Lemon

Among the major programs of the Bongbong Marcos administration is the digitalization of government services. This is crucial to keeping pace with our rapidly modernizing neighbors who are making great strides in building emerging information technology into their bureaucracies and frontline services.

If the exemplar of this digitalization program is the P3.14-billion Land Transportation Management System (LTMS), one will be hard-pressed to claim progress. The LTMS is Component A of the DOTr’s P8-billion Road IT Infrastructure Project.

This initial component remains incomplete 68 months after the deal was sealed. Government auditors have raised numerous red flags about how money for the project is being spent. Vehicle owners, the supposed beneficiaries of digitalization, are exasperated.

When one buys a car and later discovers it is riddled with defects, the item is described as a “lemon.” We have wasted six good years trying to get the LTMS running. Perhaps it is time to call this thing a “lemon.” While we grapple with the imperfections of this system, time and technology will pass us by.

The whopping P8-billion contract to modernize and fully digitalize the LTO was awarded to a consortium by what was then the DOTC in May 2018. This project seeks to replace the old IT system provided by Stradcom. The consortium is led by German IT firm Dermalog with joint venture partners Holy Family Printing Corp., Microgenesis and Verzontal Builders.

Since then, the project has been hounded by delays and glitches. Three congressional hearings have been held on the matter. For three years in a row, the Commission on Audit (COA) issued adverse observations regarding how money is spent and how the project is run.

Dermalog is asking for another extension of the project. This is on top of the 15 extensions it has already been granted.

 In its 2022 report, the COA pointed out that despite full payments already made to the contractor, the seven core applications of the LTMS suffered from 40 unresolved system issues. More than 90 functionalities were listed for enhancement as of end-2022.

The COA called out the LTO for wrongly paying the foreign IT contractor maintenance fees from October 2019 to October 2020 even as the first acceptance of core applications was made only on December 2020. As penalty, the COA shortened the duration of maintenance services to October 2024 instead of December 2025. This is to the disadvantage of government.

Despite the delays and unwarranted payments made, Dermalog has not been penalized under the provisions of the Government Procurement Reform Act. Instead, the LTO allowed numerous concessions to the contractor – especially extensions to the deadline for deliverables.

All the delays in completing a fully functional IT system are borne by the hapless clients of the LTO: the vehicle registrants who cue up for hours to get their business with the agency done.

A joint investigation conducted by the LTO and the Department of Information and Communications Technology (DICT) found 14 serious hardware and software deficiencies in the LTMS. The system being installed, for instance, cannot perform multiple transactions at once. It cannot accommodate requests such as modifying plate numbers. This is a clunky system.

The review also discovered that Dermalog has not turned over the source code that would allow the LTO to have full control of the LTMS. Under the terms of the contract, the LTO has the sole and exclusive right to the source code. But now we see the agency begging for it from an imperious contractor.

The source code unlocks all the relevant documents and technical specifications necessary to understand how the system works. Some surmise the German firm continues to keep the source code to itself as leverage when asking for more deadline extensions – which the LTO readily yielded over the years.

How much indignity should the LTO accept before it puts its foot down?

The Senate Blue Ribbon committee, when it was chaired by Sen. Francis Tolentino, conducted an initial investigation into this matter based on resolutions filed by Sen. Aquilino Pimentel III and Sen. Imee Marcos. The officials of Dermalog chose to be absent from this hearing, thereby avoiding all the difficult questions that need to be raised.

The new chair of the Blue Ribbon committee, Sen. Pia Cayetano, will hopefully see the importance of this matter and continue the investigation. She might be better disposed to get Dermalog to attend.

There are only eight months left until the contract with Dermalog expires. Considering what has not happened in the past 68 months, it is difficult to be optimistic that this flagship digitalization project would get to the finish line with flying colors. This particular contractor seems to be doing a repeat of what the tailors did in the story of the emperor’s new clothes: they pretend to be weaving and sewing with nothing in sight.

What is more likely is that all the glitches in the system will force us all to go manual by the time the contractor collects taxpayer money and brings the project to a close. With the great number of motorists the LTO services, returning to manual procedures will only bring chaos.

Recall that this particular fraud-prone agency is the same one that fails to deliver plastic driver’s license cards and has a huge backlog in the issuance of vehicle plates. It is a key barometer of how government is automating its processes.