The long-delayed digitalization project of the Land Transportation Office, or LTO, faces new roadblocks that are expected to further complicate the timeline for its full implementation.
The project, which started in 2018, has been delayed by more than two years, mostly because of the failures of German contractor Dermalog.
LTO has identified 14 components of the Land Transportation Management System, or LTMS, as being deficient despite the full payment of its P8-billion cost.
The project consists of two components, the first costing around P3.2 billion and the second more than P5 billion. The Department of Information and Communications Technology or DICT has identified the defects that LTO chief Atty. Vigor Mendoza II said are being addressed by a technical working group he formed.
In 2018, the LTO awarded the project to a joint venture led by German technology firm Dermalog.
Since the contract's start, however, Demalog has failed to deliver many of the project's key components. LTO officials termed Dermalog's handling of the vital processes of the automated system a threat to national security.
Lately, members of the consortium led by Dermalog have been embroiled in infighting.
Filipino construction firm Verzontal Builders Inc. said it is "seeking justice" as it mulls filing civil and criminal complaints against Dermalog due to a payment dispute.
Verzontal counsel Ricardo Gao Pronove III said the company is pursuing legal options to ensure Dermalog is "exposed for its corrupt practices," despite the latest Court of Appeals decision that dismissed a petition due to technicalities.
Pronove said Dermalog cut Verzontal from their joint venture agreement abruptly. The lawyer said that without Verzontal, the LTMS contract would be deemed invalid since the net financial contracting capacity requirement for a government project for bidding can't be achieved without it.
"We don't want to partner with them anymore because they are conducting [it] illegally. They are violating the contract," Pronove said.
In its complaint, Verzontal alleged that Dermalog failed to pay the company its 25 percent share despite completing the civil, mechanical, and electrical works needed for the LTMS project.
Verzontal also claimed it was made to believe that the electro-mechanical works only amounted to P278 million when it was indicated in the contract that it totaled P390 million.
Pronove said the new civil case would still be based on Dermalog's failure to pay Verzontal fully for its completed services, particularly the construction of LTO's information technology center. In contrast, the criminal case is related to Dermalog's alleged illegal activities in the LTMS project.
He added that Verzontal is beefing up the cases, which are expected to be filed before the end of the year.
In a Senate Blue Ribbon committee hearing on alleged irregularities in the LTMS project last June, Verzontal director Jose Natividad revealed that they were not privy to the other components of the LTMS project because the JVA partners had not held a single meeting.
Other local companies in the JVA include Microgenesis Software Inc. and Holy Family Printing Corporation.
Congress probes LTO deal
Senators are looking into the Dermalog JVA that might not be "a real partnership" but a sub-contracting deal.
Projects undertaken by joint venture agreements where several members are not registered with the Securities and Exchange Commission are prone to corruption.
The Procurement Law is now being reviewed for possible amendments to include provisions that will compel JVAs to register with the Securities and Exchange Commission before bidding for government projects to avoid irregularities.
Aside from internal disputes regarding Dermalog's JVA, the LTMS project has been facing delays and issues, which were uncovered by the Commission on Audit, or CoA, and the DICT.
These shortcomings include unmet schedules that resulted in several extensions, collecting advance payments, and unfulfilled deliverables. Verzontal said the irregularities support its claim that something was wrong with the undertaking.
"Would you entrust your personal data with this company? They hold sensitive information about Filipino motorists, and we need to be cautious about that," said Verzontal's Natividad.
The CoA flagged the contract in a 2021 consolidated annual audit report for the Department of Transportation.
Among the "customized core applications" were the Driver's Licensing System and the Motor Vehicle Inspection and Registration System, both of which are components of the LTMS.
The state audit agency said LTO's "acceptance of customized core applications with missing processes had caused undue payment to the vendor, which is disadvantageous to the government."
Senator Francis Tolentino cited several problems that he wants the government to resolve in the LTO project.
"Why have we fully paid for a project that is only 80 percent complete? Why do our drivers continue to experience difficulty obtaining a license until now? Why is the IT roadmap (worth P8 billion) still not being implemented?" he asked.
"And why is the interconnectivity that has been planned for a long time and given the corresponding funds, still not yet in order?"
