Foreign contractor owes DOTr ₧702M for ATM project


By Ma. Stella F. Arnaldo / Special to the BusinessMirror

THE Department of Transportation (DOTr) is claiming some P702 million in damages from the contractor of the government’s air traffic management system.

According to a DOTr source, this amount represents “delay damages,” and covers the two packages of the P10.8-billion Communications, Navigation, Surveillance/Air Traffic Management System (CNS/ATM) project of the Civil Aviation Authority of the Philippines (CAAP), funded by the Japan International Cooperation Authority (Jica). According to Jica’s web site, it made available a ¥22,049 million (P9,469 million) loan to the Philippine government for the project on March 28, 2002.

In the January 12 joint hearing by the Senate Committees on Public Services; Civil Service, Government Reorganization and Professional Regulation; and Finance into the New Year’s Day glitch that caused the shutdown of the Philippine airspace for seven hours, former Transportation Secretary Arthur Tugade revealed the agency also had claims versus contractor Sumitomo Corp.-Thales Corp. for delays in the implementation of the project. The airspace shutdown affected close to 300 flights and 65,000 passengers.

CAAP Director General Manuel Tamayo said negotiations are still ongoing to settle the contractor’s claims, which amount to P987 million. But latest computations by the DOTr show that those claims should only be P662 million, according to BusinessMirror’s source. The CAAP has been  trying to secure a service contract with Thales, but the latter isn’t inclined to do so until their claims are settled, according to their representative in the Philippines. (See, “Thales not keen on new deal with CAAP till ‘existing claims’ settled,” in the BusinessMirror, January 12, 2023.)

CCTV cameras installed

The day after the Senate hearing, the CAAP installed five closed-circuit television (CCTV) cameras in the main room, which houses the equipment of the air traffic management center. Senate President Juan Miguel Zubiri acknowledged the CAAP’s action, and thanked them in Filipino, for “acting on our order [on Thursday] to install CCTV cameras in sensitive and critical areas.” He earlier raised the possibility of an “internal sabotage” as there were no CCTV cameras in the equipment room, which houses circuit breakers, one of which tripped and caused the system’s shutdown.

For her part, Sen. Grace Poe told CNN Philippines the Senate may convene an executive session with the Department of Information and Communications Technology’s (DICT) Cybercrime Investigation and Coordinating Center to explore the cyberattack angle in the air traffic management system’s shutdown. At Thursday’s hearing, Senator Sherwin Gatchalian said because no vulnerabilities tests were made on the CNS/ATM system “that leaves us very open to the possibility of cyberattack.”

‘Int’l embarrassment’

In her opening statement at the opening of the Senate hearing, Senator Nancy Binay, chair of the Committee on Tourism, said, “[The] incident has left a bad impression on us in our effort to sell the Philippines abroad. This anomaly is an embarrassment that will not go away soon.”

She enjoined her peers to get to the bottom of the airspace shutdown’s issues and find solutions immediately. “We need to act decisively so that we can convince not only foreign tourists, but our own people, that they will not suffer through hell to get to experience the Philippines. We don’t want a repeat of the incident and be embarrassed. Our tourism industry is targeting 4.8 million international visitors for this year. We are slated to host international events this year, such as the FIBA World Cup, along with major trade shows and conferences.”

Tamayo told lawmakers that procurement for the CNS/ATM project commenced in 2009, but the project was completed and turned over to the CAAP only on October 16, 2017. The Commission on Audit disallowed the P59-million advance payment under phase 1 of the project in May 2011, and only cleared it two years later. Construction of the project resumed in August 2013.