09/22/2024 – 17:11
The Court of Justice of São Paulo annulled a contract signed without bidding by the city of São Sebastião, on the northern coast of the state, with a civil association for the provision of legal services in a case regarding oil royalties.
Wanted by Statethe city hall argued that the hiring was regular and reported that it will file an appeal to try to reverse the decision.
“The topic is extremely specific and complex, and the technical staff of the city of São Sebastião does not have the level of specialization necessary to deal with this specific demand, which justified the hiring of third-party services,” says the note sent to the blog (read the full text at the end of the article).
The contract was signed in 2022, during the second term of Mayor Felipe Augusto (Republicans), and provides for the payment of fees of 20% of the total recovered by the municipality in the process, which could reach R$140 million, according to the lawsuit. The amount was considered “exorbitant” and incompatible with the market.
The contracted entity is the University Research, Studies and Consulting Center Association (Nupec), which is registered as a non-profit civil association. The president is Army reserve colonel Arcy Magno da Silva and the vice president is lawyer Vinicius Gonçalves Peixoto.
Among the activities declared by Nupec are the “provision of consultancy, management and technical advisory services in the legal, financial, tax, social security, oil and gas, educational, assistance, social, cultural, pedagogical, administrative and technological areas”.
The government may hire private law firms. This possibility is provided for in the legislation. However, there are requirements that must be met, such as the qualifications of the firm or professional chosen to provide the service.
The judges of the 2nd Public Law Chamber considered that the association hired by the city of São Sebastião did not have the necessary expertise to act in the royalties process.
“A priori, this type of lawsuit requires the hiring of a law firm specialized in the area of Oil and Natural Gas Regulatory Law, which the Nupec Association has not demonstrated to be. The Association is neither a law firm nor specialized,” says an excerpt from the vote of Judge Cláudio Augusto Pedrassi, rapporteur of the case.
In a note sent to StateNupec states that it has been operating in the oil and gas sector for over 30 years and that it was hired to carry out studies, analyses and research, of an eminently technical nature, to measure the distribution of royalties originating from the Santos Basin.
“Nupec has worked on a range of complex issues, at a level that very few Brazilian municipalities can do. This was the reason for hiring it,” says the statement (read more below).
Another point considered irregular by the Court of São Paulo is that the contract provides that the association could pass on the service to a specialist lawyer. For the judges, this means “carte blanche” for subcontracting. “Which, it should be noted, cannot be considered valid, given the nature of the contract (unique activity, which requires notable legal specialization in a specific area of law)”, continued the rapporteur.
The judges also raised a third problem. The Municipal Prosecutor’s Office, the city’s legal arm, had already represented the city in a lawsuit on the same subject, which, in the opinion of the São Paulo Court of Justice, proves that the contract was not necessary.
In addition to annulling the contract, the judges ordered the return of the money paid by the city government. The amount will still be calculated in the lawsuit. The decision responded to a request from the Public Prosecutor’s Office of São Paulo and Andreia Dagues Santana, the author of the class action lawsuit challenging the contract.
THE CITY COUNCIL OF SÃO SEBASTIÃO HAS THE FLOOR
The City of São Sebastião informs that it was not notified about the decision in question, and states in advance that the contracted services go beyond the legal demands themselves.
The municipal administration signed a contract with the most specialized research institution in oil and gas in the country, linked to the Federal University of Rio de Janeiro, to carry out several technical surveys related to the city’s participation rights in the distribution of royalties linked to production in the Santos Basin.
As a result of this specialized technical work, which resulted in a new approach to São Sebastião’s participation, new legal actions were proposed, going beyond the previous demand filed by the Municipal Attorney’s Office.
It is worth noting that the topic is extremely specific and complex, and that the technical staff of the City of São Sebastião does not have the level of specialization necessary to deal with this specific demand, which justified the hiring of third-party services.
We would like to point out that the decision is not final and the City Hall will appeal to higher courts. The result of this work was fair distribution of resources, providing a significant increase in the city’s participation.
We would like to emphasize that this increase in resources was directed towards the reconstruction of the city, which was severely affected by the rains of February 23, 2023. The investments were applied to the paving and drainage of destroyed roads, as well as to the reconstruction of priority areas, such as schools and health centers. A significant portion of the resources was also allocated to the prevention of landslides on hillsides and the construction of containment barriers in approximately 10 neighborhoods, as was the case in Vila Sahy, where the work carried out represented an investment of R$123 million by municipal coffers.
The City of São Sebastião reinforces its commitment to transparency, legality and public interest, always seeking the best for the development and well-being of all citizens.
WITH THE WORD, NUPEC
Nupec clarifies that it has over 30 years of experience in the oil and gas sector and is a partner of several other institutions of excellence, such as Copead of the Federal University of Rio de Janeiro. The contract by the municipality of São Sebastião was intended for studies, analyses and research, of an eminently technical nature, aiming to measure the distribution of royalties from the Santos Basin.
Nupec has worked on a range of complex issues, at a level that very few Brazilian municipalities can do. This was the reason for hiring it. It is also worth mentioning that, on the contrary, the qualification to practice law due to notable knowledge and specialization is in line with the country’s legislation and the OAB statute.
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