Puerto Rico Telecom Bureau sues Solix for $1M over post-contract payments
The Puerto Rico Telecommunications Bureau (NET, in Spanish) has filed a lawsuit against Solix Inc., seeking to recover more than $1 million the agency claims to have been overpaid after their contract expired.
In the lawsuit filed at the San Juan Superior Court late last week, the agency explains that, in April 2007, NET awarded Solix a three-year contract for $570,000 to manage Puerto Rico’s Universal Service Fund. The contract, extended in April 2010 for an additional year with $153,000, expired in April 2011 without further amendments or extensions.
However, the bureau argues that Solix continued to bill and receive payments for services rendered despite the contract’s expiration.
“Both in the contract and in the only amendment made, it was established that no excess amount authorized in the contract would be paid, unless the increase was previously authorized and an amendment was formalized,” NET stated in the lawsuit. “However, after April 24, 2011, Solix continued to provide services, which were invoiced, collected and paid.”
The lawsuit was spurred by a Puerto Rico Comptroller’s Office audit regarding NET’s fiscal operations. Audit report CP-21-08, dated April 15, 2021, states that between April 25, 2011, and Dec. 31, 2017, NET made 73 payments for services invoiced by Solix, despite the absence of a valid contract.
“The payments were made improperly and in violation of the laws of the Government of Puerto Rico. The amount disbursed during that period was $1,031,028,” the audit states, recommending that the president of the NET recover the funds from Solix.
The agency followed the advice and, on Sept. 7, 2021, the then-director of the Public Services Regulatory Board — the NET’s umbrella agency — Carmen Serrano-Burgos sent Josephine Farkas, the representative from Solix, a collection letter detailing the results of the Audit Report and including an invoice, payable within 30 days.
But on Nov. 23, 2021, Eric Seguin, vice president of Solix, sent a letter to the board indicating there was an existing contractual relationship between the parties from April 25, 2011, to Dec. 31, 2017, and requested an extension until Dec. 29, 2021, to gather the necessary information to provide a formal response.
On Dec. 24, 2021, Solix responded to the board’s collection letter, arguing that “government agencies are not required to follow the conclusions issued by the Comptroller’s Office; that Article 23 of the contract allowed the respondent to continue working month-to-month even after the contract had expired; that the money with which it was paid are not public funds; and that the claimant’s causes of action have elapsed.”
But on April 6, 2022, the board responded by stating that the Puerto Rico Supreme Court has been “clear and consistent” about the requirements related to government contracts, including that the agreement must be in writing. It also refuted Solix’s claims that it could work month-to-month without a formal extension.
“In this case, we must [establish] that the period in which a service was provided without a valid contract and in total noncompliance with the law was six years. A period much longer than the four years in which the service was provided with a valid contract,” the NET stated in the claim.
“So, it’s impossible to apply a transition clause that is clearly inapplicable to the particular situation, especially considering that six years would not be a reasonable transition period, so the 73 disbursements are clearly unsustainable in light of this clause,” the NET further claimed.
The agency also concluded that the funds with which Solix was paid are public funds, given that once private money passes to the coffers of a government agency legally authorized to manage them and issue disbursements, they become public funds.
On May 23, 2023, the board sent a second collections letter to Solix, indicating that if it did not receive a response “and/or” payment within 60 days, it would sue.
With Solix’s response on July 21, 2023 to the collection letter reiterating its initial defense and failing to settle the claimed amount, the board moved forward with the lawsuit on Feb. 5, 2023, for the recovery of the overpaid amount.
