The Brazilian Ministry of Economy pushes a discount buyers club on government workers
In an unconstitutional act of censorship, on August 28th a Rio de Janeiro court ordered the independent Brazilian news portal, GGN, to pull down 11 articles about the relationship between right wing politicians and big data mining operations. The ruling was made due to a request from BTG-Pactual, an investment bank with a US$10 Billion portfolio founded by President Jair Bolsonaro’s right wing extremist Economics Minister, Paulo Guedes. In solidarity with GGN and in the name of freedom of the press, Brasil Wire is publishing these articles in English. In the case of this article, GGN offered the Ministry of Economy a right to response. Apparently, this was not enough, as it was censored anyway.
by Luis Nassif
(originally pulbished 2/9/2020)
* Updated with response from the Ministry of Economy
Part 1 – The database
We have warned repeatedly about tech company attacks on public databases. In 2018, a Data Protection Law was passed, but it will only take effect at the end of 2020. Until that happens a massive attack on public databases is being carried out, culminating with the proposal to sell Serpro and Dapatrev. This is a gold mine at a moment when the digitization of the economy is in full swing.
We have already published several articles about this:
The chess match of how Lava Jato taskforce chief Dalton Dallagnol became a lobbyist for a company mentioned in Lava Jato
The chess match for the privatization of Serpro and Dataprev
The chess match of BTG’s move to take over São Paulo’s parking meter concession
These articles detail several deals made between politicians and companies over access to public databases.
José Serra sold off the São Paulo state government’s CADIN (debtors database). João Doria Jr sold the São Paulo municipal government employees database to Oneway. Deltan Dallagnol pushed Oneway services on public prosecutors offices. Dória and, later, Bruno Covas, guided São Paulo’s Zona Azul public parking meter system tender to BTG Pactual. Now let’s take a look at Economy Minister Paulo Guedes’ maneuver to transfer public databases to private companies without placing any kind of burden on them.
Part 2 – The discount club
Brazil has a proliferation of discount clubs for civil servants. Essentially, they are online shopping sites that register customers, buy a stock of discounted merchandise in advance, and offer it to their customers at discounted rates. On August 22, the Ministry of Economy decided to take over responsibility for these contracts and push them down the throats of federal government workers. There was no apparent reason why the gigantic Ministry of Economy was concerned with something that had nothing to do with state spending. According to a note from the government workers’ website:
The Ministry of Economy opened a public tender to seek interested parties in brokering Discount Club membership for more than one million active and retired federal civil servants. The announcement was published in the Federal Official Gazette (DOU), on Thursday (8/22). For the Secretary of Management and Personnel Performance, Wagner Lenhart, the expectation is positive. “We hope that companies will participate, since they will have access to an audience of more than 620,000 active employees and 410,000 retirees”. By highlighting the advantages, Lenhart believes that companies will gain visibility and the possibility of promoting their business. “The servers will benefit from discounts on purchases and services,” he says.
There was no reason for this announcement, since the civil servants have the right to freely negotiate for these services through their employees associations. The tender was announced at the last minute. Bidders had only 3 weeks to submit, and the Ministry of the Economy would select the winners.
Part 3 – The direction
In general, Discount Clubs aim to stimulate local commerce, since a relevant part of what is offered – lunches and dinners, tours, events, clothes, etc. – is offered locally. But the requirements in the tender were clearly designed for national companies. Highlights of the tender include:
Companies need national reach in the categories of Travel, Health and Education.
Bidding companies have to prove partnerships with at least 100 other companies in different fields and had to own call centers with at least 127 employees.
Most importantly, the tender confered the absolute power of selection to Economy Minister Paulo Guedes. It was not a conventional bidding process, in which the winning bid could be publicly compared with other losing bids. It represented a process in which, in a competitive market, the State creates a cartel and bars the entry of competitors.
Part 4 – A gift to the chosen ones
The conditions are clearly scandalous. Form of payment and sales commissions are not defined or regulated. Everything will go to the registered company. The selected companies will have access to the entire database of civil servants. This risk caused the National Federation of Federal Police (Fenapef) to request the suspension of the tender, fearing that the government would hand over their personal data to private groups. All marketing will be provided by the State, through its websites and other forms of communication with civil servants. The State will be responsible for all repercussions including fines and damages to third parties. The technological systems used require that, for the first purchase, employees complete questionnaires indicating all fields of interest.
Part 5 – Selected companies
Five companies were awarded contracts: Crafty Brasil, Dois 5F, Legis Club Brasil, Mark Tec, and Allya Serviços Tecnológicas. According to the online newspaper Metrópoles, from Brasilia, the lobbyist for Dois 5F is Leonardo Quintão, a former Congressman from the MDB party in Minas Gerais, who was linked to Bolsonaro on the transition team. After leaving Congress he became a lobbyist. Allya is partially owned by BTG. In 2018, the company was one of the gold stocks recommend by BTG as its big bet for 2019. A motion to suspend the licitation is being analyzed by Minister Bruno Dantas, from the Federal Auditing Court.
Right of Response:
The Ministry of the Economy responds to the article:
The goal of the Ministry of Economy (ME), when opening a public tender in August, was to seek institutions interested in intermediating Discount Clubs for more than one million active and inactive federal civil servants. All companies that met the criteria established in the request for proposals, which was precisely defined to ensure universal access, agility and quality of services offered, were invited to place bids. The purpose is to create an exclusive instrument to provide benefits to government workers, instituting true people management and seeking to bring opportunities and benefits for that group. This will occur if the server voluntarily chooses to register in an accredited discount club.
The terms of the agreement also state that the confirmation of the workers link with the Federal Public Administration will be carried out by an Application Programming Interface (API), which only accesses open information from the server. This open data is related to workers’ functional information , which according to Law 12.527 / 11 (Law of Access to Information ), must be subject to the advertising principle. It is important to note that no registration or database will be made available to accredited organizations and that the choice to participate or not is up to each civil servant.
In addition, the licitation is clear in defining that the accredited platforms must be exclusive for federal public servants from the executive branch and accredited companies must meet this criterion and guarantee information security, as determined by Law nº 13,709 / 2018 (General Data Protection Law).
To be one of the organizations capable of hosting a Discount Club, companies have to demonstrate national capillarity in the categories of Travel, Health and Education, as there are federal employees in all states. In addition, interested parties must have a partnership with at least 100 other companies from different branches of activity. Furthermore, the licitation notice is clear in stating that the responsibility and repercussions of the work are the sole responsibility of the accredited companies and not the Administration.
On September 25, 2019, the Federal Audit Court (TCU) ruled that there are no signs of restriction to competition in the public tender notice of the discount clubs that was proposed by the Ministry of Economy. Furthermore, according to the ruling No. 2266/2019, impugnation request No. 19975.119380 / 2019-84 does not fulfill the admissibility requirements. There is no centralization in the program, so much so that five organizations were considered qualified to host the Discount Clubs, including a workers association. Furthermore, nothing prevents the representative workers entities to continue offering their service benefit clubs.
The Public Servant Discount Club is a people management tool and membership is an issue of workers’ choice. Every decision is left to the worker, who can choose the offer that best suits him. He can use an existing discount club offered by an association, adhere to one of the new plans accredited by the Federal Government or stay out of any club.