Puerto Rico’s Senate approved, during its regular session, Senate Bill 1447, presented by Senate President Thomas Rivera Schatz and filed at his request, which bans contingency fees tied to government and municipal contracting in order to strengthen the integrity of public procurement and protect the use of public funds. The bill defines a contingency fee as compensation whose payment is conditioned on the payment or granting of benefits, with public funds or assets, to natural or juridical persons in exchange for the awarding of contracts, bids or public services.
Its statement of motives notes that this practice is prohibited under the United States federal government regarding federal funds and in 43 states, but not in Puerto Rico. The measure extends its provisions to municipalities and municipal consortiums, sets a uniform definition of contingency fee, and requires every government or municipal contract to include a certification of compliance with the ban.
It also amends the Penal Code to add a new article establishing the crime of improper intervention through contingency fees, with sanctions for those who intentionally take part in such arrangements, including public officials or employees who award contracts knowing they exist. Remedies include restitution of the fee, contract cancellation, and recovery of public funds, with government entities and municipalities having 180 days to harmonize their regulations, forms and procedures.