Can LTO contractor fill Stradcom’s shoes?

INNOVATIONS: After 15 years of computerizing and integrating the nationwide services of the Land Transportation Office, the contractor Stradcom Corp. will disengage upon the expiration of its contract on Feb. 10.

Stradcom has reason to look back with pride to the innovations it has put in place at an investment of P4.2 billion over its contract period — and at no cost to the government.

As a car owner and driver, I appreciate most the ease of motor vehicle registration, and the speedy renewal of licenses without appreciable increase in cost to LTO clients.

But come February, there will be no disruption of LTO services. Stradcom has pledged to stand by, if necessary, to ensure a smooth transition until the new contractor is able to fully take over the system.

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EFFICIENT PROCESSING: Real time transactions under the Stradcom system have boosted government income, making the LTO one of the highest earning agencies, hitting a high of over P14 billion in revenues in 2011, next to the internal revenue and the customs bureaus.

Computerization has made possible the processing and issuance of a new driver’s license in an hour and its renewal within 30 minutes — as experienced by President Noynoy Aquino himself when he renewed his license in 2011.

The LTO, the first agency ever nationally computerized, processes almost 70,000 transactions daily. Its database includes over 10 million driver’s licenses and over seven million registered motor vehicles.

To reach out to LTO clientele, Stradcom has built 29 license renewal centers, some of them in shopping malls, and deployed 11 e-mobile vans for driver’s license renewal.

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REVENUE BOOST: Synchronization and integration of LTO operations with other government agencies has resulted not only in increased income, but also in less corruption.

Stradcom linked the IT system of LTO to such coordinate agencies as the Metro Manila Development Authority, ensuring that penalties for traffic violations are enforced.

It used to be that drivers could ignore citations and warnings. Now erring drivers can no longer renew their licenses without paying fines, because MMDA records are automatically reflected in the LTO system.

By linking up with the Land Transportation Franchise Regulatory Board, the LTO system has secured over P19.3 million against illegal public utility vehicle franchises. It has also secured some P1.4 billion in taxes and premiums against “fly by night” insurance companies.

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NEW SCHEME: Stradcom president/CEO Cezar T. Quiambao said the firm would no longer bid for the new seven-year contract since the Department of Transportation and Communication is departing from the current BOO (Build-Operate-Own) scheme to direct procurement.

“The best thing about the BOO business model is that it allowed the LTO to become one of the highest revenue-generating agencies at zero cost to the government,” he said.

Having served four Philippine presidents, seven DoTC secretaries and nine LTO chiefs, Stradcom has spent over P300 million for upgrades and improvements. It has installed 30,000 hardware, equipment and peripherals in all LTO offices nationwide, including extension offices.

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ALL-PINOY FIRM: The 10-year contract of the DoTC/LTO with Stradcom for the LTO-IT project was awarded in December 1997, but the Certificate of Acceptance of an IT Facility (CAIF) was awarded only in 2003 resulting in an expiry date of Feb. 10, 2013.

Although LTO annual revenue from the IT system amounts to over P14 billion, Stradcom earns only around P500 million. Btw, the government still owes Stradcom almost P4 billion.

Now a 100-percent Filipino firm, Stradcom is 60-percent controlled by Quiambao’s group, with the remaining 40 percent owned by local banks.

In the beginning, Stradcom had as part of the board the World Bank through the International Finance Corp. that participated in the firm’s initial funding needs. But when Stradcom started generating revenues, the IFC moved on to other investments.

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SUMBILLA RAID: In 2011, a group led by a certain Bonifacio Sumbilla “raided” the operations base in the LTO main offices in Quezon City claiming to be the legitimate Stradcom controlling interest, and not the Quiambao group.

The ownership issue has been settled since by the Pangasinan Regional Trial Court which ruled that the case filed by the Sumbilla group was just a nuisance suit.

Mainly on the basis of CCTV footage of the incident, the Department of Justice recommended the suspension of LTO chief Virginia Torres, after a finding of connivance for walking in with the Sumbilla group when it entered the Stradcom premises.

Since it did not have the passwords, the Sumbilla group failed to take over and run the system, but the incident disrupted LTO operations.

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WHY B-O-O?: If memory serves, it was then President Fidel V. Ramos who decided in 1997 to use a BOO (Build-Operate-Own) instead of a BOT (Build-Operate-Transfer) scheme for the LTO system upgrade.

Noting the rapid obsolescence in technology, the Ramos administration expressed concern that the government would be left holding outdated equipment at the end of the contract period.

Since the IT equipment is owned by Stradcom (although the database is held by the DoTC/LTO), my impression is that the incoming contractor will have to start from scratch in building up and managing its own hardware and system.

Shifting to direct procurement, the Aquino administration has allotted P8 billion for seven years for the services of the new contractor, including its creation of a new system. This means that the next provider could gross a potential P8 billion from the government during the life of its contract.

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