Author Topic: Multi-Year Obligational Authority (MYOA)  (Read 1664 times)

adroth

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Multi-Year Obligational Authority (MYOA)
« on: January 04, 2018, 10:07:14 PM »
Administrator's note: It is time to rebuild the original forum's discussions about MYOA. Let's start with data that we dug up back in March 6, 2010.

Companion discussion on the forum's FB extension: https://www.facebook.com/groups/rpdefense/permalink/1536782466407595/

About the AFP Modernization Trust Fund: http://defenseph.net/drp/index.php?topic=2878.0

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Formal definition for MYOA

Quote
Department of Budget & Management
Circular 2004-12
October 27, 2004

< Edited >

3.1 Mult-Year Obligational Authority - refers to an authority issued by the Department of Budget and Management (DBM) to enable an agency to enter into a multi-year contract whether for locally funded projects (LFPs) or foreign assisted projects (FAPs).


From: http://www.gppb.gov.ph/issuances/Circulars/2009/01-2009.pdf


Quote
Government Procurement Policy Board (GPPB)
CIRCULAR 01-2009
20 January 2009

. . .

Multi-Year Obligational Authority (MYOA) - a document issued by DBM either for locally funded projects or foreign assisted projects
implemented by agencies in order to authorize the latter to enter into multi-year contracts for the full project cost. A MYOA, which contains an annual breakdown of the full project cost, obligates agencies to include in their budget proposal for the ensuing years the amount programmed for the said year(s).

==== ~~~ ===

Although this circular explicitly excludes the AFP, it does provide some idea about other relevant terms.

From: http://home.doh.gov.ph/dc/dc334-04.pdf

Quote
3.2 Multi-Year Project (MYP) - refers to a program/project which will take more than one (1) year to complete including suppliers' credit. These may be classified into:

a) MYPs with appropriations available in full during the first year of implementation;

b) MYPs which require multi-year appropriations; and,

c) Annual Recurring Projects/Activities which require multi-year

3.3 Multi-Year Contract (MYC) - refers to a contract for MYPs, the implementation of which will take more than one year to complete, and require multi-year appropriations. Thus, contracts executed for MYPs with appropriations available in full during the first year of implementation, or those falling under 3.2.a above, do not fall under this definition.

3.4 Medium Term Expenditure Program (MTEP) - refers to a forward estimate/financial plan with a term of three to five years of the agency's yearly priority programs, activities and projects (PAP) within a given/assumed budget ceiling.

3.5 Funding Strategy - refers to a funding program for a specific multi-year project indicating source of financing to support said project for the entire duration of the project. Such sources can either be a "free/freed" portion of the agency budget ceiling (e.g., allocations for completing or completed project), reallocations/realignment from other programs, activities, projects (thus involving a PAP deprioritization process) or projected revenues authorized to be used for the purpose. The Funding Strategy should be part of the METP subject to DBM review/validation.

4.0 Guidelines and procedures

4.1 Prior to entering into a MYC, the national government agencies must first secure a MYOA from the DBM < Edited >

4.2 A MYOA shall be issued to an agency who (i) voluntarily commits to give priority and include the annual budgetary requirements of the MYP in its budget proposal within the prescribed budget ceiling, and (ii) whose funding strategy indicates that the annual budgetary requirement of the MYP may be accomodated within the annual budgetary ceiling of the agency over a period of time. Hence, a prerequisite for the issuance of a MYOA is the submission of the following documentary requirements:

a) Request for MYOA including a confirmation on the commitment of the Agency

b) Funding Strategy/Medium Term Expenditure Program

c) Investment Coordination Committee/NEDA Board approval for Locally Funded Projects (LFPs) costing more than P300M, and for all foreign-assisted projects (FAPs)

d) Approved loan agreeement for FAPs; and

e) All other prior clearances as may be required under existing law, policies, rules and regulations, e.g., NCC endorsement of computerization project; NTC clearance for acquisition of communication equipments; PNP clearance for purchase of firearms; and other similar authorizations.
« Last Edit: January 05, 2018, 03:05:06 PM by adroth »

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #1 on: January 04, 2018, 10:08:41 PM »
Some form of MYOA appears to be needed to implement that DND's long standing MYCUP. It'll be interesting to see the paperwork behind all of this.

From: http://www.neda.gov.ph/ads/mtpdp/mtpdp2004-2010/pdf/mtpdp%202004-2010%20neda_chapterx23_defense.pdf

Quote
f. Planning, programming and execution of a Multi-Year Capability Upgrade Program for the AFP

Planning, programming and execution of a multiyear capability upgrade program for the AFP will be done under the MYDPS. From the MYCaPS developed under the MYDPS will emerge a three tier multiyear capability upgrade program for the AFP covering a 6-year, 12-year and 18-year horizon. For the mid-term, the 6-year AFP Capability Upgrade Program for the AFP will focus on the basic requirements of the AFP to improve its capabilities in fulfilling its missions in pursuit of its internal security operations.

g. Optimization of the defense budget and improving management controls

Another product of the MYDPS will be the establishment of a multiyear defense budget that will include the allocation of budgets to address military operational requirements (e.g. operations and maintenance, training, recapitalization and upgrading of military assets). This will feature needed improvements in the planning, budgeting and requirements generation systems of the DND and AFP and the creation of structures and systems for oversight within the DND and the AFP Major Services to manage resources and requirements from planning to execution.

. . .

B. Upgrading the Capability of the AFP

Under the MYCaPS, the AFP will define a national military strategy in the conduct of internal security operations covering a six-year period that will feature defined and measurable targets and objectives. Within anticipated financial limits, the AFP will identify the required resources to upgrade its capabilities in areas such as mobility, firepower, communications, force protection and combat life support. Upgrading the AFP capabilities in these areas will enable the organization to more effectively perform its missions. In addition, programs to upgrade the operations and training of land force, maritime force, air force as well as Joint Command and Control shall continue to be enhanced.

In general, the land force capability upgrade will focus on projects designed to improve land mobility, command and communication, increase firepower and enhance force protection and combat life support. The maritime force capability upgrade will focus on projects designed to develop and sustain naval mobility, naval patrol capability and naval firepower. The air force capability upgrade will focus on projects designed to develop and sustain airlift, air strike, surveillance, ground support and medical evacuation capabilities. The Joint Command and Control (C2) capability upgrade will focus on training programs on Joint C2, on upgraded equipment, and for establishment of stand-up Joint Special Operations Units.

Over the next six years, a substantial part of the annual budget of the DND and the AFP, supplemented by funds from other sources, will be used to upgrade the capability of the AFP resulting in a stronger and mission-capable AFP.

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #2 on: January 04, 2018, 10:09:41 PM »
How other departments use MYOA

From: http://www.pdic.gov.ph/index.php?nid1=8&nid2=3&nid=266&ntype=1&go=&page=15

Quote
RP to beef up deposit insurance fund (Manila Bulletin online)

The government is issuing a multi-year obligation authority (MYOA) to restock the Philippine Deposit Insurance Corp. (PDIC) capital by P45 billion more to beef up its deposit insurance fund (DIF) as a defensive move.

This is a pre-emptive measure against the global financial crisis, but not as defined or immediate as what the US government and other governments in Europe did, which is to guarantee the deposits of their banking systems.

PDIC president Jose Nograles said the additional buffer fund will be given through a MYOA. He explained that while PDIC do not need the DIF soon, it is more for confidence-building that the agency has access to these funds.

"(How soon we need it) will depend on the conditions," said Nograles. "We don�t need it tomorrow, but it�s really part of defensive financial (and) we have authority to access some money if needed."

. . .

< Edited >

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #3 on: January 04, 2018, 10:11:00 PM »
The Authorized Budget for Contract in the context of a MYOA

From: http://www.gppb.gov.ph/issuances/Circulars/2009/01-2009.pdf

Quote
Approved Budget for the Contract (ABC) - refers to the following:

NGs including SUCs (referred to in Section 2.1)

3.3.1 For specifically appropriated items as reflected in the annual budget of the national government agency, the amount corresponding to either the full cost of a single year or multiyear program/project/activity. For multi-year projects, for which a Multi-Year Obligational Authority has been issued, the ABC shall be the amount reflected in the Multi-Year Obligational Authority.

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #4 on: January 04, 2018, 10:12:25 PM »
Six years after the concept was implemented . . . the DND finally sorted out the procedures required to allow the DND-AFP to leverage this option. This was a game changer for the AFP Modernization Program.

Quote
AFP modernization now possible -- Gonzales       
by People's Tonight     
Saturday, 13 March 2010 18:36 

       http://www.journal.com.ph/index.php/national/5072-afp-modernization-now-possible-gonzales-.html

THE DEFENSE and military establishments are working 24/7 to jump-start the long-dreamed-of modernization of the Armed Forces of the Philippines now that it is already possible.

Defense Secretary Norberto Gonzales made this announcement on Friday during the Philippine Army change-of-command ceremony in Camp Bonifacio which he presided.

Gonzales said President Arroyo and Congress had made the modernization of the country�s Armed Forces now possible by granting �multi-year obligation authority (MYOA) to the defense department.     

The President tasked me to work for the AFP modernization in earnest. We will begin it now. We will work to immediately upgrade our armed capability,� Gonzales said.

Gonzales said the modernization program can be pursued in two phases. The first phase is an interim one in which the country�s defense capability will be upgraded to a level that is �modest but lethal� and �can trigger our people�s national pride.�   

�After 10 years, full modernization can be pursued in earnest as the country becomes wealthy,� Gonzales said.

Gonzales believes that the first phase of the program can be done in two years and preparations for it can be made during the remaining months of the Arroyo government.

�We can even start the acquisition within our term if we really work 24/7,� the defense chief said even as he asked the military establishment �not to waste the golden opportunity that the President has given us.�

The AFP Modernization Act of 1995 has given the military the opportunity to modernize in 15 years with a total fund of P331 billion. However, only P28.9 billion have been utilized to date by the AFP. The modernization law is expiring this year.

Without the multi-year obligation authority, the defense department can only spend up to P5 billion per year from the modernization funds. 

Gonzales emphasized the importance of modernizing the Armed Forces to the transformation of the country from Third World to First World.

�Modernizing our Armed Forces is not only about capability building.  It is also about rebuilding our respectability in the community of nations and in the eyes of our own people.  The AFP being the ultimate symbol of our love for our country, making it respectable is important in triggering our national pride, and national pride is essential in mobilizing our people for our country�s transformation from Third World to First World,� Gonzales said.

To expedite the implementation of the modernization program, Gonzales said government will change its mode of procurement. Instead of dealing with private suppliers, this time it will only get into government-to- government deals to do away with controversial biddings.

====

Use of the Multi-Year Obligational Authority was explicitly defined in the Revised AFP Modernization Law as follows

SEC. 5. Section 9(b) and (c) of the same Act are hereby amended to read as follows:

http://www.officialgazette.gov.ph/2012/12/11/republic-act-no-10349/

Quote
SEC. 9. Multi-year Contracts and Other Contractual Arrangements. (a) x x x

(b) For multi-year contracts, Congress shall, upon issuance of a multi-year obligational authority by the Department of Budget and Management (DBM), make the corresponding appropriation for the ensuing fiscal years: Provided, That the DND and the DBM shall issue the implementing guidelines to ensure consistency with the Revised AFP Modernization Program and existing guidelines in the contracting of multi-year projects.

(c) The Secretary of National Defense shall submit to Congress, through the Chairpersons of the Senate Committees on National Defense and Security and Finance and the Chairpersons of the House Committees on National Defense and Security and Appropriations, copies of these multi-year contracts and other agreements/arrangements to enable Congress to appropriate hinds.
« Last Edit: January 05, 2018, 03:21:45 PM by adroth »

adroth

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« Last Edit: January 05, 2018, 01:00:13 AM by adroth »

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #6 on: January 05, 2018, 01:17:28 PM »
The gems are starting to come in at the forum's FB extension

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« Last Edit: January 05, 2018, 01:31:05 PM by adroth »

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #8 on: January 05, 2018, 07:28:29 PM »

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #9 on: January 08, 2018, 02:04:49 AM »
The DND's P25B "credit card" for the AFP Modernization Program

From: http://defenseph.net/2018/01/08/the-dnds-p25b-credit-card-for-the-afp-modernization-program/

The Department of Budget & Management released the official AFP Modernization Budget for 2018: P25B. This represents a fraction of the total DND budget of P149.7B which includes everything from salaries, to veterans pension payments, to operational expenses that keep aircraft flying, ships sailing, and guns firing.

When evaluating whether or not the P25B modernization budget is sufficient to cover the various pending and ongoing acquisition projects of the AFP (see here), one must first recall a little understood but game-changing development known as the Multi-Year Obligational Authority (MYOA) that was first implemented in the latter half of 2010. (See here).

The MYOA was first used for the aborted Arroyo-era Multi-Role Vessel (MRV), which was then rebranded in the Aquino administration as the Strategic Support Vessel (re-using the name of the another Arroyo-era project that was originally based on a second-hand Japanese RO-RO vessel that eventually went nowhere). Since then, the MYOAs have been used for projects such as the Long Range Patrol Aircraft and the Close Air Support Aircraft.

The MYOA is significant because it unshackles the AFP from the limits of the national budget. It does so by using a simple concept that the average Filipino who has ever made large consumer purchase (e.g., a car, a house, a refrigerator, or even a karaoke machine) uses to buy what he or she needs while staying within the constraints of the household budget: payments by installment. The MYOA is essentially credit card for the department that uses it to include the DND.

Consider for the example the Close Air Support Aircraft project which is valued at 4,968,000,000. The MYOA document for the project actually breaks the project into the following annual installments: Year 1: 15%, Year 2: 42.5%, Year 3: 42.5%.

Examples of how the DND leveraged MYOA procedures developed in 2010

Close Air Support Aircraft (CASA)

http://www.dnd.gov.ph/transparency/procurement/DND_BAC/Supplemental_Bid/SBB%20DND-AFP-PAF-CASA-15-03-007.pdf



While the original breakdown was pegged in 2016, and the actual contract signing didnt take place till 2 year after, the breakdown formula shown above is comparable to how other projects were calculated, such as the still-pending Long Range Patrol Aircraft project.

Therefore for the first year, the funds required for the CASA project will only be approximately P754M. When applied the P25B annual budget, this would still leave P24.3B for other purchases.

If other projects also use the MYOA concept for their purchases . . .

. . . then instead of looking at the total Authorized Budgets for Contract of each purchase as the total the DND needs each year as its budget

. . . one only need to look at the percentage of the initial installment as the budgetary requirement for each year.

Furthermore modernization funds are NOT actually just limited to the General Appropriations Act. As per Section 6 of the Revised AFP Modernization Program, funds for the acquisition of AFP equipment is actually drawn from the AFP Modernization Trust Fund (AFPMTF). The AFPMTF sources funds from the following sources:

- The National Budget, particularly appropriations for the AFP Modernization

- Income from the Government Arsenal (once it being production for export)

- Sale of DND property

- Income from Public-Private partnerships

- Sale of excess defense articles and other uneconomically repairable equipment

- Funds from budgetary surplus

- Donations from local and foreign sources (this is how the AFP gets funding from Malampaya)

In summary, the MYOA facility, and the flexible funding nature of the AFP Modernization Trust Fund means that the size of AFP Modernization budget is does not actually limit what the AFP can do, as it did in the years before 2010. Even if the AFP were limited to the national budget as its source of funding, the P25B allocation if done right would simply represent the installment payment for that year. Thus, there remains much cause for optimism in the coming year, and the years ahead.
« Last Edit: January 08, 2018, 02:30:18 AM by adroth »

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #10 on: January 08, 2018, 05:27:56 PM »
An alternative view is an alternative view. Still worth noting

https://www.facebook.com/Maxdefense/posts/649480608555933


adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #12 on: January 09, 2018, 09:55:22 PM »
The disconnect between the intent of this thread, and the reactions of folks towards it, appear rooted in two assumptions:

1. The P25B allocation this year is representative of how the rest of Horizon 2 will be funded.
2. The annual budget is the only source of funding for the AFP Modernization Trust Fund.

Neither of which are necessarily true.

Junior

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #13 on: January 10, 2018, 06:04:27 AM »
The disconnect between the intent of this thread, and the reactions of folks towards it, appear rooted in two assumptions:

1. The P25B allocation this year is representative of how the rest of Horizon 2 will be funded.
2. The annual budget is the only source of funding for the AFP Modernization Trust Fund.

Neither of which are necessarily true.

We should also remember proceeds from
1. BCDA which for 2017 is almost P5 billion
2. TRAIN which is projected around P13 billion annually

both of which is separate from the AFPMP annual allocation

adroth

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Re: Multi-Year Obligational Authority (MYOA)
« Reply #14 on: January 11, 2018, 12:57:30 AM »
Solon says P25-B AFP upgrades a message to terrorists: Were capable of defeating you
Published January 10, 2018 7:31pm
By ERWIN COLCOL, GMA News

http://www.gmanetwork.com/news/news/nation/639237/solon-says-p25-b-afp-upgrades-a-message-to-terrorists-lsquo-we-rsquo-re-capable-of-defeating-you-rsquo/story/

House Appropriations Committee chair Karlo Nograles said that the P25-billion Armed Forces of the Philippines (AFP) modernization program will improve the military's fighting capabilities in all aspects.

In a news release, Nograles said the Department of National Defense has already given final approval of the details of the P25 billion for the modernization plan.

"We're talking about land, air, and sea upgrades for the AFP. This modernization program will erase doubts regarding the Duterte administration's commitment to our brave men and women in uniform and protecting the country as a whole," Nograles said.

"While our military personnel will no doubt enjoy their well-deserved increase in base pay this year, their morale will get another huge boost thanks to the new combat vehicles they will be getting," he added.

Included in the forthcoming purchases under the modernization plan are 24 attack helicopters worth P13.8 billion, one fixed wing jet worth P2 billion, and one turboprop patrol aircraft worth P1.8 billion.

"If the acquisition of the attack helicopters will be subject to a multi-year acquisition, then the list would also include 44 units of light attack tanks. These will be worth P9.4 billion," Nograles said.

The program will also include payment, through multi-year obligations, for two frigates, an amphibious assault vehicle, and a surveillance radar worth a total of P8 billion.

< Edited >