Philippines’ central bank enters arbitration over failed ID card project

After the Philippines’ central bank decided to cancel its contract with identification system company AllCard Inc. (ACI) to produce the country’s national ID card, the case officially entered arbitration procedures.

ACI had won a contract with the central bank, Bangko Sentral ng Pilipinas (BSP), to supply cards and equipment for the national ID system, PhilSys. In August, however, BSP announced the termination of the contract, accusing AllCard of delivering only 57.9 million ID cards out of the planned 116 million. The production issues have led to losses of 1.06 billion Philippine pesos (US$1.9 million) – almost half of the contract amount awarded to ACI, the central bank said.

BSP’s case against AllCard includes several other complaints, including failing to comply with instructions or provide a plan to catch up with production as well as incurring almost seven percent of wastage. The maximum limit is one percent.

BSP will not be able to issue public statements on the proceedings during the arbitration, according to news outlet Business World.

Meanwhile, AllCard has promised to erase any backlog within 12 months, urging the BSP to rethink its decision and filing a motion for reconsideration. The company said it was fully capable of meeting the deadline despite the disruption due to “unforeseen challenges” and the ongoing arbitration case, The Inquirer reports.

Philippine ID card saga gets complicated

Local media has also revealed that AllCard already sought arbitration in January 2024 just before the central bank decided to abandon the contract. According to the Commission on Audit (COA), BSP imposed fines on AllCard which may have prompted the company to seek arbitration.

Several groups have called for further investigation into the BSP’s handling of the contract, with lawmakers accusing the central bank of subcontracting the national ID production. BSP has denied the claims.

Meanwhile, the Philippine Statistics Authority (PSA), which gathers the data for the ID cards, attributed the delays to both AllCard and BSP, which is formally in charge of printing the IDs, according to news outlet Bilyonaryo.

As early as March 2023, the agency wrote to the central bank asking to terminate their Memorandum of Understanding once PSA receives 55 million cards. At the time, the PSA held 35 million cards, The Rappler reports.

The examination of the Commission on Audit (COA), however, shows that delays in receiving necessary data impacted the printing schedule while PSA faced its own delays. A consultant for the PSA, responsible for developing the card personalization management system needed for printing, encountered its own set of issues, the report notes.

The PSA consultant is a joint venture between MSP Private Ltd. and Mega Data Corp. and represents the second-largest expense in the PhilID project. The largest expense is the BSP’s 3.48 billion Philippine pesos ($62.3 million) contract for card personalization and distribution. Another 1.19 billion Philippine pesos ($21.3 million) was spent on 5,000 registration kits provided by the joint venture of Nextix Inc. and Gemalto Pte. Ltd., while almost 684 million Philippine pesos ($12.2 million) was given to the joint venture of Idemia Identity and Security France and FMC Research Solutions Inc., per Bilyonaryo.

Article Topics

AllCard  |  government purchasing  |  identity document  |  identity management  |  PhilID  |  Philippines