Brazil: Petrobras Publishes Bidding and Contracts Regulations (RLCP)

Law No. 13,303/2016, published in the Federal Official Gazette on July 1, 2016 (“State-Owned Companies Law”), provides for the statutes of governmental companies, mixed-capital companies and their subsidiaries, within the Union, states, Federal District and municipalities, including the regulation of procurement procedures.

Accordingly, in compliance with the requirements set forth in the State-Owned Companies Law, the Petrobras Bidding and Contracts Regulations ("RLCP") document – published in the Federal Official Gazette on January 15 – has been prepared, setting forth the general rules that govern Petrobras’ procurement procedures, and will replace Petrobras’ Simplified Bidding Procedure Regulations (provided for in Decree No. 2,745/1998) and the Petrobras Procurement Manual ("MPC").

The RLCP provides for the following bidding procedures – with the invitation letter (convite) approach being phased out –, which should be processed, preferably, by electronic means:

1. the auction procedure, which must preferably be used when dealing with common goods and services – defined by the State-Owned Companies Law as those whose performance and quality standards can be objectively defined by the tender protocol, by means of usual market standards;
2. the open competition procedure, in which the bidders submit their offers and subsequently present successive, increasing or decreasing public bids, according to the selected decision criteria;
3. the closed competition procedure, in which the offers are kept secret until the date and time defined for their disclosure, similar to the procedure already practiced by Petrobras; and
4. the combined competition procedure (in case the contractual object can be divided), in which each part of the contractual object will be governed by the rules of the chosen procedure, in accordance with the respective tender protocol.

As a rule, procurement procedures must take place through a public bid, open to any interested party that complies with the bidding rules under the tender protocol. However, direct contracting may occur in the events provided for in the State-Owned Companies Law, namely: (i) non-applicability of bidding procedures; (ii) exemptions from bidding procedures, in accordance with the exhaustive list of the referred Law; and (iii) when a bidding procedure is not required, in cases where the competition is unfeasible.
Furthermore, the RLCP takes into account the Petrobras Corruption Prevention Program (“PPPC”), approved in 2013, with the aim of providing guidelines for the actions of interested parties in establishing and maintaining a relationship with Petrobras. Under the new Regulations, the parties must (i) demonstrate compliance with the PPPC and (ii) commit to compliance with anti-corruption laws and integrity policies, procedures and rules, such as Petrobras’ Code of Ethics and Conduct Guide. Although in existence since 2013, the PPPC was not expressly covered by the previous Regulations.

After the required due diligences, a certain degree of integrity risk will be assigned to the interested parties, which may vary from low, medium or high. Those identified with a high degree of integrity risk will not be able to participate in Petrobras’ procurement procedures, except in the specific cases provided for in Petrobras’ internal regulations.

The RLCP has been in force since its publication on January 15, 2018. However, pursuant to the schedule made available on the Petrobras website, the new Regulations will take effect gradually by Organizational Units, starting on February 5 at Espírito Santos’ Exploration and Production Operations Unit (UO-ES), followed by Rio de Janeiro’s Exploration and Production Operations Unit (UO-Rio) on April 2. Notwithstanding, all contracting opportunities published from May 15 will be governed by the State-Owned Companies Law, the RLCP and Petrobras’ Corporate Standards.

The bidding procedures initiated and contracts entered into before the RLCP came into force, including any related Amendments, will remain governed by the previous legislation.