MANILA, Philippines – Is the Land Transportation Office’s (LTO) old information technology (IT) system provided by Stradcom phased out, or is it a “golden parachute” that can fix the current system’s hitches? It seems that the government can’t decide.

Right now, the LTO is stuck in an awkward position where it uses both Stradcom’s old IT system and the government-owned Land Transportation Management System (LTMS) to process transactions like motor vehicle registrations and renewals, although Stradcom has already signed a phaseout agreement with the government. This dual system set-up collectively costs motorists billions a year in computer fees and leads to delays in service.

How do you solve the inefficiencies that this causes? The government apparently has conflicting views on what to do and which IT system to favor. The Department of Transportation (DOTr) seems to be leaning towards improving the LTMS, which was bid out to and set up by a joint venture led by German firm Dermalog.

A DOTr letter obtained by Rappler shows Transportation Secretary Jaime Bautista personally wrote to Stradcom, ordering the old IT system provider to submit all the motor vehicle records in its database to LTO “as soon as possible.”

“Upon review, it has been noted that the data provided by Stradcom Corporation only covers motor vehicle records up to December 2022, submitted in June 2023,” Bautista wrote in a letter dated May 3.

“[D]ue to delays in submission and missing essential data in the entries submitted, there are still obstacles to the execution and implementation of the new vehicle registration module of the LTO,” he added.

Just a few days before the DOTr sent its letter, Rappler reported how Stradcom had failed to turn over its electronic database in a timely manner, meaning that registration data for new motor vehicles in 2023 were missing from the new LTMS IT system. Sources familiar with the LTMS told Rappler that this has led to delays in processing motor vehicle registration renewals since it takes two weeks to import data from Stradcom to the new IT system.

Transport officials also told Rappler that they have been asking Stradcom to submit the data ever since the term of former LTO head Jose Art Tugade. But now, the DOTr – LTO’s mother agency – is putting more teeth into its demand, with a letter coming straight from the transportation secretary.

“The Department stresses the importance of Stradcom Corporation’s cooperation in this endeavor and the immediate transfer of all LTO-related data as agreed upon in the Phase Out Agreement,” Bautista wrote.

Stradcom, a ‘golden parachute?’

While the DOTr has been working to improve the government-owned IT system, a congressman has been pushing to cancel the Dermalog-LTO contract.

Since February, SAGIP party-list Representative Rodante Marcoleta has been pressuring the LTO to “legally rescind” the contract. In another meeting in March, Marcoleta again asked the LTO whether they were trying to cancel the contract.

Back then, LTO chief Vigor Mendoza II said that the agency was studying the “possibility of rescission” and seeking advice from the DOTr. Mendoza later clarified in a press release that the LTO has not terminated the contract for the LTMS.

In the latest meeting of the House Committee on Transportation on Monday, May 13, Marcoleta again asserted that the contract involving Dermalog should be terminated for failing to submit deliverables on time even after being granted several extensions.

“I am raising this for the nth time,” Marcoleta said. “I have already raised this possibility that considering that there are obvious violations of the contract – kasi hindi man lang kayo nagpatuo ng (because you didn’t even claim) liquidated damages. You are also obligated by the law to impose liquidated damages.”

Marcoleta also suggested that Stradcom might be able to take over the LTO’s IT system once again after terminating the contract with Dermalog.

“Is not the old IT system not in a position to do its job as it has been doing for the last so many years because the LTMS has not been perfected anyway?” Marcoleta said.

After Stradcom president Anthony Quiambao gave his assurance that the old IT system could provide its services “just like before,” Marcoleta said that it gave LTO a “golden parachute” in the event that the contract with Dermalog was cancelled.

“I thank the gentleman for offering a golden parachute here. I think that would be enough to allay the fears of LTO,” the lawmaker said.

However, Mendoza remained hesitant to confirm whether or not the LTO was supporting moves to end the contract, citing that the matter was already with the Supreme Court and that the agency was preparing to submit its comment to the high court. The LTO chief also said that they needed to “validate [Stradcom’s] capacity and capability to really walk the talk” and take over LTMS’ ability for online transactions and services.

DOTr Legal Affairs Undersecretary Reinier Yebra also emphasized that the transportation department was primarily concerned with ensuring that there is no disruption to public service.

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Is arbitration the way to go?

With the LTO still stuck with two parallel IT systems, and with no clear timeline or next steps, Northern Samar 1st District Representative Paul Daza raised the possibility of arbitration to settle disputes once and for all.

“I think DOTr and LTO should consider going through arbitration because it seems like nothing will happen. It’s been dragging for the longest time,” Daza said on Monday.

However, neither Dermalog nor LTO wished to enter into the “lengthy” arbitration process. Instead, they had differing views on how to effectively transition to the new IT system.

Till Dunkel, the project manager for Dermalog in the Philippines, asserted that the issues with the LTMS could be resolved if the government “turned off the old system,” referring to Stradcom.

Meanwhile, Mendoza countered that they would turn the old system off only after verifying all the functionalities of the LTMS and receiving guidance from the DOTr. The LTO chief emphasized that Dermalog should prioritize turning over the source code of the LTMS to the agency so that it could continue the project with the assistance of the Department of Information and Communications Technology (DICT).

But even with the disagreements hampering the rollout of the LTMS, DOTr undersecretary Jesus Ferdinand Ortega likewise said that the transportation department will not consider arbitration. They were instead working to find a compromise, though he gave no timeline.

“With the approval of the Secretary po, I will initiate talks between Dermalog and LTO po. And then could be with the DICT,” Ortega said. “Mag-usap, maghanap, (Talk, search) [and] look for something that we could agree or we could settle po.” – Rappler.com