SOCIAL Amelioration and Genuine Intervention on Poverty (SAGIP) Party-list Rep. Rodante Marcoleta is seeking the cancellation of the foreign-made P3.14 billion Land Transportation Management System (LTMS) contract, the Land Transportation Office’s (LTO) information technology platform, due to alleged legality issues and several violations.
During the House Committee on Transportation’s meeting on various issues of the Department of Transportation (DOTr) and LTO, including the LTMS, Marcoleta, citing the latest Audit Observation Memorandum (AOM) of the Commission on Audit (COA), revealed that the actual delivery period of milestones under the LTMS project exceeded the allowable time extension, which was not compliant with the Government Procurement Manual Volume 2.
Despite multiple deadline extensions, the COA bared that Milestones 1 and 3 of the LTMS were delayed from 165 to 756 days, respectively.
Marcoleta explained that according to the LTMS contract, the LTO is allowed to charge an applicable rate of liquidated damages from the contract price for the delayed delivery of goods and services, and once the maximum is reached, the LTO may terminate the contract.
He told LTO chief Assistant Secretary Vigor Mendoza II that based on his estimates, the total liquidated damage cost is currently at P3.19 billion, which already exceeded the maximum allowable amount. With this, the LTO can “legally rescind” the LTMS contract.
The 3.14 billion LTMS project is Component A of the P8.2 billion DOTr Road IT Infrastructure Project, which was awarded to the Joint Venture Agreement (JVA) of German technology firm Dermalog and local partners Holy Family Printing Corp., Microgenesis, and Verzontal Builders, Inc. in May 2018.
The P2.6 billion Component B refers to the procurement of hardware, software, and services relative to LTO’s automation.
Marcoleta questioned the legality of splitting the project into two components, arguing that there were no documents showing that it was approved by the National Economic and Development Authority — Investment Coordination Committee (NEDA-ICC).
He stressed this was gross negligence on the part of LTO, a clear violation of Section 65 of the Government Procurement Reform Act (R.A. 9184) and constituted technical malversation under Article 220 of the Revised Penal Code.
He added that the 13 extension orders and three amendments to the payment schedule of the LTO in favor of Dermalog also violated procurement and anti-graft laws.
It can be recalled that Sen. Imee Marcos, in December 2022, filed Senate Resolution 348 seeking to investigate the alleged corruption involved in the splitting of the P8.2 billion DOTr Road IT Infrastructure Project.
Marcos also cited a COA report revealing the LTMS was delayed by at least three years, and “should have warranted damages.”
Mendoza said they have already coordinated with the Ombudsman to investigate the LTMS contract and enforce accountability against current and past LTO officials involved in the project.
Sta. Rosa City Rep. Dan Fernandez lashed out at Dermalog representatives for repeatedly “lying” and told them to respect the congressional procedure even though “they are foreigners.” This stemmed from Dermalog’s pronouncement that the LTMS is 100% functional and the LTO has full access to the system.
However, Mendoza belied this claim and said the LTO has identified 130 issues that prevent the LTMS from being fully functional. For instance, the LTMS fails to provide an accurate computation of the Motor Vehicle User’s Charge (MVUC), which can wrongly charge the transacting public or affect the government’s tax collection. The LTMS is also not connected with other government agencies.
Mendoza stressed the agency has no full system access to the LTMS so it could not make any alterations to the system without Dermalog’s help. He added that with full system access, some changes in the system can be performed by the Department of Information and Communications Technology (DICT), which could help the agency swiftly respond to the needs of the transacting public without additional costs.
To date, LTO’s change order requests to Dermalog already amount to P620 million. This irked several lawmakers, saying the Philippine government has already paid a hefty amount of taxpayer money, and yet the system access is being “held hostage” by the foreign contractor.
Meanwhile, in response to a question by Bagong Henerasyon Party-list Rep. Bernadette Herrera-Dy, Stradcom Corp. President and CEO Anthony Quiambao confirmed to the committee that the company has already made its database submission to the LTO 10 times.
Quiambao also cried foul over Dermalog’s accusations that Stradcom’s failure to submit the database affected the functionalities of the LTMS. He urged the foreign IT firm’s officials to apologize to the company for previously misusing its company name as the reason for Dermalog’s delays.
House Committee on Transportation chairperson and Antipolo City 2nd District Rep. Romeo Acop ordered the LTO, DICT, and Dermalog to meet and resolve the pending issues of the LTMS within two weeks to find solutions in addressing the never-ending suffering of LTO and its clients.
