Termination of LTO Contract with German IT Firm Dermalog Due to Underperformance and Violations

LTO Chief Assistant Secretary Vigor Mendoza 2nd
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Termination of Contract with Dermalog: LTO’s Decision to Address Underperformance

The Land Transportation Office (LTO) recently announced its intention to terminate its contract worth P3.14 billion with German information technology firm Dermalog. The decision was made due to the company’s underperformance in developing the Land Transportation Management System (LTMS).

According to LTO Chief Assistant Secretary Vigor Mendoza 2nd, the agency sought assistance from the Office of the Solicitor General to facilitate the process of rescinding the contract. The Department of Transportation (DOTr) has approved this action, emphasizing the need for a swift resolution.

Mendoza highlighted that the COA (Commission on Audit) report, submitted to the Office of the Solicitor General last year, played a crucial role in justifying the termination. The termination process is expected to be completed within the week, ensuring that necessary measures are taken to address the underperformance issue.

To minimize the impact on the public, Mendoza assured the public that the LTO is actively coordinating with the Department of Information and Communications Technology (DICT). Their collaboration aims to ensure that essential services, such as motor vehicle registration and driver’s license application, will continue unaffected by this initiative.

The Department of Transportation (DOTr) echoed the LTO’s concerns, emphasizing that the LTMS still lacks crucial features necessary for the LTO’s daily operations. One such feature is a payment system, which is vital for streamlining processes and improving efficiency.

The LTMS was developed through a joint venture agreement between Dermalog and its local partners, Holy Family Printing Corp., Microgenesis, and Verzontal Builders Inc. The German firm secured the project through a competitive bidding process in May 2018.

During a congressional hearing on March 7, House Committee on Transportation Chairman and Antipolo City 2nd District Representative Romeo Acop raised concerns about Dermalog’s performance. Acop pointed out that the company violated two provisions of the government procurement manual by failing to submit the required deliverables on time, despite being granted 13 deadline extensions.

Acop further highlighted that these violations resulted in damages worth P1.119 billion, which he believes justifies the termination of the contract. The LTO’s decision to terminate the contract is a necessary step to address the issues of underperformance and ensure accountability in government projects.

Ensuring Accountability and Efficiency in Government Projects

The termination of the contract between the LTO and Dermalog underscores the government’s commitment to ensuring accountability and efficiency in public projects. It serves as a reminder that companies awarded government contracts must fulfill their obligations and deliver the promised results within the agreed-upon timeframe.

The joint venture agreement between Dermalog and its local partners was a significant opportunity to enhance the Land Transportation Office’s operations. However, the company’s failure to meet deadlines and deliver the required features has hindered the progress of the LTMS.

By terminating the contract, the LTO is taking a proactive approach to address the underperformance and seek alternative solutions that will better serve the public. The decision reflects the government’s commitment to upholding the highest standards of transparency and accountability in public procurement processes.

It is crucial to note that the termination of the contract is not a decision taken lightly. The LTO, with the support of the Office of the Solicitor General, thoroughly reviewed the situation and considered the impact on the agency’s operations and the public. The COA report provided the necessary evidence to justify the termination and seek damages for the losses incurred.

Moving forward, the LTO will explore options to ensure the successful implementation of the LTMS. Collaboration with the Department of Information and Communications Technology (DICT) is a step in the right direction, as it will help mitigate any disruptions to essential services such as motor vehicle registration and driver’s license application.

The termination of the contract with Dermalog sends a clear message to both local and international companies bidding for government projects. It emphasizes the importance of fulfilling contractual obligations and delivering high-quality results within the agreed-upon timeframe.

Conclusion

The decision by the Land Transportation Office (LTO) to terminate its contract with Dermalog due to underperformance demonstrates the government’s commitment to accountability and efficiency in public projects. The LTO’s collaboration with the Office of the Solicitor General and the Department of Information and Communications Technology (DICT) reflects a proactive approach to address the issues and ensure the continuity of essential services.

By terminating the contract, the LTO aims to find alternative solutions that will better serve the public and enhance the Land Transportation Management System (LTMS). This decision serves as a reminder to companies bidding for government projects that they must fulfill their obligations and deliver the promised results within the agreed-upon timeframe.

Moving forward, the LTO will continue to prioritize transparency, accountability, and efficiency in its procurement processes. The termination of the contract with Dermalog is a significant step towards achieving these goals and ensuring that government projects benefit the public as intended.

Source: The Manila Times

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