Following the trend of the federal, state and municipal public administrations, on June 08, 2018 the Brazilian Ministry of Agriculture, Livestock and Supply”MAPA”) published Order No. 877/2018, making it compulsory for public notices of biddings and the respective contracts  involving amounts equal to or greater than BRL$ 5,000,000.00five million reais) to contain a specific provision  requiring companies that provide services to MAPA to that establish Compliance Program within a period 9nine) months from the date of signature of the agreement.
Under MAPA’s Order, it will be considered an adequate compliance program one that mitigates risks of acts harmful to the public administration, irregularities related to deviations of ethics and contractual fraud, and also reduces the risks of failures in the execution of contracts with the public administration. To accomplish that, the contracted company must implement internal procedures and mechanisms to manage risks, create hotlines, implement code of ethics and policies to detect and remedy deviations, frauds and irregularities.
The contracted company shall demonstrate the existence and effectiveness of the program by proving proof of:a) full disclosure of its code of ethics and policies to all employees and managers;b) periodic training for employees and managers;c) adoption of risk management practices;d) independence of the department responsible for compliance in the Company;e) existence of hotlines;f) verification and punitive measures in case of violation of the compliance program.
The compliance program that is merely formal or does not present the requirements requested by MAPA or that is absolutely ineffective to mitigate the risks mentioned above, can be deemed by MAPA as not adequate and the company will lose the right to renew the contract in question.
Please keep in mind that similar requirements have also been implemented by municipal and state public administrations. In the State of Rio de Janeiro, Espírito Santo and in the Federal District, companies that wish to enter into contracts with the public administration, must necessarily have an compliance program implemented. There is a bill in progress in São Paulo that stipulates as tie-breaking criteria on a public bidding procedure, the existence of an compliance program by the bidder.
The compliance team of Candido Martins is available for any further clarifications.
Renata Simon –