MANILA, Philippines — The government has decided against renewing its contract with firm Stradcom Corporation for the information technology support and interconnectivity services that the Land Transportation Office (LTO) employs for motor vehicle registration and driver’s license applications.

Transportation and Communications Secretary Manuel “Mar” Roxas II said the government will not exercise its exclusive option to extend the LTO’s contract with Stradcom Corporation, which is set to expire next year.

“We will bid out a new IT contract for the DOTC, LTO and LTFRB (Land Transportation Franchising and Regulatory Board). A new IT system will be in place three to six months prior to the expiry of Stradcom’s contract in February 2013,” he told reporters in a briefing Monday.

When asked how the Department of Transportation and Communications (DoTC) came up with the decision against renewing government’s contract with Stradcom Corporation, Roxas said the government considers opening the project to new contractors as an opportunity to employ the latest technology for the LTO database and explore avenues to lower the cost of the service to benefit the transacting public.

“It is not question of whether I’m satisfied or not (with Stradcom’s performance) but the contract provides government an opportunity to start fresh. My feelings have nothing to do with (this decision),” he clarified.

Roxas added that bidding the project anew will give the government the chance to correct the flaws and grey areas of the LTO’s existing contract with Stradcom Corporation.

“Improvements in the terms of reference (TOR) will include the provision that IT facilities and equipments provided by the contractor will become government property (once the contract expires) and that government consent will be required (for the private consumption of government data obtained from the database),” he added.

Roxas said the TOR for the new IT contract will be finalized one to two months from now, especially after a number of local and foreign IT firms expressed strong interest to participate in the DoTC’s transparent bidding process.

The DOTC chief said Stradcom, which has been pushing for renewal of contract to provide IT and interconnectivity services to LTO, can still participate in the bidding provided they can meet the requirements and qualifications of the TOR.

Roxas also dismissed the possibility of a legal dispute with Stradcom, saying the government calls the shots on whether or not Stradcom’s contract will be extended.

“I don’t see any legal battle with Stradcom (over this decision) because government has the exclusive option to extend the contract under Article 4, Section 4.1 of the contract,” he added.

Article 4, Section 4.1 of the contract allows the party interested to renew the its build-own-operate contract by indicating its desire to renew the agreement beyond its 10 year term at least 12 months prior to the expiry of the original contract and DOTC/LTO shall decide within 30 days whether it wants to renew the agreement.

But earlier, Stradcom executive Cezar Quiambao warned government against bidding the project out, insisting that its BOO contract provides a renewal mechanism “which should be appropriately observed.”

“While we welcome DoTC’s pronouncement on the bidding, we also wish to advice them that the existing BOO contract provides for a renewal mechanism which should be appropriately observed since the contract is the law between the parties,” he said.

The contract to build the LTO database and IT systems was awarded to Stradcom Corporation in 1997. While Stradcom claimed it has spent $100 million to build the IT infrastructure at no cost to government, DOTC said the firm earned at least P10 billion from the project, including P800 million for the use of LTO data.