BSP terminates contract with Nat’l ID cards supplier

The Bangko Sentral ng Pilipinas (BSP) has terminated its contract with its supplier of cards and equipment for the Philippine Identification System (PhilSys) or National ID project for failure to fulfill and perform the services in its deal with the central bank.

In a Notice of Decision to Terminate Contract, obtained by GMA News Online, the BSP informed AllCard Inc. (ACI) of the Monetary Board’s decision, dated August 15, to terminate in whole the contract between the two parties for the “supply, delivery, installation, and commission of Lotus 1 Lot Lease of Card Production Equipment for a period of three years, including provisions of Technical and Maintenance Support personnel, training of BSP/PSA personnel, and supply and delivery of raw materials, consumable,s and wear-and-tear spare parts for 116 million pieces of PhilID cards.”

The central bank cited the following as grounds for terminating its contract with ACI:

• Failure to deliver any or all of the goods specified in the contract, amounting to more than 10% of the contract price —with ACI’s failure “to delivery enough raw materials within the specified period, even within the extension granted” and the supplier also failing to “maintain the production machinery due to unavailable machine spare parts causing prolonged machine downtime
• Failure to perform other obligations under the contract 

The BSP, in particular, said ACI failed to perform the following:

• Failed/refused to comply with valid instructions
• Failed to timely provide a comprehensive and realistic catch-up plan
• Incurred almost 7% wastage, which grossly exceeded the 1% maximum allowable maximum wastage

The notice also indicated that, as of June 30, 2024, the cumulative liquidated damages due from ACI have reached more than 10% of the contract price. 

With this, the BSP said: “The contract is hereby deemed terminated from receipt by ACI of the notice decision. No other paper or document shall be entertained by the Monetary Board.”

BSP Governor Eli Remolona, in an earlier forum, said that “we have decided to terminate actually the old contracts because the contractor for these IDs has not been able to deliver, so we have terminated the contracts.”

“We are negotiating for damages and at the same time we’re looking for a new vendor for this contract. But this is an issue and we’re working on that issue,” Remolona said.

In a text message, Remolona confirmed that the BSP terminated the contract with ACI “for the supply, delivery, installation, and commissioning of Lot 1 Lease of Card Production Equipment for National ID Cards. “

Sought for comment, ACI president Roy Ebora told GMA News Online that “at the moment all I can say is we have filed a Motion for Reconsideration with the Monetary Board and we have an ongoing arbitration with the BSP.”

The central bank chief, likewise, said that “the contract is subject to a pending arbitration between BSP and ACI.”

“In light of the confidentiality of arbitration, BSP is prohibited from disclosing matters relating to the proceedings,” Remolona said.

Senate to probe contract termination

Senate Minority Leader Aquilino "Koko" Pimentel III will seek an investigation on the matter, noting that it will bring further delay in the delivery of national IDs. 

"Mukhang magkakaroon na naman ng further delay sa making and delivery of the national IDs. Dapat imbestigahan 'yan ng Senado," Pimentel said in a text message. 

(It seems that there will be another delay in the production and delivery of national IDs. The Senate should investigate this matter.)

Pimentel said he is currently drafting a resolution asking the Senate to investigate the termination of contract on the production of national IDs.—RF, GMA Integrated News