Cut of accounts points to overpricing at garbage auction in SP – 01/03/2024 – Panel SA

An audit by the São Paulo Municipal Court of Auditors (TCM) highlighted serious flaws and evidence of an overprice of R$2.9 billion in the R$10 billion contract for five years of garbage collection in the capital of São Paulo drawn up by the management of the Mayor Ricardo Nunes.

The auction, which was scheduled for mid-December, remains suspended until adjustments are made. There are nine batches of services planned.

When contacted, the City Hall said it will clarify the points highlighted by TCM advisor João Antonio and stated that the event will be resumed after the court’s position.

“Furthermore, the City Hall highlights that the notice is still undergoing review, ruling out the possibility of overpricing, since the process is under analysis, respecting the procedural rites agreed with the court,” said the city hall in a note.

Today, two companies take care of the collection and disposal of waste: Loga (from the Solví group) and Ecourbis (Queiroz Galvão and Marquise). The contracts expire in October this year.

According to the TCM report, the teams’ productivity metrics used were underestimated, while the forecast expenses for fuel, uniforms and inputs (plastic bags, for example), among other items, were increased.

In one of the types of sweeping of roads and gutters provided for by the notice, the city council considered the average daily productivity of 4.75 km per pair, below that in force in the previous contract. This alone generates an overprice of R$408.6 million.

In one of the types of uniforms, the notice provides for 8% of the contract value instead of 2.4%, the index used as a reference previously. Result: R$97.3 million more.

The unjustified consideration of 15 plastic bags per sweeper, instead of ten, as in the previous contract, combined with the unjustified increase in the value per plastic bag (TCM carried out price research) generates an overprice of R$42.7 million.

Competition locks

In addition to price references, the auditors pointed out flaws in the division of the contract into lots and guarantee mechanisms that, in practice, restrict competition, directing the notice to large groups.

“The administration did not present any decisive or sufficient technical element to justify the subdivision of this tender into nine lots”, says the TCM audit report.

It also points out that there are no technical arguments for limiting the number of companies admitted to each interested consortium.

The requirement for certificates of experience from applicants in “parts” of the service — sweeping or mechanized collection, for example — “is not reasonable and unduly restricts the competition”, say the auditors.

Furthermore, there is no explanation for the requirement for net worth of at least R$11 billion per year (10% of the value higher than that actually estimated for the contract).

“Economic-financial qualification is being required to simultaneously execute all lots in which the bidder may participate, while, due to items in the notice, they will only be able to effectively execute the contract referring to one lot, even if they participate in more than one competitive process.”

Initially, the city hall evaluated the renewal of current contracts. The discussion ended up on TCM in mid-July last year. The body criticized the service, opposing the extension of concessions.

The municipal court of accounts then gave the city hall six months to submit studies for a new tender.

INSIDE THE CONTRACT

Check out the findings of the São Paulo court of accounts

Sweeping gutters
Undue and unjustified average daily productivity of just 4.75 km per pair
Extra value: R$ 408,620,660.63

Sweeping gutters and sidewalks
Undue and unjustified average daily productivity of only 3 km axis per pair
Extra value: R$ 63,948,932.07

Mechanized sweeping
Average speed of just 8km/h per vehicle compared to 10km/h in the previous contract
Extra value: R$ 59,417,229.46

Street market sweeping
Average productivity of just 1,600m² per pair compared to 3,363m² per pair in the previous contract
Extra value: R$ 170,792,464.59

Team collection of bulk waste
Average productivity of just 302 km
Extra value: R$ 228,180,436.02

Voluntary Delivery Points (PEV)
Carrying out only one trip per vehicle in the service
Extra value: R$ 27,689,462

Plastic bags
Use of 15 units per sweeper, instead of 10, as in the previous contract. Higher price is not justified, according to price research
Extra value: R$ 42,741,131.99

Uniforms
Average of 8% for a given type, compared to 2.4% in the previous contract for uniforms, PPE and tools; average of 6% of other types, compared to 2.17%.
Additional amounts: R$ 97,345,772.10 and R$ 40,781,512.61, respectively

Fuels
Use of the Siurb cost and not the methodology more in line with reality that was already used in previous notices
Extra value: R$ 438,937,822.48

Manual collection of sweeping residue with compactor
Improperties in cost composition
Extra value: R$ 247,467,406.00

“Popular car”
The hourly cost of this service is distorted
Extra value: R$ 812,569.05

Social charges
Improper use of vacation percentage higher than the previous notice
Extra value: R$ 504,965,924.23

Unhealthiness
Additional 20% instead of 10%, as provided for in the category’s Collective Agreement
Extra value: R$ 39,977,163.17

Street situation
Evidence of oversizing the number of teams in the “Cleanliness in places with homeless population” service
Extra value: R$ 626,611,434.53
_{Source: TCM}

With Diego Felix