Author Topic: Philippine Aerospace Development Corporation (PADC) transferred from DOTR to DND  (Read 14547 times)

adroth

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Philippine Aerospace Development Corporation (PADC)

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From: https://www.facebook.com/DOTrPH/posts/1057167721089030

DOTr Secretary Arthur Tugade and DND Secretary Delfin Lorenzana lead the Memorandum of Understanding (MOU) Signing between the DOTr and DND for the transfer of the following from DOTr to DND:

1. Philippine Aerospace Development Corporation (PADC);
2. Guiuan airport; and
3. Some facilities of the Old Puerto Princesa terminal building.



« Last Edit: March 04, 2018, 02:11:07 AM by adroth »

girder

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Any word on what the plan is with the PADC now?

I thought it was on the chopping block given what was stated the last time we heard of it on the news.

Did they reconsider? Does the DND plan to keep its aircraft maintenance capability by reorganizing it as a bureau or is it going to still be a GOCC?

redcomet_m

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i think they are after the property

adroth

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The framework that PADC presents, however, still provides an interesting opportunity. A chance to spin-off the AFP Programmed Depot Maintenance capability into something that could actually make money for the AFP


The next two sections of this article will present concrete examples of opportunities that map to the list of projects, presented earlier, that could be at risk in the event of a budget crunch:

  • Economic windfall from aircraft acquisitions
  • Economic windfall from maritime acquisitions

Economic windfall from aircraft acquisitions

As of writing, the Philippines lacks any serious indigenous aeronautical endeavors. The dreams offered by the XL-14 Maya and XL-15 Tagak in the 50s, and even the Cali Pinto of the Marcos years have been relegated to the realm of the "what-if" with no clear-cut path to the here and now.

XL-15 Tagak c/o Janes All the Worlds Aircraft 1954 Cali Pinto c/o Francis Neri albums

Near-term economic benefit from additional air assets, therefore, would be found in maintenance contract opportunities. The influx of new aircraft -- from supersonic jets to new transport and patrol aircraft -- create numerous potential service contracts for qualified companies. Keeping what we buy in the air with as much involvement of local companies -- providing licensed or OEM-certified services -- as possible ensures operational readiness of these aircraft as well as providing economic benefit to the local aerospace industry.

The increased capabilities of these new aircraft come at a price. Not only in terms of capital outlay, but upkeep. Modern electronics need levels of attention that older, less-sophisticated and less capable, systems could potentially get by without. This is particularly true of cutting-edge modular avionics systems that can't simply be jury-rigged into operation when they become nonoperational.

Consider the following aeronautical developments and a simplified sampling of their corresponding support burden would be candidates for logistical agreements:

The Korean Aircraft Industries FA-50 Lead-In Fighter Trainer / Surface Attack Aircraft represents a quantum leap in PAF capabilities. But those capabilities come with a corresponding maintenance overhead for its myriad of systems that the Philippine Air Force is operating for the first time. From its fly-by-wire system to its Mach 1 capable engines. There are currently two of these aircraft in the inventory, and another 10 are due to arrive. Photo c/o Lester Tongco
Aircraft such as the FA-50 and S211 Basic Jet Trainer have two ejection seats each. One for each aircrew. These pilot safety systems require their own maintenance regimens that include periodic refurbishment of their components, to include rocket motors.
       
Forward Looking Infra-Red (FLIR) systems allow PAF and PN AW-109 helicopters to find targets, or individuals in need of rescue, in all weathers. But these also require scheduled replacement of critical modules to stay operational. Photo c/o the Francis Neri albums
All new acquisitions from the AW-109 helicopters to the CN-295 transports, feature multi-function displays (MFD) -- also called "glass cockpits". These reduce pilot workload by replacing the traditional gauges of Vietnam-era aircraft thus improving flight safety. These modular components introduce new maintenance routines. Photo c/o the Francis Neri albums.

Business-as-usual, part-by-part,  piecemeal acquisitions -- that would have the AFP issue bid invitations for each individual component, with all the attendant bureaucratic overhead and potential for delay-causing re-bids -- would hamper operational readiness of these aircraft in ways that wouldn't on older but less-capable, Vietnam War-era aircraft. An FA-50, for example, could be fully operational in all respects. But if its fly-by-wire computers are rendered non-operational by the lack of appropriate spares it will stay on the ground. A non-operational "hangar queen" or non-mission-capable asset is a poor return on investment for the people's money.

While the AFP modernization law requires that each acquisition include provision for an Integrated Logistics Package (ILP) from the manufacturer, such packages are finite. The following excerpt from a Supplemental Bid Bulletin from the PAF's Attack Helicopter project, which eventually acquired the AgustaWestland AW109, presents an example of the extent of spares that are included in acquisitions. This document lays out how much time the AFP typically has to establish a more sustained spares acquisition scheme after a weapon system arrives.


For the long-term, in-country capability for supporting these aircraft must be developed. If done with the nation's interests in mind, this need could be filled by Philippine companies -- in partnership with foreign manufacturers of the equipment -- that would provide logistical support arrangements to ensure local availability of manufacture-approved parts as well as in-country maintenance and repair capabilities. Companies offering these services would be contracted to provide ready availability of critical components at pre-negotiated prices based on forecasts of the need for such parts (e.g., based on maintenance schedules, Mean-Time-Between-Failure (MTBF) data, statistical trends, etc.) as well as foreign currency fluctuation tolerances.

This would reduce the delays created by having to source replacement components overseas after having exhausted the AFP's own internal inventory -- assuming budgetary provisions permit the build-up of such an inventory as opposed to a Just-In-Time (JIT) parts requisition scheme. The red-tape generated by government procurement processes currently do not facilitate JIT acquisitions.

[em] Note : The complexities of balancing quantities between in-house AFP component stocks with components sourced through these logistical arrangements are beyond the goals of this article and would require direct access to proprietary maintenance data. Attention must also be given to the tariffs that such companies would face for importing and then storing these components. The potential for leveraging the industrial park status of the Government Arsenal compound in Limay Bataan, to address these tariffs, would need to be investigated. See further below for details.
[/em]

A foreign example of a commercial entity providing logistical support for a military organization would be Quantas Defense Services -- previously a wholly owned subsidiary of Quantas Airlines but was sold to Northrop Grumman in 2013. This company  provided support for the Royal Australian Air Fore's A330 multi-role tanker transport fleet, operational logistics services for the Australian government's VIP aircraft, and engine overhaul services for the Lockheed Martin Orion P-3 and BAE Systems Hawk lead-in fighter trainer. It was recently given a contract to refurbish C-130s of the  Indonesian Air Force.

Broadly speaking, this equipment-support capability is referred to as: Maintain, Repair, & Overhaul (MRO). The Philippines is no stranger to aeronautical MRO -- particularly the commercial MRO that is at the heart of this article. The  Philippine Aerospace Development Corporation, a Government Owned & Controlled Corporation (GOCC), was established in 1973 with the following charter:

Quote
. . . the government’s arm for the development of the Philippine Aviation Industry. The driving motives for its establishment are self-reliance, national security and technology transfer.



PADC currently provides MRO services for the following:

ServicesDescription
Airframe Inspection, repair and alteration of:

Britten Norman ISLANDER Model 2A and 2B Aircrafts
CESSNA Model 150, 172, 206, T206 Series 421, 421A and 421B Series
Piper Seneca Aircraft
EnginesLycoming and Continental piston engines up to four hundred (400) HP rating

As the Allison Authorized Maintenance and Overhaul Center (AMOC)in the Philippines, PADC undertook theForeign Military Sales (FMS) program on the overhaul of the Allison 250-C30 engines of the Sikorsky helicopters and the Allison 250-B17 engines of the Nomads
PropellersRepair and overhaul facilities for:

Hartzell
MC Cauley
Sensenich
Hamilton Standard
Landing gear Functional Test, Repair and Overhaul of landings gears for:

Britten-Norman Islander
Cessna

As shown by the list above -- which was taken from the PADC Website -- these capabilities remain limited to the types of aircraft that were in service at the time of this GOCC's inception. Whereas private MRO companies, such as Lufthansa Technik Philippines -- a joint venture between MacroAsia Corporation and Lufthansa Technik AG -- benefit from foreign capital and know-how and cater to larger and more sophisticated aircraft, the PADC's service offerings are comparatively stunted.

In its current form, the PADC is ill-suited to provide MRO services for the dozens of aircraft that are coming for the AFP. Closing the gap between current capabilities with what our new warplanes require will require a systemic evaluation of why the PADC atrophied in the first place. Assuming the PADC can be recapitalized and modernized, if not replaced with an equivalent but optimized organization, such an entity would be the perfect platform for Public-Private Partnership ventures that would not only satisfy the needs of the AFP, but also compete in the global MRO market.[/size]


adroth

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For this to work, however, critical mass involving the following considerations must be reached:
[ul]
    
  • Funding
  • Opportunity
  • Know-how
[/ul]
The  funding is there, care of the various funding instruments that have been developed over the years to justify and enable defense spending. These include procedures for proper access of the AFP Modernization Trust Fund, legal basis for private contributions to that fund (c/o Section 6, sub-paragraph "i" of Republic Act 10349), to the implementing guidelines for Multi-Year Obligating Authority (MYOA) for DND acquisitions that exceed the annual budgetary allocation of the national budget.

"Opportunity" is a function of a multitude of factors but recapitalization of the air arms of the various services already create a baseline upon which to build. The new aircraft being acquired create this opportunity.

On the matter of "Know-How", a shining example of advancements in locally available skills came to the fore in 2013, when the Philippine Air Force reached a major capability milestone careof the 410th Maintenance Wing when it completed Programmed Depot Maintenance (PDM) for  C-130 #3633. A PDM is the aircraft equivalent to a major overhaul for a car, and in the  US Air Force is done every 48 to 64 months. The 410th MW not only identified sources for the necessary parts -- albeit piecemeal because of the lack of logistics arrangements -- it also mustered the necessary technical expertise to complete the PDM in-house.

Previously, the PAF had never undertaken its own PDM of its complicated Hercules transports. The event was a testament to the PAF's efforts to improve the technical proficiency of its personnel. While the need to retain these capabilities within the Philippine Air Force is important, the potential for leveraging these skills and lessons-learned in this effort to compete in the global Maintenance, Repair, Overhaul (MRO) market for military aircraft -- as a properly OEM-certified maintenance facility -- should not be ignored.

It is worth noting that the Malaysian Air Force unit responsible for similar functions was eventually privatized as a  joint-venture with Lockheed Martin and became Airod Malaysia, which continues to provide support for the Malaysian Air Force. In 1997, Airod provided PDM services fo PAF C-130  #4593.

A conscious effort to maintain PAF equipment using a combination of in-house capabilities and domestic MRO companies as part of a self-reliance program would boost the MRO industry to the benefit of the Philippine labor force. Not only would this strengthen the local aerospace industry, it would also reduce the outflow of foreign currency. The experience, and resulting capital build up generated by a maintain-locally policy could very well give impetus to more ambitious aerospace manufacturing ventures. Provided, of course, that the Philippines were properly organized for such a transition. (See further down for how to organize for this shift).

Keeping aircraft in the air will mean profit for someone. Why not make sure that that "someone" is the Filipino people?

Economic windfall from maritime acquisitions

The Philippine Navy is in the midst of the largest post-Martial Law build up in its history. Plans to recapitalize the service have been in existence since the  1995 modernization program. The Navy reminded the public of this effort when it published it's " desired force mix" in 2012 providing specific force-strength requirements for various types of vessels. The service refreshed this notice again three years later when it published he following infographic on the Philippine Navy  website.


The individual components of the PN's modernization plan are the most expensive members of the AFP modernization effort. Consider the following projects on the list at the start of this article:

ProjectAuthorized Budget for ContractQuantity
Strategic Sealift Vessel Acquisition Project P4,000,000,000.00 2
Frigate Acquisition Project P18,000,000,000.00 2

With an annual modernization budget of only P5B per year, many of the navy's projects would not even be possible without the  Multi-Year Obligating Authority drafted in 2010. The SSV project budget alone is larger than the appropriations for either the Department of Science and Technology or Department of Trade and Industry. The sheer amount of monetary resources that these projects require make them prime candidates for the budget slasher's axe.

From a purely defense-centric perspective, the need for these acquisitions is undeniable. These vessels resolve long-standing capability gaps that prevent the Philippine Navy from operating in a modern maritime threat environment. It is the only navy in Southeast Asia without missile capable boats, and until its frigates arrive is the only maritime force with no response to a submarine threat.

But aside from emphasizing that these assets are par-for-the-course for 21st century maritime security, defense planners could also emphasize the economic benefits of continuing the maritime build-up -- regardless if the vessels are actually built locally or imported.

The obvious direct benefit to the economy would be to build ships on the modernization list locally. With the navy fresh on the heels of two relatively recent self-reliant shipbuilding programs, there is ample evidence to prove that Philippine shipyards are ready to answer the call to build military vessels. These two projects are the Multi-Purpose Assault Craft (MPAC) manufactured by Propmech in Subic Bay, and the largest domestically built military vessel in AFP history: the BRP Tagbanua Landing Craft Utility (LCU) which was manufactured in  Philippine Iron Construction & Marine Works (PICMW) in Jasaan, Misamis Oriental. Both appear below.

BRP Tagbanua (PN photo) Multi-Purpose Assault Craft (DND photo)
It's worth noting that the following components of the Sail Plan are comparable to the MPAC and LCU projects, in terms of vessel size, as well as technical and construction complexity, and would therefore be low-hanging-fruit for an indigenous shipbuilding program:
[ul]
    
  • Fast Attack Craft (42 units)
  • Landing Craft Utility
[/ul]
Beyond these types of vessels, however, the Philippine Navy has thus far sought foreign assistance. The first SSV, the BRP Tarlac (LD-601) was built in PT PAL in Indonesia and the second SSV is being constructed at the same yard. For the Frigate project, a South Korean shipyard is currently undergoing Post Qualification evaluation for this two-ship acquisition.

There is good reason for this. While there are indeed shipyards in the Philippines with significant slipways and are capable of constructing as many as five massive container ships  simultaneously, these large yards are actually foreign-owned and are focused primarily on building ships for their foreign owner's order books. The lack of participation of local shipyards in the bid invitations for the SSV and Frigate projects strongly implies that the local industry acknowledges this limitation.

Filipino controlled local shipyards face a number of challenges that need resolution. These range from the cost of electricity, supply chain issues (e.g., lack of domestic steel sources, etc.), to skills-deficits. On top of these industry challenges, there is also the matter of restricted access to key sub-systems that make up a modern warship. Foreign-manufactured sensors, advanced weapon systems, and similarly sensitive equipment are not available for export (e.g.,  ITAR) to non-state buyers. So local shipbuilders would not be able acquire these sub-systems themselves.

Therefore, for the near-term, we will need to resort to foreign sourcing for vessels that exceed our manufacturing capability or access to technology. This gives the AFP the best opportunity to achieve its modernization goals within a reasonable timeframe. The operative word being "near-term".

Philippine Navy Sail Plan 2020 requires multiple instances of each ship. Therefore even if the initial orders for ships go to foreign shipyards, subsequent order need not be. A prime example of this mode of acquisition is Indonesia, and actually involves the Strategic Support Vessel (SSV).

The recently delivered Tarlac class SSV is based on the based on the Indonesian Navy’s "improved Makassar" class Landing Ship Dock (LPD). This ship, in turn, was derived from a design by Daesun Shipbuilding & Engineering of South Korea which built the first two ships of the class for Indonesia in South Korean shipyards. PT PAL, the Indonesian shipyard which built the BRP Tarlac and is currently building its sister ship, acquired design rights to the Makassar class LPD from South Korea, and is now offering the vessels for export. Whether or not South Korea continues to receive compensation for future sales of their design is unclear.

The potential benefits for the Philippine economy are too great to ignore. With careful planning, industrial incentives, licensing agreements with foreign partners -- comparable to what Indonesia negotiated with South Korea -- and synergy with the local shipbuilding industry, the remaining items in the Sail Plan could function as a catalyst for the shipbuilding industry.

 Basis in law

Incremental efforts, from the Ramos to the Arroyo administration have created a legal framework that actually reduces the legislative ground work that the Duterte administration needs to perform to implement the proposals listed above. The unprecedented volume of purchases completed or initiated during the Aquino administration is -- in truth -- a net effect of the efforts that have come before. There is, therefore, no legal or procedural impediment to continuation of the current trend.

The AFP modernization law explicitly favors locally-manufactured defense articles:
[blockquote]Sec. 10. Self-Reliant Defense Posture Program. — (a) In implementing the modernization program, the AFP shall, as far as practicable, give  preference to Filipino contractors  and suppliers or to foreign contractors or suppliers willing and able to locate a substantial portion of, if not the entire, production process of the term(s) involved,  within the Philippines .

(b) 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 feasible, incorporate in each contract/agreement special  foreign exchange reduction  schemes such as countertrade, in country manufacture, co-production , or other innovative arrangements or combinations thereof.

(c) The AFP likewise ensure that in negotiating all applicable contracts or agreements, provisions are incorporated respecting the  transfer to the AFP of the principal technology  involved as well as the training of AFP personnel to operate and maintain such equipment or technology.[/blockquote]
The "spirit of the law" favors a Filipino-First procurement scheme.

As things currently stand, all pending acquisitions are required to have a local Philippine partner. A requirement enshrined in the Carlos Garcia-era Republic Act 5183 prohibits the Philippine government from sourcing items from companies that aren’t majority Filipino owned. This means that any foreign vendor seeking to sell its wares to the AFP needs to establish arrangements with Philippine business entities, which will then be responsible for representing the vendor in public biddings and similar engagements.

The legal framework for domestic windfall from the billions of pesos slated for defense expenditure for already-ongoing projects is already in-place. All that a prospective Secretary of National Defense, Chief of Staff AFP, or defense adviser would need do is to highlight this prospectively unaware policy makers within a Duterte cabinet.

 Putting the plan in action

The law calls for technology transfers as part of as many acquisitions as possible. But creating the entities that would actually absorb that technology are simply non-existent. The Philippines' failure to implement a far-reaching industrialization program has been a persistent stumbling block to the local defense industry. There are few, if any, companies that could oversee a turn-key transfer of defense technology.

While RA 5183 has been in existence for over half a decade, thus far it's principal achievement as been the institutionalization of the "middle-man" industry: companies that simply peddle access to the corridors of power rather than actually promote the local defense industry.

Three key enablers must exist for this self-reliance based modernization program to take root:
[ul]
    
  • A  coordinating body  that can marshall government and industry resources for the identification and evaluation of technologies that would be candidates for technology transfer
  • A  manufacturing entity  that would either serve as a catalyst for its sector or as proof of concept for local manufacture of defense articles
  • A  skills development agency  that would ensure that existing, and prospective defense companies would have a pool of properly trained and educated workers from which it can draw its manpower requirements
[/ul]
Without these three pillars of self-reliance, any indigenous development program would be doomed to failure. From the 1950s to the today, the  history of the indigenous defense industry is littered with failed ventures and prototypes that went nowhere mainly because of the lack of this three-legged framework.

All three enablers can, theoretically, be either based on existing agencies or be entities that would have to be created.  The following sections presents one way such enablers could be setup.[/size]

adroth

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Imagine the DND offering this service to other users of the C-130 and similar aircraft. Provided, of course, we actually get the proper certifications from various manufacturers.



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adroth

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Would it make sense to use the manpower of the 410th Maintenance Wing as the base for a revitalized PADC . . . which not only refurbishes ALL of the PAF aircraft, but also offers this as a paid service to other countries in the region?


adroth

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The Philippine Aerospace Development Corporation (PADC) delivered a refurbished Philippine Navy BN Islander (#PN320) on July 21, 2015 sporting a new grey color scheme.

http://adroth.ph/2015-whats-happening-with-the-afp-modernization-program/

« Last Edit: March 04, 2018, 12:41:20 PM by adroth »

adroth

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The two Bell Huey IIs currently in PAF services were converted to their current state with PAF manpower



Ayoshi

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ADAS 2018: Philippine Air Force to acquire MRO firm | Janes - 26 September 2018
Quote
The Philippine Air Force (PAF) is to acquire a local state-owned enterprise to support efforts to enhance its maintenance, repair, and overhaul (MRO) capabilities.

jetmech

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   The Philippine gov't should have left it as it was (ownership).  The transfer now place limits on one customer, DND. How about the commercial side it was supporting? Maybe small, but if the intention was to revitalize capabilities, the Philippine gov't should have infused the funds required for capital investments to acquire the needed equipment/ infrastructure to support the DND as well as the commercial businesses that will benefit from having repairs done locally. I hope they realize, military and commercial aviation products & services (even identical) don't mix with regards to regulations and standards. Commercial products have to follow ICAO/ FAA rules (oversight/ certification) while military end users don't.  Just like all aircraft supply manufacturers here in the U.S., they have the commercial and military contract sections.   

adroth

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   The Philippine gov't should have left it as it was (ownership).  The transfer now place limits on one customer, DND. How about the commercial side it was supporting? Maybe small, but if the intention was to revitalize capabilities, the Philippine gov't should have infused the funds required for capital investments to acquire the needed equipment/ infrastructure to support the DND as well as the commercial businesses that will benefit from having repairs done locally. I hope they realize, military and commercial aviation products & services (even identical) don't mix with regards to regulations and standards. Commercial products have to follow ICAO/ FAA rules (oversight/ certification) while military end users don't.  Just like all aircraft supply manufacturers here in the U.S., they have the commercial and military contract sections.

Could the 410th Maintenance Wing, which actually already had equipment, being transformed in the same way the Airod of Malaysia was?

jetmech

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   Don't know how Malaysia's Airod is set up, quasi gov't corporation like PADC before or a unit of the military? The other thing I noticed among your anticipated (or hoping for) repair capabilities self reliance are the avionics or other main systems, let's say the FA-50, did the Philippines purchase any TDPs (Technical Data Packages) from the Koreans or Lockheed Martin?  Last time I checked, even the US DOD hesitate including this on the acquisition budget because they're not cheap.

   My main point here is that what's the plan? Will it be exclusive  for Philippine DND use or will it also do business commercially? Do they want it to be self-sustaining? Not relying on DND needs? They don't mix.

adroth

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   Don't know how Malaysia's Airod is set up

They were the Malaysian Air Force’s equivalent to the 410th MW. They built up in-house PDM capability for the RMAF then they converted it into Airod that catered to the civilian market as well.

Collected a lot of info in the old forum. Need to re-assemble it.