DOTr: Dermalog contract still on

Jaime Bautista —DOTR FB PAGE

As President Ferdinand Marcos Jr. wrapped up his visit to Germany and Czechia on Friday, Department of Transportation (DOTr) Secretary Jaime Bautista denied that the government has terminated its P3.14-billion contract with German technology firm Dermalog.

“No Dermalog contract was terminated,” Bautista said in a statement. “The Land Transportation Management System (LTMS), developed by Dermalog, is owned by the government. The LTMS is currently being maintained by Dermalog.”

The secretary issued the statement after Land Transportation Office (LTO) chief Vigor Mendoza II earlier said that they were taking steps for the possible rescission of its multibillion contract with Dermalog.

But Mendoza himself issued another statement saying that the full migration of the LTMS remains a top priority of the agency, including the full utilization of Dermalog’s system.

The Hamburg-based Dermalog Identification Systems GmbH is the largest German biometrics manufacturer and it partnered with local firms to develop the LTMS for the LTO’s driver licensing and vehicle registration processes.

Reverse course

LTO is “more focused on solving all the challenges in the agency in order to deliver fast and convenient services to its clients across the country,” Mendoza said in the statement he issued after Bautista’s denial.

“Our hands are full in terms of further improving our services and in delivering what needs to be delivered to our countrymen. All of these are our priority right now,” Mendoza said.

Mendoza said that since he assumed office in July last year, the 70-percent utilization rate of the LTMS has already increased to around 97 percent and the LTO expects to fully migrate to the LTMS by August this year.

Since the Dermalog portal was launched in the country in 2020, Dermalog said in a statement that its system has issued 28 million driver’s licenses, or about 30,000 per day. It also handles 70,000 to 80,000 vehicle registrations per day.

House pressure

The LTMS has saved motorists P1.932 billion in computer fees for driver’s licenses and also saved P3.123 to P3.245 billion in computer fees for vehicle registrations.

However, some congressmen, particularly Antipolo Rep. Romeo Acop and Sagip party list Rep. Rodante Marcoleta, have been pressuring LTO to rescind its contract with the Dermalog joint venture purportedly because of breaches of contract.

Acop, chair of the House committee on transportation, cited a government audit report saying that the government suffered P1.119 billion in damages, after Dermalog failed to submit its deliverables on time.

READ: LTO won’t terminate contract with Dermalog, says Mendoza

Marcoleta, on the other hand, ordered Mendoza to immediately start the process of rescission because the contract was already “ripe for termination.”

Marcoleta added that the termination could ensure LTO’s complete control over the LTMS to implement changes, since Dermalog repeatedly refused to turn over the source code to LTO until its contract ends next year.

Acop argued that Dermalog violated two provisions of the Government Procurement Manual when it failed to submit its deliverables.

“Pursuant to the Revised Implementing Rules and Regulations of the Government Procurement Reform Act (Republic Act No. 9184), once the cumulative amount of liquidated damages reaches 10 percent of the amount of the contract, the procuring entity may rescind or terminate the contract without prejudice to other causes of action and remedies available under the circumstance,” Acop said in a House hearing.

However, Mendoza said that while the Commission on Audit found grounds for termination, there is also an arbitration clause in the Dermalog contract that could further delay the LTO’s delivery of services.