Combat Engineering Equipment Lot 4 - Armored Combat Engineer Earthmover Acquisition Project of the Philippine Army

As part of its modernization program and based on the learnings from the Battle of Marawi in 2017 against ISIS-inspired terrorists, the Philippine Army has embarked on the introduction of Combat Engineering Equipment to its arsenal.

Among those for acquisition are a small fleet of Armored Combat Earthmovers (ACE) which could provide combat support in any terrain.

The project, called the Combat Engineering Equipment Lot 4 - Armored Combat Engineer Earthmover Acquisition Project, is part of the Horizon 2 phase Priority Projects under the Revised AFP Modernization Program, and was among those approved in-principle by Pres. Rodrigo Duterte last June 2018.

The Kunduz amphibious armored combat earthmover developed by FNSS of Turkey. Photo credited to uri1974, taken from Wheelsage.org.

Project Summary:

Combat Engineering Equipment Lot 4 - Armored Combat Engineer Earthmover Acquisition Project

Note: Edited as of 21 August 2023

* End User: Philippine Army (unspecified Army Engineering Brigade)

* Quantity: 6 units, potentially more

* Modernization Phase: Horizon 2 Phase of RAFPMP

* Project ABC: Php1,200,000,000.00

* Acquisition Mode: Government-to-Government (G2G) negotiations between the Philippines Department of National Defense andTurkish Ministry of Defense under the Turkey-Philippines Defense Industry Cooperation Agreement.

* Source of Funding: GAA Funded

* SARO Release:
- SARO worth Php177,673,058 (15% initial payment)
- SARO-BMB-D-22-0009340 worth Php417,801,181.00 dated 07 October 2022 (2nd MYCA payment)
- SARO-BMB-D-23-0021665 worth Php624,547,428.31 dated 07 August 2023 (3rd and final MYCA payment)

* Winning Proponent: FNSS Savunma Sistemleri A.Ş.(Turkey)

* Product for Delivery: FNSS Kunduz Amphibious Armored Combat Earthmover (AACE)

* Contract Price: Php1,193,717,660.00

* Residual Amount: Php6,282,340.00

* Expected Project Completion: March 2023

* First post by MaxDefense: 2018

* MaxDefense Searching Hashtag: #PACEEACEEAcquisition

* Status: Originally among those decided as a G2G acquisition with Chinese government. Changed to G2G with Turkish government. Notice of Award (NOA) said to have been released in favor of FNSS as of February 2020, Contract Signing and Notice to Proceed delayed due to COVID-19 restrictions and government's decision to postpone until further notice. Contract signing confirmed to have been made on November 2020.

The FNSS Kunduz armored earthmover in action. Photo taken from Defenseworld's website.

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U P D A T E S:
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11 February 2020:

Turkish defense company FNSS, through its CEO Nail Kurt confirmed that they have signed a deal with the Philippine military for the export of the Kunduz amphibious armored combat earthmover.

The export deal with the Philippines is said to be the first for the product.

Based on MaxDefense Philippines' own monitoring of the AFP Modernization Program, only the Philippine Army has an impending requirement for armored combat earthmovers as part of its Combat Engineering Equipment Acquisition Project.

Previous posts made by MaxDefense on its social media page indicated that there are several lots under the Combat Engineering Equipment project that were supposed to be awarded as part of Government-to-Government (G2G) deals with the United Kingdom and People's Republic of China. Among those originally assigned for G2G with China is the Combat Engineering Equipment project's Lot 2, which calls for the acquisition of six (6) armored combat earthmovers.

Should China be awarded with the project under a G2G deal, it was eyed to be supplied by Poly Group, one of China's largest defense comapnies.

According to MaxDefense sources, the Philippine Army was against the G2G deals with China as they believe that while their products are cheaper, they are wary of the quality of Chinese machinery as well as the logistics and support package that they can offer.

Shifting the deal to a different source was approved last year by Defense Sec. Delfin Lorenzana, and the Philippine Army decided to downselect two models: Turkey's Kunduz from FNSS, and South Korea's KM9 ACE from Hanwha Techwin. Both models were derived from the American M9 Armored Combat Earthmover (ACE), which was the basis of the Philippine Army's own requirement for the Armored Combat Engineer Earthmover.

The Hanwha Techwin KM9 ACE, which was downselected by the Philippine Army together with the FNSS Kunduz. Eventually the Turkish product was selected. Photo taken from Oryx @ Twitter.

Ultimately the Philippine Army's Technical Working Group (TWG) for the project selected the FNSS Kunduz, which appears to be an improved version of the M9 ACE by adding amphibious capabilities, as well as improved armor protection for the crew.

The FNSS Kunduz. Credits to original source of photo.

MaxDefense is still in the process of determining the exact value of the deal. Based on FNSS' own announcement, the contract signing and Notice to Proceed (NTP) is expected to be signed only in 2 months time, or around April 2020.

FNSS also confirmed that delivery is expected by 2021, which means the contract duration should be around 365 days (1 year) which is standard with DND contracts under the AFP Modernization Program. This places the delivery deadline to be around April 2021, although FNSS could deliver initial batches at an earlier date.

FNSS showing the main components of the Kunduz AACE. Photo taken from FNSS' website.

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09 August 2020:

MaxDefense received information from sources that the project is not suspended like some other projects of the AFP Modernization Program, but is still to be pursued within 2020, although is postponed until further notice.

This is because the initial funding for the program was already made in FY2019, and the current funding for it would already be the second of three Multi-Year Contractual Authroities (MYCA).

It was decided in May 2020 that the project would be among those whose MYCA funding would be continue under FY2020. An allocation of Php910,412,107.19 was made for FY2020 for both Lot 1 (Armored Vehicle-Launched Bridge) and Lot 4 (Armored Combat Earthmover), which constitutes around 33% of the contract price for both projects.

The Turkish government was said to have put some pressure for this project to proceed considering the value of the initial MYCA allocation is not very significant. If pursued, the Philippines will become the first export customer for the FNSS Kuduz.

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05 January 2021

FNSS was reported to have confirmed that the deal between the Philippines and Turkey for the delivery of Amphibious Armored Combat Earthmovers (AACE) for the Philippine Army has proceeded after a contract was signed on November 2020.

The deal was said to be the second under the Turkey-Philippines Defense Industry Cooperation Agreement, which was signed in 2019 between the two countries as Turkey hopes to participate in the modernization program of the Armed Forces of the Philippines.

FNSS is expected to deliver its Kunduz AACE to the Philippine Army, and complete the contract obligations by March 2023.

Testing would be conducted in both countries, before final acceptance by the Philippine Army.

The Kunduz AACE from FNSS. Photo credits to FNSS.

It appears that the delivery will take around 3 years, which is quite lengthy considering the products to be delivered are not as complicated and plentiful.

It would have been better if the Philippines will have some sort of participation in its production, considering the agreement between Turkey and the Philippines is focued on Defense Industry Cooperation.

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22 August 2023:

The third and final MYCA payment for the project was secured with the DBM's release of a new last 07 August 2023, with SARO-BMB-D-23-0021665 worth Php596,858,829.50.

This means that the delivery of the Kunduz ACE could be happening soon, as the contract stipulates final payment only upon completion of delivery.