6.1. Introduction
The bidding process is the procedure established in the 1988 Constitution of the Federative Republic of Brazil, which guarantees equal competition among private companies so that they can contract with the Public Administration.
In this article, we discuss public contracts that may involve the provision of services or the acquisition of goods, as governed by Federal Law No. 14,133/2021. It is important to note that contracts with mixed-capital companies, their subsidiaries, and public companies are governed by Law No. 13,303/2016 (“Lei das Estatais”).
In this article, we discuss public contracts governed by Law 14,133/2021, which must comply with the formal administrative procedure conducted by the Public Administration prior to the contract itself. The Public Administration will be responsible for the entire development of the bidding process.
The rigor and observance of these processes reflect a duty of the Public Administration, embodied in Article 37, item XXI of our Federal Constitution, to ensure the preservation of the public interest in hiring.
Regarding the stages of a bidding process, it is essential to note that the bids have at least two major phases: one internal and one external.
The preparatory phase begins with the declaration of the need for goods or services and ends with the publication of the tender notice.
The external phase of public knowledge starts with the release of the invitation to bid and ends with the signing of the administrative contract.
Thus, in summary, the bidding procedure is divided into seven stages: (i) Preparatory phase; (ii) Publication of the bidding notice; (iii) Submission of proposals and bids; (iv) Evaluation; (v) Qualification; (vi) Submission of appeals; (vii) Approval.
6.2. Regulation and Principles
Law 14.133/21 establishes general rules for public tenders and contracts to be carried out by the Public Administration. In this context, it sets out the principles to be observed by the contracting public administrator, in accordance with the provisions of Article 37 of the Federal Constitution:
Legality: The public administration is obliged to adhere to the legal limits established for its contracts, which are less flexible than those for the contracting of goods and services between private entities.
Impartiality: All decisions made by the public administration must be based on objective criteria, free from personal bias, and aimed at serving the public interest.
Morality and administrative probity are related to the principle of impersonality and aim to prevent public administrators from prioritizing personal interests over the public interest, whether their own or those of third parties.
Equality in bidding procedures: all participants in a bidding process must be treated equally by the Public Administration, so that the same conditions are established for all competitors in a bidding process.
Publicity: establishes the commitment of the public bidding entity to give knowledge and publicity of its acts to the common interest.
Binding nature of the tender notice: The evaluation of bids and the execution of the public contract entered into between the Administration and the private agent for the achievement of the tendered object must comply with and be subject to all the rules of the terms of the tender notice.
Economy and Efficiency: The Public Administration must evaluate the proposals submitted in a bidding process based on the criteria of economy and efficiency, which are generally reflected in the proposal that is most advantageous to the public interest.
6.3. Modalities of public bidding
Law 14,133/2021 outlines five types of bidding: (i) auction; (ii) competition, (iii) contests (iv) auctions and (v) competitive dialogues and (vi) accreditation. These may generally be adopted in the following cases:
(i) Trading Session: this method shall be used when the object of the tender requires performance and quality standards that can be objectively defined by the call for tenders, through usual market specifications. Therefore, it does not apply to certain types of public procurement.
(ii) Competition: a method used to contract special goods and services, as well as common engineering works and services. The criteria may include:
(a) lowest price;
(b) best technique or artistic content;
(c) technique and price;
(d) highest economic return;
(e) highest discount.
(iii) Contest: a contest is a procedure that seeks to select technical, scientific or artistic works. The call for entries shall indicate the required qualifications of participants, the presentation guidelines and forms, and the participation conditions and prize or remuneration to be awarded to the winner.In contests aiming at the development of a project, the winner must transfer to the Public Administration all property rights related to the project and shall authorize its execution in accordance with competent authorities’ convenience and opportunity.
(iv) Auction: type of bidding for the sale of real estate property or goods that is unusable or legally seized to the highest bidder.
(v) Competitive dialogue: this modality is used for contracting works, services and purchases, whereby the public administration engages in dialogue with bidders. It is important to note that this official communication will be conducted with companies that have been selected based on objective criteria. The aim is to develop viable alternatives so that the public administration can contract specific goods or services when challenges to contracting are identified, such as a lack of technical or market information or legal or financial structures.
(vi) Accreditation: administrative procedure for public tenders. Thus, the Public Administration invites interested parties to supply goods so that, once the requirements have been met, they can be accredited by the purchasing body and can execute the object of the contract when called upon.
The evaluation criteria for a public procurement procedure are defined in Law 14.133/2021 and are as follows:
Lowest price: this criterion is used when selecting the most advantageous bid for the Administration, whereby the winner is the participant who submits a bid in accordance with the tender notice specifications and offers the lowest price.
‘Highest discount’: the judgement will be based on the overall price set out in the tender notice, with the discount extended to any additional terms.
Best technique or artistic content: Judgement will be based exclusively on the technical or artistic proposals submitted by participants in the competition. The tender notice must define the prize or remuneration to be awarded to winners.
Technique and price: Judgement based on technique and price considers the highest score obtained from the weighting of the marks awarded to the technical and price aspects of the proposal, according to objective factors set out in the tender notice. This criterion will be chosen in certain situations when studies carried out by the public administration in the tender’s preparatory phase indicate that it is the best criterion for economy and efficiency in public procurement.
‘Highest bid’: used exclusively for the auction modality, consisting of the highest bid submitted by a bidder participating in the auction.
‘Highest economic return’: this judgement will be used exclusively for the conclusion of an efficiency contract and will be considered the greatest savings for the public administration. It should also be noted that the contracted private entity will be remunerated through a fixed percentage, proportional to the savings obtained during the execution of the contract.
6.4. Exemption and non-requirement of bidding
The bidding duty, provided for in the Federal Constitution, is the general rule for contracting with the Public Administration. Notwithstanding, Law 14,133/21 provides for exceptions to this legal duty, so that the Government may, in some cases, carry out direct contracting, without bidding.
The situations of exemption from bidding are provided for in Article 75, of Law 14,133/21, and the Public Administration may not, its own discretion, waive bidding in other cases not listed in this provision.
Bidding is not required when competition is not possible, especially in cases of:
I – acquisition of materials, equipment or supplies or hiring of services that can only be provided by an exclusive producer, company or commercial representative;
II – hiring a professional from the artistic sector, directly or through an exclusive entrepreneur, if it is recognized by specialized critics or public opinion;
III – contracting the following specialized technical services of a predominantly intellectual nature with professionals or companies with notable specialization, with no requirement for advertising and dissemination services:
a) technical studies, planning, basic projects or executive projects;
b) opinions, expertise and evaluations in general;
c) technical advice or consultancy and financial or tax audits;
d) inspection, supervision or management of works or services;
e) sponsorship or defense of judicial or administrative causes;
f) training and improvement of personnel;
g) restoration of works of art and assets of historical value;
h) quality and technological controls, analyses, tests and field and laboratory trials, instrumentation and monitoring of specific parameters of works and the environment and other engineering services;
IV – objects that must or can be contracted through accreditation;
V – acquisition or rental of real estate property whose installation and location characteristics make it necessary its choose.
It is important to note that waiving or rendering the bidding process unenforceable does not eliminate the preparatory phase, for which the Government must provide justification for adopting one of the exceptions provided for in the Law.
6.5. Administrative Contracts
Administrative contracts are governed by Law 14,133/21 and are regulated by their clauses and by the precepts of public law, and the principles of the general theory of contracts and the provisions of private law will be applied to them in addition.
In this context, it should be noted that public interest takes precedence during the execution of the contract. Therefore, clauses that grant greater powers to the Public Administration during the execution of the contract may be adopted. However, Law 14,133/2021 provides mechanisms to protect private entities contracted by the public administration.
Contracts must clear and precisely on the establishment of the conditions for their execution expressed in clauses that define the rights, obligations and responsibilities of the parties, in accordance with the terms of the instrument calling for the bid and those of the winning proposal or with the terms of the act that authorized direct contracting and those of the respective proposal.
A draft of the administrative contract is part of the bidding invitation, which allows bidders to become aware of its terms even before they start participating in the bidding.
Once the bidding procedure is completed, the Public Administration will regularly call on the winning bidder to sign the contract term or to accept or withdraw the equivalent instrument, within the deadline and under the conditions established in the calling instrument. If the winning bidder does not appear to formalize the contract, the right to contract will be void, without prejudice to suffering sanctions provided for in Law 14,133/21.
6.6. Recommendations to engagement in public biddings
Any company interested in contracting with the Brazilian public administration for the sale of goods or provision of services must comply with the guidelines set out in Law 14.133/2021 and the provisions of the tender notice in which they intend to participate. Companies must submit the documents and information requested in detail in the tender notice, such as evidence of economic capacity, details of their corporate and operational structure, and certificates of tax compliance and court registry.
Therefore, another valuable recommendation is to periodically obtain certificates proving your legal and fiscal compliance. These should be issued by the relevant public agencies.
In case of doubts about the interpretation of the call for bids or notice any omissions, you can send questions to the public authority responsible for the tender via official channels. This will allow the Public Administration to resolve any issues raised.
Finally, it is important to note that, in light of Law 12.846/2013 (‘Anti-Corruption Law’) and an updated Public Procurement Manual, companies that regularly participate in bidding processes must maintain Anti-Corruption Compliance Programs to ensure that their actions comply with the legislation and regulations in force in the country.
Authors: Vanessa Cristina Santiago
Updated by: Cristiana Alli Molineiro
Gaia, Silva, Gaede & Associados
Av. Pres. Juscelino Kubitschek, 1830
Itaim Bibi, São Paulo – SP
CEP 04543-900
Telefone: (11) 3797-7400
E-mail: [email protected]
Internet: www.gsga.com.br