THE Commission on Audit is seeking sanctions against the third party service provider (SP) contracted by the Land Bank of the Philippines for failing to keep the government bank’s automated teller machines (ATMs) available to customers at the required rate.
In its 2019 audit of Landbank, the COA disclosed that G4S Cash Solutions Philippines, Inc. failed to meet the required 96 percent minimum uptime rate for 11 out of 12 months in 2019, September being the only month when it registered 96.04 percent availability.
Under its contract, G4S Cash Solutions had committed to undertake cash loading of all Landbank ATMs as well as first-level maintenance on the cash machines. Specifically, it was supposed to refill the machines with cash within two hours in Metro Manila and within four hours in provincial locations.
In its reply to the audit findings, Landbank management said it has taken steps to improve the ATM availability and has imposed penalties against the service provider amounting to P3,391,250.
The Landbank rationalized the necessity of hiring a third-party firm as a way to reduce operational risks and improve efficiency in the operating time of the ATMs.
The service provider’s 2013 contract expired August 2016 but this was renewed up to August 2019 on a contract worth P324 million. This was again extended twice more up to February 6, 2020 and on to August 6, 2020 to give the bank time to prepare for a bidding process for another service contract.
“The SP failed to maintain the monthly Total Uptime Maintenance Rate of 96 percent provided in the terms of reference. Review and analysis of the ATM Servicing Availability Report showed …that there were frequent prolonged periods of “no cash status.”
Likewise, a quarterly performance assessment from respondent Landbank branches recorded “needs improvement” ratings for the whole year in all criteria, including cash loading, response time, security procedures and ATM cleanliness and maintenance.
Auditors noted that under the contract, Landbank may impose a penalty equivalent to two percent of the total monthly charges of the total number of ATMs within the following month after the deficiency was incurred.
The charges were P50 if the down time lasts for up to an hour, P100 if between one hour but less than two hours, and P200 in excess of two hours.
However, the audit team found that Landbank did not religiously collect the monthly service level agreement penalties and had in fact acted belatedly.
