MANILA, Philippines - The Philippine government said Tuesday it had cancelled a 73 million dollar deal to buy military helicopters following allegations of collusion with a Polish defense contractor.
A formal inquiry found no hard proof of collusion between PZL Swidnik and the defense ministry panel that recommended the award of the contract, but concluded the deal was overpriced, ministry spokesman Eduardo Batac said.
"Defense Secretary Voltaire Gazmin has approved the recommendation of the board of inquiry to declare a failure of bidding for the attack helicopter acquisition project of the Philippine Air Force," Batac said in a statement.
The deal, approved by the bid committee in September this year, would have seen the Philippines buy seven attack helicopters, including one with night-vision capability, for P3.2 billion ($73 million).
Gazmin also froze the planned acquisition of three billion pesos' worth of combat utility helicopters for the Philippine Navy, for which no contract awards had been made, Batac said.
"We are going to encounter some delays," he said of the Philippine government's efforts to modernize its military equipment, adding that no decision had been taken on how best to proceed.
The Philippines needs the aircraft to fight communist as well as Muslim separatist insurgencies.
Tenders for the Air Force and Navy helicopters were first sought in 2007 under President Benigno Aquino III's predecessor Gloria Arroyo, Batac said.
After a series of failed tenders in 2008 and 2009, when no bids were submitted, the ministry revised the number of units it wanted to buy down from eight to seven, as well as changing payload and engine specifications.
However, only one company made a bid even with the revised requirements, Batac said.
Aquino blocked the entire project and ordered an inquiry in October this year amid allegations the bid committee rigged the rules to favor PZL Swidnik, the only firm that eventually submitted a bid for the attack helicopters.
"In the course of their investigation, the (inquiry board) did not find 'prima facie' evidence of collusion," Batac said.
"However, the (board) found the (bid committee's) decision to reduce the quantity of attack helicopters that can be acquired from eight to seven... to be unquestionably disadvantageous to the government," he said.
It would have shortchanged the government of 400 million pesos, he added.