MANILA — A civil society group has raised serious concerns over the continued operations of a foreign biometrics provider at the Land Transportation Office (LTO), claiming that its government contracts have already expired and may no longer have legal effect.
The Filipino League of Advocates for Good Governance (FLAGG), formerly known as Flag Maharlika, said Dermalog Identification Systems GmbH, a German firm involved in LTO’s digital infrastructure programs, no longer has a valid and existing service agreement with the agency.
The group made the statement in a press release issued Wednesday, as it urged government agencies to clarify the status of contracts linked to the LTO’s modernization program.
Expired contracts, legal questions raised
FLAGG said Dermalog secured multibillion-peso contracts with the LTO beginning in 2017, but claimed these agreements have already expired.
“As of today, Dermalog has no valid and subsisting contract with the LTO,” the group said, adding that questions remain regarding the legality of its continued involvement in government systems.
The group also said it is reviewing procurement and government records which may be released once certified copies are obtained.
Issues raised on ICC approval, procurement process
FLAGG further alleged that the original LTO Infrastructure and Information System (LTO-IIS) project, approved in 2012 under the National Economic and Development Authority-Investment Coordination Committee (NEDA-ICC), may have lapsed due to time limitations under procurement rules.
According to the group, ICC approvals are typically valid only for a limited period unless renewed, and it questioned whether subsequent procurements between 2017 and 2019 had proper and updated approval.
It also claimed there was no separate ICC approval for the subdivision of the original project into multiple contract packages.
FLAGG said these concerns are now being reviewed by concerned government agencies.
Allegations on bidding outcomes and project implementation
The group also flagged several procurement outcomes involving Dermalog and its joint venture partners, including:
A 2017 contract for driver’s license cards and laser engravers, where Dermalog allegedly had no registered Philippine branch at the time of award
A 2018 ₱3.44-billion road transport IT infrastructure project reportedly awarded despite the company submitting a higher bid
Another procurement where a rival bidder was disqualified, allowing a Dermalog-led joint venture to secure the contract
Allegations that key software systems and application programming interfaces (APIs) tied to LTO systems remain under supplier control
FLAGG estimated that Dermalog and its partners have secured approximately ₱5.15 billion worth of LTO-related contracts.
‘No legal basis to continue operations’
The group stressed that with the alleged expiration of contracts, there is no longer legal authority for Dermalog to continue operating within LTO systems or to collect fees related to its services.
“There is currently no valid and subsisting contract giving Dermalog legal authority to continue operating within the LTO,” FLAGG said.
It also described public defenses of the company by Coalition 169 as potentially diverting attention from unresolved procurement issues.
Government agencies urged to respond
FLAGG called on several agencies, including the LTO, Department of Transportation (DOTr), Department of Economy, Planning and Development (DepDev), and the Commission on Audit (COA), to clarify:
Whether Dermalog’s contracts have officially expired or been extended
Whether payments continue and under what legal basis
The status of software systems and digital infrastructure allegedly still controlled by the supplier
Whether the procurement process should be subject to administrative, civil, or criminal review
The group said it will release supporting documents once verified copies are obtained.
“The Filipino public deserves transparency on who is behind groups defending these arrangements and what interests they are protecting,” FLAGG said.
About FLAGG
FLAGG (Filipino League of Advocates for Good Governance), formerly Flag Maharlika, is a civic advocacy organization focused on transparency, accountability, and lawful government procurement practices.
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