)

One of the leading companies to replace Austal is ASFAT, a Turkish state-owned defense contractor.

“This project will be a stepping stone for ASFAT to make more cooperation with the [Philippine] Air Force and [Philippine] Army,” said Sinan Topuz, business development manager for ASFAT Asia Pacific.

Lorenzana said that he will endorse the OPV project to the incoming DND Secretary and let the leadership decide as a new administration enters in June.

“Our people are still negotiating with some companies for the procurement of the OPVs… Six ‘yan at kung maayos natin ‘yung mga papeles (We are eyeing to procure six units and if we completed the papers), I might also endorse it to the next Secretary of Defense,” Lorenzana said.

“Nasa TWG [Technical Working Group] naman ‘yun eh. The BAC [Bids and Awards Committee] and the TWG are working on it kung ano mas pabor sa atin (It’s up to the TWG. The BAC and TWG are working on it to determine what’s most favorable to us),” he added.

Department of National Defense (DND) Secretary Delfin Lorenzana speaks to the media during the opening ceremony of the fourth Asian Defense, Security, and Crisis Management Exhibition and Conference (ADAS) at the World Trade Center in Pasay City on April 27, 2022. (MANILA BULLETIN)

Meanwhile, the Defense Chief believes that the defense bilateral relationship between the Philippines and Australia was not strained due to the cancellation of the deal with Austal.

“Hindi naman siguro dahil tayo naman, hindi tayo nagbago ng ating [conditions]. We would have pursued them (Austal) (I think [the relationship] won’t be affected because we did not change our [conditions]. We would have pursued them),” Lorenzana said.

Aside from the initial affordable price, Austal already have a shipbuilding facility in Balamban, Cebu in 2012. One of the benefits of the DND’s deal with Austal would have been additional jobs for local workers in the area.

“Austal remains committed. We have a shipyard in Cebu which we established for almost 10 years. We have invested millions of dollars in building capability in this country, and our facility in the Philippines is designing, building, and delivering boats that this region has never seen before,” Shiner said.

Aside from the OPV, Austal is also in talks with the Philippine Navy for the provision of a hospital ship. It is also discussing a possible deal with the Philippine Coast Guard for a hospital vessel and a humanitarian assistance and disaster relief (HADR) vessel; and the Philippine National Police (PNP) for maritime patrol vessels.