The Royal Thai Navy has come under public scrutiny after only one company, South Korea’s Hanwha Ocean, was deemed qualified to take on the 17-billion-baht frigate procurement.
The development has sparked widespread criticism and prompted the Royal Thai Navy top brass to defend the transparency of the project on Friday.
Navy commander Adm Pairote Fuangchan held a press conference with project officials to explain the selection process after public criticism that only one bidder was left.
The project covers one high-performance frigate with onboard systems and equipment, spare parts, support, testing, training, acceptance, warranties and related costs, under a 17-billion-baht ceiling.
It forms part of the navy’s long-term force development plan to replace ageing vessels and to protect sovereignty, maritime routes, economic areas, energy resources and key infrastructure.
The navy said the new frigate would fight across three dimensions — surface combat, anti-submarine warfare and air defence — and could strike land targets, counter unmanned aircraft and conduct command, control, datalink and joint operations.
Rear Adm Parat Rattanachaiphan, a navy spokesman, said operational requirements had been set by the vessel’s missions, areas of operation and potential threats, rather than by any company, country, brand or design.
The navy invited 11 shipyards from several countries to obtain the tender documents, with six eventually submitting bids. It said the terms of reference had undergone consultation and review, with no complaints from bidders during their preparation.
Criteria announced in advance distinguished mandatory minimum requirements from scored items covering capability, readiness, survivability, logistics and technical support, bidder reliability, technology transfer and defence-industry development, Rear Adm Parat said.
“Four bidders subsequently failed to meet substantive technical requirements. The reasons included failure to submit documents needed to demonstrate performance and capability, proposals outside the scope of work, and conditional offers that could hinder assessment or potentially disadvantage the state.
“One other bidder failed the qualification stage because of missing or materially incorrect documentation and a failure to meet specified requirements,” Rear Adm Parat said.
The procurement committee unanimously applied an evidence-based evaluation using the same standards for all bidders and considered only documents submitted on time.
The navy said that one firm left in the race did not make awarding the contract automatic, as the committee still had to assess technical aspects, price, delivery terms, warranties, lifetime support, technology transfer and value for money.
Hanwha Ocean Co Ltd of South Korea was selected after evaluation and negotiations at a final price of 16.73 billion baht, 270 million baht below the ceiling, or about 1.6%. The figure includes VAT, taxes and duties, transport, insurance and related costs.
Under the final offer, Hanwha will provide an offshore patrol vessel (OPV) design, an unmanned surface vehicle (USV) design, and rights to access and further develop knowledge relating to the Tactical Data Link and Combat Management System (CMS). The navy said that would reduce dependence on foreign technology and help Thailand modify, integrate and develop systems while strengthening its defence industry and personnel.
The offset package includes investment, research and development, technology transfer, personnel development, joint production and the use of Thai labour, materials, goods and services. Hanwha’s proposal has an actual value of 7.254 billion baht, equivalent to 43.36% of the project value, and an Offset Credit Value of more than 53.65 billion baht.
The navy said the credit is a calculated figure based on set criteria and multipliers, not money paid to the government. Offset commitments would be written into the contract with plans, deadlines, indicators and verification.
Contract negotiations, drafting and signing come next, followed by design, construction, system installation, testing, training, acceptance and delivery. The navy said it would monitor performance, the delivery schedule, technology transfer, domestic activities and offset commitments.