Group creates Observ to monitor public notices

São Paulo, September 10, 2018

Valor Econômico – The Ethos Institute, the technology start-up Jusbrasil, the global strategy company Albright Stonebridge and Barros Pimentel Advogados (law firm) have joined together to create an institute which will monitor public tender notices for projects and public works at all three levels. Called Observ, it will be an open and free digital platform that will show if there is targeting or illegal acts in infrastructure bids. The aim is to promote transparency and thereby reduce corruption in public contracts. At the present time, there is no platform like the one Observ intends to be in the country: a non-profit organization accessed by anyone.

Odebrecht instigated the Observ initiative as part of its leniency agreement actions signed with the Public Prosecution Service (MPF) within Operation Lava-Jato (Car Wash). One of the items is supporting actions of public interest in order to adapt the market to best practices, in partnership with institutions with an excellent reputation.

Brazil publishes between 70,000 and 75,000 public infrastructure notices per year. The system will collect and publish 100% of the tender invitations and 43% of the public notices on an online platform. The notice attachments, spreadsheets and regulations are spread over approximately 8,000 sites, but 43% are concentrated on 85 sites, which should make Jusbrasil’s work less complex.

Via a blockchain draw – a tool that uses decentralized cryptography -, the system will select a sample of documents which will be carefully analyzed. The idea is to identify if the dates listed in the notice are feasible, if it is directed towards possible interested parties or if there are hidden defects for example.

The project has been presented at various forums, such as the World Bank, the Faculty of Law at the University of São Paulo (USP) and the MPF. Public prosecutor, Deltan Dallagnol, the Lava-Jato task force coordinator, was enthusiastic about the initiative. "We need a stronger and more articulate civil society, which creates solutions for its problems from the bottom up. That is why I welcome the proposal of creating an institute to monitor public works", he confirmed to Valor.

The project proposes a governance system which prevents any actor in the infrastructure market from having political power at Observ and also assures that data and analysis are open and auditable by society.

"Tenders are the best thermometer in the public-private relationship. They are tenders which create all types of embezzlement, corruption, exploitation and influence peddling. Being able to get an institute running that focuses on the process, starting with infrastructure tenders, which are one of the areas with the most problems in Operation Car Wash, is a great opportunity", said Ricardo Young, chairman of the Ethos Institute advisory board.

Fábio Januário, CEO of Odebrecht Engineering and Construction, said that the company’s role was to "accelerate and incubate" the organization. "We are looking for sponsors, such as large foundations which can get the project moving and so that the institute can stand on its own two feet", he said. According to the executive, the idea is that Observ expands its activities to other countries in Latin America in the future.

At the moment, companies that have signed leniency agreements are not able to compete in markets where old practices remain. "There is no point in construction companies signing leniency agreements, taking on a public commitment of not being corrupt and returning to a defective market in which those who pay kickbacks are the ones who survive and flourish. It should be an even playing field," said the public prosecutor Dallagnol.

According to lawyer, Caio Rodriguez from Barros Pimentel, who took part in Odebrecht’s leniency agreement, companies and competitors such as Camargo Corrêa and Andrade Gutierrez, to quote the biggest ones, are currently at a competitive disadvantage. "For all the reasons in the world, including the agreement’s obligations, but for the interest in having practices with integrity. The market is not yet at the same pace. What is important to them is that the market can readjust to best practices", he said.