LTO exec pursues probe of P3.14-B LTMS mess

LAND Transportation Office (LTO) chief Assistant Secretary Vigor Mendoza 2nd on Wednesday said they coordinated with the Office of the Ombudsman to investigate the P3.14-billion Land Transportation Management System (LTMS) contract with German technology firm Dermalog.

Mendoza made the announcement following the call of Sagip Party-list Rep. Rodante Marcoleta for the cancellation of the LTMS contract for Dermalog’s underperformance and delays.

The LTO official will hold accountable current and past LTO officials involved in the project that was awarded in May 2018 through competitive bidding.

He also belied pronouncements made by Dermalog officials that the LTMS is 100-percent functional, and the LTO has full access to the system.

Mendoza said the LTO has identified 130 issues that prevent the LTMS from being fully functional.

For instance, he said the LTMS fails to provide an accurate computation of the Motor Vehicle User’s Charge (MVUC), which can wrongly impose a fee on the transacting public or affect the government’s tax collection.

Mendoza pointed out that LTO has no full system access to the LTMS so it could not make any alterations to the system without Dermalog’s help.

He also said that with full 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.

The DICT has disclosed earlier 14 deficiencies in the LTMS system and 166 needed enhancements to further improve it.

To date, LTO’s change order requests to Dermalog already amount to P620 million.

Mendoza issued these pronouncements amid calls for the cancellation of the LTMS contract.

During the House Committee on Transportation’s meeting on various issues of the Department of Transportation (DoTr) and LTO held on Tuesday, Marcoleta cited the latest Audit Observation Memorandum (AOM) of the Commission on Audit (CoA), which revealed that the actual delivery period of milestones under the LTMS project exceeded the allowable time extension.

Marcoleta said this 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 said that based on the LTMS contract, the LTO is allowed to charge an applicable rate of liquidated damages from the contract price for delayed delivery of goods and services, and once the maximum is reached, the LTO may terminate the contract.

He told Mendoza that based on his estimates, the total liquidated damages 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 P3.14-billion LTMS project is Component A of the P8.2billion 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 P5-billion Component B refers to the procurement of hardware, software and services relative to LTO’s automation.

However, 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 said that this was gross negligence on the part of LTO, a clear violation of Section 65 of the “Government Procurement Reform Act” (RA 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.

Stradcom Corp. President and CEO Anthony Quiambao earlier confirmed that the company had 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.