LTO says no need to terminate contract with IT provider Dermalog

The Land Transportation Office (LTO) has maintained that it will not terminate its land transportation management system (LTMS) contract with Dermalog, the agency’s current information technology service provider, LTO chief Assistant Secretary Vigor Mendoza II said Tuesday.

Mendoza made this response to the query of House transportation panel chairperson Romeo Acop.

He added LTO has no capability to take over LTMS or the system for processing the registration of millions of motor vehicles in the country and driver's licenses every year.

“We cannot on our own run the system without the assistance of our IT service provider Dermalog. The LTO does not have sufficient IT knowhow and personnel to take charge of the system,” Mendoza said.

“I assure you, Mr. Chairman, that our position is in the best interest of the government. We can explain it in a closed-door session because of the presence of parties here that are litigants in a case pending in the Supreme Court,” he added, referring to the pending case wherein petitioners asked the High Court to nullify LTO's P3.19 billion contract with Dermalog supposedly for its faulty and defective service.

Acop made the query since the Commission on Audit, in 2023, issued an Audit Observation Memorandum (AOM) to the LTO stating that the actual delivery period of milestones under the LTMS project from Dermalog exceeded the allowable time extension which was not compliant with the Government Procurement Manual Volume 2.

The same AOM stated that Milestones 1 and 3 of the LTMS were delayed from 165 to 756 days, respectively, despite multiple deadline extensions.

The AOM, however, is issued by the COA to the agencies concerned to give the latter the opportunity to explain certain adverse findings before it comes up with an Annual Audit Report (AAR), which is the final report.

Dermalog, on the other hand, is a German company that heads a joint venture with some local firms that the LTO contracted in 2018 to develop and manage LTMS.

During the hearing, SAGIP party-list Representative Rodante Marcoleta said the LTO should replace Dermalog with Stradcom as the agency’s service provider.

Mendoza, however, said he needs more time to vet the Stradcom credentials.

“We will have to validate their capability to walk the talk,” he said.

Transportation Undersecretary Reinier Paul Yebra, for his part, said the DOTr has tasked LTO to ensure efficient delivery of service.

“This is a contract between LTO and its IT provider. As the mother agency and per the directive of Secretary Jaime Bautista, we want to ensure na wala pong disruption sa service sa publiko,” Yebra said.

In a letter dated May 2, Transportation Secretary Jaime Bautista wrote to Stradcom president Anthony Quiambao to turn over all data it had collected from LTO during the duration of its previous contract.

Bautista has said then that such data submission “is crucial for a smooth transition to the new vehicle registration module and to expedite transaction processing for better service to our clients and stakeholders.”

“However, due to delays in transmission and missing data in the entries submitted, there are still obstacles to the execution and implementation of the new vehicle registration module of the LTO,” he said in his letter.—AOL, GMA Integrated News