The Land Transportation Office (LTO) may end up facing problems on its digital operation after the Office of the Ombudsman earlier ordered the agency to disengage from its old system run by Stradcom, and amid concerns on the proposal to renew a contract with a German firm for its current digital transaction platform.

Late last month, Ombudsman Jesus Crispin Remulla directed the LTO to refrain from using the Stradcom, a directive that prompted digitalization advocate Digital Pinoys to raise concerns on its effects.

Amid the LTMS use, the LTO is still tapping the Stradcom system due to the former’s alleged inability to process some digital transactions.

“A deeper look into the current situation at the LTO suggests that an abrupt disengagement from Stradcom may cause more harm than good if unresolved LTMS turnover and transition issues remain,” said Digital Pinoys national campaigner Ronald Gustilo.

He said the immediate priority should be ensuring that the LTO possesses all the resources necessary to independently operate and secure the Land Transportation Management System (LTMS).

“The bigger issue is ensuring that the LTO is equipped with all the manpower, tools, resources, documentation, technical support, and system components necessary to independently secure, operate and maintain the LTMS,” said Gustilo.

The Ombudsman’s order also came after the LTO itself raised the issues of unresolved audit findings and system deficiencies of the LTMS under the German firm Dermalog that it said continues to persist seven years after the project’s implementation.

The LTMS was envisioned to be a web-based core system to integrate all LTO services -- like issuance of driver’s license, registration of motor vehicles, and issuance of transport permits – into a single database and digital platform. The contract was signed by LTO with Dermalog on May 28, 2018 for around P3.1 billion.

Earlier, representatives from the Dermalog sought for the renewal of its contract with the LTO and allegedly requested between P2 billion to P2.5 billion for the upgrades of the LTMS.

In the latest hearing of the House Committee on Transportation (COTr), representatives of Dermalog urged lawmakers to support the proposed funding, which they said would be used for cybersecurity improvements, fraud detection measures, and anti-corruption enhancements to the LTMS.

The Dermalog’s contract expired on May 30.

But in the same hearing, LTO Executive Director Martin Ontog was cold in the contract renewal citing unresolved cybersecurity deficiencies and audit findings that continue to affect the LTMS.

He said that the absence of adequate cybersecurity safeguards exposes millions of driver and vehicle records to potential breaches and may place the system at risk of non-compliance with the Data Privacy Act.

The LTMS has been the subject of reports of the Commission on Audit (COA) due to alleged delays, incomplete features, and persistent system deficiencies.

Apart from the COA findings, Ontog said they also received validated reports from LTO field officers of some transactions that could not be processed under LTMS that include

Public Utility Vehicle (PUV) transactions, Motor Vehicle User’s Charge (MVUC) exemptions required for diplomats and economic zone locators, and the automatic collection of penalties for new registrations among others.

Ontog said these deficiencies directly affect the LTO’s ability to perform its mandate.

In its latest report, COA recommended that the LTO demand from Dermalog and set a specific timeline to deliver and resolve remaining issues and concerns in the LTMS in accordance with the Terms of Reference to attain a completely functioning IT system and consider to include the possible sanctions in case of noncompliance”.

Ontog also disclosed that Dermalog has already submitted a proposal for the renewal of the contract.

But he said it came with a condition requiring LTO to settle the IT contractor’s P1.2 billion financial claim within 45 days.

The LTO has been repeatedly saying that the suspension of the payment was based on a COA Notice of Suspension.

Ontog maintained that the combination of Dermalog’s documented non-compliance with the LTO’s 13 formal demands for full LTMS turnover, the expiration of its contract, and unresolved cybersecurity concerns raises serious questions about extending its role in the LTMS.

He added that while the agency is prepared to facilitate an orderly transition, it cannot support arrangements that would further extend contractor control of a system that remains subject to longstanding operational deficiencies, unresolved audit findings, and pending turnover obligations.