AN ACT REVITALIZING AND STRENGTHENING THE SELF-RELIANT DEFENSE POSTURE PROGRAM AND PROMOTING THE DEVELOPMENT OF A NATIONAL DEFENSE INDUSTRY PURSUANT THERETO AND PROVIDING FUNDS THEREFOR

[ REPUBLIC ACT NO. 12024, October 08, 2024 ]

AN ACT REVITALIZING AND STRENGTHENING THE SELF-RELIANT DEFENSE POSTURE PROGRAM AND PROMOTING THE DEVELOPMENT OF A NATIONAL DEFENSE INDUSTRY PURSUANT THERETO AND PROVIDING FUNDS THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Self-Reliant Defense Posture Revitalization Act".

Section 2. Declaration of Policy. - It shall be the policy of the State to serve and protect its people and sovereignty at all times. The State also recognize the important role of a self-reliant defense posture in national defense. Thus, it is imperative to revitalize the country's self-reliant defense posture program and to fully harness the potential of the defense industry at a time when security threats are imminent and continue to evolve.

Toward this end, the State shall undertake to develop the defense industry and its capability to locally produce advanced weaponry and equipment for its armed forces through technology transfer, partnerships with, and incentives to, the private sector.

Section 3. Definition of Terms. - As used in this Act:

Section 4. Creation of the Office of the Undersecretary for Defense Technology Research and Industry Development. - The Office of the Undersecretary for Defense Technology Research and Industry Development (DTRID) shall be created within the DND. It shall be headed by an officer with the rank of Undersecretary, assisted by an Assistant Secretary, both to be appointed by the President.

Existing offices and units of the DND with similar functions and responsibilities as the DTRID shall be subsumed and merged under this office.

Section 5. Powers and Functions of the Office of the Undersecretary for DTRID. - The Office of the Undersecretary for DTRID shall have the following powers and functions:

Section 6. National Defense Industry. - The National Defense Industry shall be developed in accordance with the following principles:

Section 7. Self-Reliant Defense Posture (SRDP) Program. The DND, through the Office of the Undersecretary for DTRID, shall formulate and implement the SRDP program to revitalize the defense industry, vigorously develop and strengthen allied industries, and address the short, medium, and long-term needs for defense materiel. The following shall be the guiding principles in formulating the program:

Section 8. Project under the SRDP Program. - Formulation of projects under the SRDP Program shall adhere to the policies set by the Office of the Undersecretary for DTRID. All projects formulated shall be subject to the approval of the President.

The Undersecretary shall exercise supervision and monitoring over the project in all instances.

If the materiel is one which is developed, produced, assembled, serviced, or operated with private entities or one whose development, production, assembly, servicing, or operation will be wholly sourced out to the private sector, the Undersecretary shall publish, in two (2) newspapers of general circulation and on its websites, the criteria and qualifications for participants of the project, the details and mechanics of the SRDP project in question, and the terms and conditions for participation in the project: Provided, That participants must obtain and maintain ISO 9001 certification and other applicable quality certifications corresponding to particular products and services such as, but not limited to, AS9100 for aerospace: Provided, further, That the Undersecretary shall not publish details, specifications, and such other information that must be kept confidential by reason of national security.

Section 9. Development of Technology and Systems to Counter Unconventional Threats. - The SRDP Programs shall include materiel, capital equipment, spare parts and accessories essential to and designed to effectively counter and address chemical, biological, radiological, nuclear, and cyberattacks or incidents.

The DND, Armed Forces of the Philippines (AFP), and all other government agencies involved in responding to such attacks or incidents shall enhance the capacity and capabilities of its special units tasked with chemical, biological, radiological, and nuclear emergency response and risk mitigation by promoting technology transfer, and locally sourcing labor and production of materiel, capital equipment, spare parts or accessories.

Section 10. Emerging and Evolving Technologies. - The DND shall develop programs and projects on emerging and evolving technologies necessary for national defense and security wherever located which shall include, but not be limited to, artificial intelligence, advanced defense equipment, military robotics and autonomous systems, internet of military things, cyber warfare, immersive technologies, additive manufacturing, big data and analytics, independent military 5G connectivity, and blockchain.

Section 11. Intellectual Property Office Special Lane. - The Intellectual Property Office of the Philippines (IPOPHL) shall establish a special lane to handle applications for patents, industrial designs, copyrights, and similar applications involving sensitive military and defense technologies, inventions, processes, and software in order to fast-track the evaluation and approval process and to ensure that confidential information pertaining to such applications are properly safeguarded.

Section 12. Cooperation of Government Agencies. - The Office of the Undersecretary for DTRID shall coordinate, collaborate, and work with the Department of Science and Technology (DOST), Department of Trade and Industry (DTI), Department of Transportation (DOTr), NEDA, Department of the Interior and Local Government (DILG), Department of Budget and Management (DBM), Department of Finance (DOF), BOI, Government Procurement Policy Board (GPPB), and other government agencies in implementing this Act.

The abovementioned agencies are mandated to support the provisions of this Act.

The DBM and the GPPB are mandated to strengthen the systems and procedures for the acquisition of materiel under this Act.

Section 13. Incentives. -

Section 14. Permits, Licenses, and Certifications. - Issuance of permits, licenses, and certifications from national and local government agencies shall strictly adhere to the period provided for under Republic Act No. 11032 or the "Ease of Doing Business and Efficient Government Service Delivery Act of 2018". In addition to this, government agencies and offices in charge of the issuance of permits, licenses, and certifications to manufacture, produce, process, assemble, service, repair, and develop materiel, ordnance, ammunition and explosives, capital equipment, spare parts, and accessories, are prohibited from ordering to change, renovate, or modify a newly built manufacturing facility, or a portion thereof, if the construction of such manufacturing facility has strictly followed the building and construction plan submitted to and approved by the concerned govenrment agency. Such changes shall be made prior to the issuance of the building permit and the actual construction of the facility: Provided, That the concerned government agency shall review the locational, building, and construction plan of the facility.

Section 15. Rationalization of Defense Acquisition. -

Section 16. Multi-Year Contracts. - Notwithstanding existing laws to the contrary, and subject to Section 15 of this Act, the DND and its bureaus shall be authorized to enter into multi-year contracts for the purpose of acquiring materiel: Provided, That corresponding appropriation for the ensuing fiscal years shall be included in the annual General Appropriations Act (GAA) upon the issuance of a multi-year obligation authority by the DBM: Provided, further, That the guidelines to ensure that contracts are consistent with the Revised AFP Modernization Program and this Act: Provided, finally, That the DND and its bureaus shall coordinate and conduct acquisition planning for the implementation of multi-year contracts.

Section 17. Contracting Loans, Credits or Indebtedness Including Supplier's Credit, Deferred Payment Arrangements for SRDP Program Projects. - The President and Commander-in-Chief in behalf of the Republic of the Philippines is hereby authorized to contract such loans, credits or indebtedness including supplier's credit, deferred payment arrangements for SRDP Program Projects upon such terms and conditions as maybe agreed upon with any local or foreign source or lender and at terms of payment of not less than ten (10) years and to enter into and conclude bilateral agreements involving other forms of official assistance such as grants and commodity credit arrangement or indebtedness as may be necessary with Government of foreign countries with whom the Philippines has diplomatic or trade relations or which are members of the United Nations, their agencies, instrumentalities or financial institutions or with reputable international organizations or non-governmental national or international lending institutions or firms extending supplier's credit or deferred payment arrangements: Provided, That such loan, credit or indebtedness shall be incurred only after the plans for such project have been prepared by the DND and approved by the President. and only when the Secretary of Budget and Management has certified that for the fiscal year in question, funds are appropriated and programmed to service the external debt of the public sector, including the loan, credit ot indebtedness proposed to be contracted, and that the counterpart peso funding requirements of the projects for which such loans, credits or indebtedness are being contracted have been programmed and shall be available as and when needed for the completion of the project.

Section 18. Applicability of This Act to Uniformed Services, Other Law Enforcement Agencies, and GOCCs. - This Act shall be applicable to uniformed services, other law enforcement agencies and GOCCs procuring materiel, capital equipment, spare parts and accessories such as, but not limited to, guns and their accessories, ammunition, bullet-proof vests or similar protective gears, armored personnel carriers (APCs), tanks, boats, ships, unmanned aerial vehicles (UAVs), aircraft and communication equipment and software, in the exercise of their functions. These agencies are the Philippine National Police (PNP), the Bureau of Jail Management and Penology (BJMP), and the Bureau of Fire Protection (BFP) under the DILG, the Philippine Coast Guard (PCG) under the DOTr, the National Bureau of Investigation (NBI), the Bureau of Corrections (BUCOR), and the Bureau of Immigration (BI) under the Department of Justice (DOJ), the National Mapping and Resource Information Authority (NAMRIA) under the Department of Environment and Natural Resources (DENR), the Bureau of Customs (BOC) under the DOF, the Philippine Drug Enforcement Agency (PDEA), and other similar law enforcement agencies and GOCCs, including but not limited to the Philippine Aerospace Development Corporation (PADC). The head of the agency concerned shall approve the procurement of materiel, capital equipment, spare parts, and accessories under this Act if the total amount of the approved budget for the contract (ABC) does not exceed Two billion five hundred million pesos (P2,500,000,000). If the ABC exceeds Two billion five hundred million pesos (P2,500,000,000), the approval of the President shall be required: Provided, That the threshold amounts shall be increased upon adoption by the DBM of higher threshold amounts. Procurement of products, supplies, projects, and services not falling under this Act shall be covered by the regular process of procurement under Republic Act No. 12009.

Section 19. Prohibition on the Sale of Materiel to Private Entities. - Materiel in the form of weapons, ammunition, explosives, and weapons systems, and other similar materiel, produced under the SRDP shall solely be for the use of the state's uniformed services and other law enforcement agencies. Sale of materiel to private entities in the Philippines, both natural and juridical, shall be prohibited, unless otherwise allowed under existing laws and regulations, including but not limited to Republic Act No. 10591 or the "Comprehensive Firearms and Ammunition Regulation Act". All sales of materiel to private entities allowed under this section shall be subject to value-added tax and other applicable taxes.

The prohibition shall not apply to sale to foreign governments and their agencies and to foreign private entities, subject, however, to the imposition of the applicable taxes and duties: Provided, That exports shall only be allowed upon satisfaction of the material requirements of the AFP, uniformed services, other law enforcement agencies, and GOCCs mentioned under Section 18 of this Act.

Section 20. Countertrade and Offset. - Countertrade and offset shall be integrated as part of the procurement policy and procedures in the DND, including those of its attached agencies, bureaus, and offices, with respect to its purchase or procurement of imported capital equipment, machinery, supplies, material, and services, as an added value in the selection of a supplier during the procurement of goods and services.

In order to reduce foreign exchange outflow, generate local employment opportunities, and enhance technology transfer to the Philippines, the Secretary of National Defense, shall, as far as practicable, incorporate in each agreement involving the Government the development, production, manufacturing, assembly, servicing, or operation of materiel, special foreign exchange reduction schemes, offset, and countertrade, in-country manufacture co-production, or other innovative arrangements or combinations thereof.

Section 21. Promotion and Marketing Support. - The Government shall promote the export of locally made materiel, and the local enterprises to other countries, and is encouraged to provide financial marketing support for the purpose of such promotion.

Section 22. Reporting and Oversight. - The Secretary of National Defense shall, not later than the end of the first quarter of the succeeding year, submit to the President and the Congress:

Pursuant to its constitutional duties, the Commission on Audit (COA) and the Congress shall discharge oversight functions, to wit:

The COA shall conduct an audit on each ongoing and completed acquisition and render a report thereon to the Congress, not later than June 30 of each year. There shall be a Congressional Oversight Committee composed of the Chairpersons of the Committees on National Defense and Security of both Senate and House of Representatives who shall serve as Co-Chairpersons of the oversight committee, the Chairperson of the Committee on Ways and Means of both Senate and House of Representatives who shall serve as Co-Vice Chairperson, four (4) members each from the Senate and the House of Representatives representing the majority and two (2) members each from the Senate and House of Representatives representing the minority to be designated by the Senate President and Speaker of the House of Representatives.

Section 23. Mandatory Review and Impact Evaluation. - Every three (3) years after the effectivity of this Act, a systematic evaluation of its accomplishments and impact shall be spearheaded and facilitated by the Office of the Undersecretary for DTRID to collect data for the purpose of determining remedial legislation.

The review shall look into a range of indicators which shall include, but not limited to, the number of decent jobs created in the defense industry, entry of domestic and foreign investments in the defense sector, percentage of locally-sourced defense and other law enforcement materiel and equipment, and enhanced technological and industrial capacity of local defense industry.

The impact evaluation report shall be submitted to Congress not later than ninety (90) days after said evaluation.

Section 24. Rule of Interpretation. - Rights and obligations arising from exiting contracts as of the date of effectivity of this Act shall be governed by their original terms and conditions or the law in force at the time such rights were vested.

The Secretary of National Defense shall continue to serve as a member of the GPPB.

Nothing in this Act shall be considered as exempting our country from compliance with the provisions of the Arms Trade Treaty.

This Act shall not hinder the full implementation of the declared policy enshrined under Republic Act No. 7042 or the "Foreign Investments Act of 1991", as amended by Republic Act No. 11647.

Section 25. Implementing Rules and Regulations. - Within ninety (90) days from the effectivity of this Act, the DND shall formulate and promulgate rules and regulations necessary for the implementation of the law.

Section 26. Appropriations. - An initial funding of One billion pesos (P1,000,000,000) shall be included in the annual appropriations of the DND for the purpose of implementing this Act. The amount necessary to support the implementation of this Act shall be charged against the respective agency's subsequent funding and shall be included in the annual GAA.

Section 27. Separability Clause. - If any provision of this Act is declared unconstitutional, the remainder thereof not otherwise affected shall remain in full force and effect.

Section 28. Repealing Clause. - All laws, presidential decrees, executive orders, letters of instruction, and administrative regulations that are inconsistent with the provisions of this Act are hereby repealed, amended, or modified accordingly.

Section 29. Effectivity. - This Act shall take effect after fifteen (15) days following the completion of its publication in the Official Gazette or in a newspaper of general circulation.

Approved,

This Act, which is a consolidation of Senate Bill No. 2455 and House Bill No. 9713, was passed by the Senate of the Philippines and the House of Representatives on August 12, 2024.

Approved: OCT 08 2024

(SGD.) FERDINAND ROMUALDEZ MARCOS JR.
President of the Philippines