The US has agreed to defer Taiwan’s first payment for 82 High Mobility Artillery Rocket Systems (HIMARS) until it has completed negotiations with contractors, the Ministry of National Defense (MND) said yesterday.
There is no precedent for the US allowing a purchasing country to delay the first payment, Department of Strategic Planning Director Lieutenant General Huang Wen-chi (黃文啓) told reporters this morning before a legislative committee hearing.
Washington is expected to complete negotiations with contractor Lockheed Martin by the end of May, he said, adding that the legislature should therefore make haste in finalizing the special defense budget to prevent more issues from arising.
Photo: Ritchie B. Tongo, EPA-EFE
The payment deadline under the US’ offered letter of acceptance (LOA) was set to expire today and was in danger of not being met, as the legislature has yet to pass the special defense budget.
The Legislative Yuan on March 13 authorized the Executive Yuan to sign four LOAs, including one for the HIMARS.
However, the ministry had no basis to make the payment, as the budget had not yet been passed by the Legislative Yuan.
The Legislative Yuan’s Foreign Affairs and National Defense Committee met today, calling Minister of National Defense Wellington Koo (顧立雄) to give a report on the ministry’s annual investment plan and ability to meet its financial commitments.
The process for procuring weapons usually requires a signed LOA and an initial payment before the US can begin negotiating with manufacturers.
While the LOA arrived behind schedule earlier this month, the US had said there was no possibility to extend the signing deadline, Huang said.
As the expiration date grew closer, the US Defense Security Cooperation Agency (DSCA) continued to refuse to grant an extension for the first payment, despite several rounds of negotiations last week, he said.
However, the ministry kept in close communication with the US and reviewed all relevant security assistance regulations, reaching a consensus this weekend with the American Institute in Taiwan, he added.
The DCAS would treat the matter as an emergency case and use its own funds to cover the costs required to prepare for contract signing, he said.
Taiwan must then pay the owed funds within five days of signing the contract, he added.
As the procurement of FGM-148 Javelins is similarly in danger of missing deadlines due to the legislative standstill, Taiwan may seek a similar extension from the US, Huang said.
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