National ID card supplier appeals termination of P2.1B contract

Image from Philsys

The supplier of national identification cards under the Philippine Identification System (PhilSys) has asked the Bangko Sentral ng Pilipinas (BSP) for a “thorough review” of its performance as it sought reconsideration of the central bank’s decision to terminate its P2.1-billion contract over its failure to deliver its obligations under the deal.

All Card Inc. (ACI), in its two-page petition dated Aug. 29, said it believed “the termination of our contract may have been based on inaccurate information or reports, given that we have complied with the requirements and there was no breach in contract.”

In a termination notice dated Aug. 15, the policy-making Monetary Board (MB) ended the BSP’s contract with ACI for its “failure to deliver any or all of the goods specified in the contract, amounting to more than 10 percent of the contract price.”

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The central bank said only 57.9 million prepersonalized national ID cards were actually produced between 2022 and 2023, 58.1 million short of the target 116 million cards for Filipinos. This resulted in a production loss of P1.06 billion, equivalent to 49.91 percent of the contract amount awarded to ACI, it noted.

BSP computations showed ACI must pay P640.9 million in total liquidated damages, or equivalent to 30.24 percent of the contract price.

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The matter is now under arbitration, according to BSP Senior Assistant Governor and General Counsel Elmore Capule on Thursday.

‘Not fully considered’

ACI’s motion for reconsideration cited its submission of a position paper to the BSP in December 2022 to provide clarification and updates about the issues raised about its performance.

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“We addressed specific concerns raised by the BSP and offered solutions to ensure the continuous and successful implementation of the project. We believe these verified position papers have not been fully considered in the recent decision to terminate the contract,” read the motion signed by ACI chair and chief executive officer Allieta Cue.

ACI warned of the impact of the contract termination on the production and distribution of the remaining national ID cards.

“As this project is vital for national security and public service, any disruption may cause delays that could affect millions of Filipinos. Moreover, the decision to terminate the contract will lay waste to approximately 60 million already produced cards, resulting in substantial financial loss and inefficiencies,” it said.

ACI appealed to the BSP to give it an opportunity to rectify any perceived deficiencies.

“We are confident that with proper communication and coordination, any concerns raised can be effectively resolved without the need for contract termination,” it said.

ACI cited its reputation as a long-standing partner of the BSP, stressing that the company values this relationship and is committed to maintaining the highest standards of service it has built with previous administrations throughout the years.

It also cited its track record, noting its successful contracts with other government and private entities, including the production of the Social Security System’s unified multipurpose identification card, as well as the Europay, Mastercard and Visa (EMV) automated teller machine (ATM) cards and credit cards for top banks, among others.

Ping: Press charges

But former Sen. Panfilo “Ping” Lacson, the principal sponsor of Republic Act No. 11055, or the Philippine Identification System Act, said appropriate charges should be pursued against those behind the failed implementation of the law that established the country’s national identification system.

“It should not end with a simple termination. Following proper legal procedures, sanctions with commensurate damages must be imposed,” Lacson said in a statement on Friday.

He said that the Philippine Statistics Authority had already received over P6 billion from Congress since 2018 to implement the project.

“Failure to fully implement the (law) six years after its passage is unacceptable,” he said.

Senate Minority Leader Aquilino Pimentel III said he would file a resolution pushing for a Senate inquiry into the matter.

“It looks like we will have further delays in the [production] and delivery of the national IDs. This should be investigated by the Senate,” Pimentel said in a Viber message. —WITH A REPORT FROM MARLON RAMOS