The sweetheart deal

Friday, March 6, 2009
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I have already written much on the information technology deal between the Land Transportation Office and Stradcom, an agreement clearly disadvantageous to government and public interests.

At the risk of repeating myself, I am still shocked at the way Stradcom is going about the contract it signed during the incumbency of the former president, and how the LTO and the Transportation Department are coddling Stradcom in spite of the fact that the multi-billion contract is so full of holes. Worse than Swiss cheese, really.

First of all, I?m surprised that despite an investigation at the House of Representatives, which found so many provisions of the deal being violated with impunity by Stradcom, there have not been any follow-up queries into the matter. This makes me wonder what love potion Stradcom has been giving congressional reporters who have been talking of the investigation.

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There are far more oddities about the deal, which is clearly a ?sweetheart deal? by any standard. I discovered these although they have not been revealed in the congressional inquiries.

First of all, there?s this provision that allows Stradcom to retain ownership of all the equipment, facilities, fixtures and fittings, and can therefore, pull out all of them at the expiration of the contract period. This leaves the LTO with nothing but the database. In fact, on its comment to this particular anomaly, the Commission on Audit observed that ?under the condition, the project continuity would be affected unless the LTO would be able to renegotiate or be able to acquire the necessary facilities at the end of the contract.?

Santa Banana, the standard excuse given for this provision is that supposedly, the equipment will become dated and obsolete, anyway. But the cost of the project included the mandatory upgrading of the system on or before Year 5 of the contract.

The mandatory upgrading was included precisely to prevent such a situation. It is intended to ensure that the IT facilities would be able to cope with increases in demand to enable the system to meet the indicated performance targets.

Stradcom?s technical proposal provides for P69.70 million for hardware and P29.62 million for software on Year 4. The project started in July 1995 so the upgrading should have been made in mid-2004. However, in its report on the performance audit of the LTO-IT project, CoA made this revealing comment: ?Currently, problems with the IT system such as hanging and slowdown were currently encountered by the district/licensing offices.? No wonder, recently, the entire frame of the LTO-IT project bogged down, delaying the processing of motor vehicle licenses and registrations.

My gulay, if only for this, LTO and DOTC should have already cancelled the deal because it puts the public?s interests at risk.

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It may be asked: Why do I know all these? It?s simply because I have papers to support my claim that the LTO-IT deal should have been canceled long ago. But, no. Instead, LTO and the DoTC continue to coddle the multi-billion peso contract, perhaps for millions of reasons.

But, more to the point, the CoA report bluntly stated that ?the system was not automatically upgraded as required in the contract, resulting in frequent slowdowns and hanging during processing of transactions.?

The report further said: ?the provision for repair and maintenance was not clear, such that defective facilities and equipment remained unattended affecting the speedy discharge of service.? My gulay, this means that Stradcom officials are laughing themselves to their banks.

Note that the CoA performance audit ended on Feb. 22, 2005, or more than five years after the project started. On the basis of the CoA report, it is very clear that there are blatant violations on the provision requiring upgrading of the facilities according to the agreement.

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Santa Banana, what is even more alarming in the CoA report is the finding that Stradcom has not faithfully complied with its obligation to remit the withholding taxes it has been collecting from people availing of the IT services and facilities. This means that the interests of over six million vehicle owners are at risk. Supposedly, the amount has had already reached P275 million from January to July 2003 up to August 2008 alone.

My gulay, is this a fact? The amount is certainly huge and if remitted, it would be a big boost to the government?s revenue collection efforts, especially since the projected revenue shortfall this year is expected to overshoot the P100-billion mark.

The information I got is that the matter is now being handled by the BIR Special Investigation Division and is being treated as a tax evasion case. Strangely, nothing has been heard from either the LTO headed by newly appointed chief Arturo Lomibao, or from his boss, DoTC Secretary Larry Mendoza. Why? Perhaps, Malaca?ang and the Department of Finance should start asking questions.

By the way, both Mendoza and Lomibao were former PNP chiefs. My gulay, what?s happening to them? Is it hear nothing, see nothing and say nothing at the LTO and the DOTC?

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These are not all among the oddities of the deal with Stradcom. From what I gather, there were also irregularities with respect to the performance bond and the operating bond for the project. It appears that one of the two securities, the P100-million performance bond posted by Stradcom in January 1996 to guarantee compliance to its obligations, covered only 90 percent of the project. The bond expired on February 10, 2003 when the LTO issued the final Certificate of Acceptance of the IT facility, when Stradcom?s performance was only 90 percent complete.

The unfinished 10 percent was not covered by the performance bond, which means that the LTO has no way of holding Stradcom responsible in case it failed to complete the job. As the CoA report disclosed, the project was only 95 percent complete as of the time its audit was finished on Feb. 22, 2005, or more than two years after the performance bond expired.

The audit team also pointed out that Stradcom failed to post the operating bond on the date required. The contractor only posted the bond on March 12, 2003 or 16 months after the required date. And Santa Banana, take note: This bond was good for only one year when the requirement was for the bond to be valid for 10 years. What Stradcom did was to renew the bond every year. Very clever, if I may say so.

The thing is, the CoA team conducted the audit and visited only selected districts and licensing offices within the National Capital Region (Metro Manila), Region 3 (Central Luzon), Region 4 (Southern Tagalog), Region 6 (Central Visayas) and Region 11 (Davao area). What we do not know is whether there are also irregularities and anomalous situations in other areas.

My gulay, Stradcom is pulling the wool over the eyes of LTO and DoTC and they don?t even realize it. I give you one guess why.

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Media friends of Elpi Cuna, Meralco?s vice president for communications and public relations, including myself will sorely miss him with his retirement after almost two decades with the Lopezes of Meralco.

While Elpi remains as a consultant of the Lopezes, I must say in all honesty that he did a Herculean job fending off a lot of criticism directed against Meralco. Elpi in fact became a fixture during those days when the Lopezes of Meralco were the object of criticisms by its consumers and media.

Elpi was my student at the Ateneo High School in the 1950s, and as such, I felt proud of him as Meralco vice president. I had some complaints over Meralco, but Elpi was patient enough to call me at times to explain. Enjoy your retirement at 71 years old, Elpi.

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The Aquino siblings, Senator Noynoy and entertainment personality Kris Aquino, have no reason to complain about the executive clemency given to the remaining 10 convicts of the Aquino-Galman double murder case for the simple reason that such clemency is the prerogative of the President under the Constitution.

For one thing, those convicted of the Ninoy Aquino assassination have more than paid their debt to society by being in Muntinlupa for 26 years. If they did not admit their role in Ninoy?s assassination, and the question of who masterminded the killing remains a mystery, that?s for history to tell, like many other unsolved mysteries in world history.

If I may say my piece, former President Cory Aquino was President for eight years. And if she did not find out who killed her husband, I guess nobody will. And that will remain forever as a dark page in our history.