Marcos orders DOTr to fast-track deal with Sumitomo-Thales for air traffic system maintenance

President Ferdinand Marcos Jr. on Tuesday directed the Department of Transportation (DOTr) to speed up its discussions with Sumitomo-Thales for the maintenance of the country’s aviation traffic management system following the New Year’s Day airspace shutdown.

At a press briefing in Malacañang, Transportation Secretary Jaime Bautista said he discussed with the President DOTr’s recommendation following the January 1 incident involving the Civil Aviation Authority of the Philippines’ (CAAP) Communications, Navigation and Surveillance/Air Traffic Management (CNS/ATM).

“This morning we met with the President and gave him an update of what happened during the January 1 issue that we had with the CNS/ATM of the CAAP,” the Transport chief said.

“We also made some recommendations on how we will move forward. The President is very much aware of what happened. He supports our recommendation to implement future requirements necessary for the upgrade or improvement of the CNS/ATM system, which includes hardware and software maintenance, hardware replacement, ultimate fallback system for system redundancy and the need for independent CNS/ATM in a separate location,” he added.

On the first day of 2023, 282 flights were canceled, diverted, or delayed after one of the Philippine Air Traffic Management Center's (ATMC) uninterruptible power supplies (UPS) failed and troubleshooting activities had to be done.

The incident grounded hundreds of flights and stranded some 56,000 passengers, virtually shutting down Philippine airspace for several hours.

With this, Bautista said the President ordered the DOTr to continue the maintenance of the CNS/ATM equipment and fast track the service contract agreement between the agency and Sumitomo Corp. - Thales Corp.

“The President [also instructed us to continue the maintenance of all the existing equipment [of the CNS/ATM]. At the same time, he wants us to fast track the maintenance agreement with Sumitomo and Thales, the provider of the system,” the Transportation chief said.

Bautista said the DOTr has been in discussions with the two corporations since September 2022.

He said the agency is expediting the resolution of the payment dispute.

“We’re just trying to settle this and hopefully by the end of this month we’d have a clear indication on how we will be able to settle the issue,” Bautista said.

The Transportation chief said the President recommended that the DOTr have separate discussions on entering into a new agreement with Sumitomo-Thales and the settlement of claims.

“We met with Sumitomo and Thales a few weeks ago and we suggested that we negotiate for a permanent maintenance agreement pending the settlement of the issues,” he said.

“We need to thresh out… We need to settle financial issues with them. They have claims against the government and we (government) also have claims against them,” he added.

Transportation Undersecretary for Aviations and Airports Roberto Lim earlier said the Thales-Sumitomo joint venture's claims involve a total amount of P986,653,157.81 which was divided into three different types of claims:

•     Suspension claims worth P477 million. This is a consequence of the suspension of contract due to a notice of disallowance in 2011 which was eventually lifted in 2013.
•     Prolongation claim worth over P387 million. This is the consequence of the delay due to the suspension of the contract and the delay of the implementation of the work instruction by the Department of Transportation.
•     Price escalation claim worth over P121 million, which is a consequence of the delay of the project contractors.

On the other hand, the DOTr also has P644 million in claims against the joint venture. Lim had said this is for the delay in the delivery of the system.

Nonetheless, Bautista said the President recognized the need for improvements in the maintenance of the air traffic management system.—AOL, GMA Integrated News