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NEW GOVERNMENT PROCUREMENT RULES ARE ENACTED IN BRAZIL

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President Jair Messias Bolsonaro just signed the new Government Procurement Act into law, converting the Bill (PL) 4.253 / 2020 into Law 14.133 of April 1, 2021, with the objective of modernizing and streamlining the current rules under which the government conducts the following transactions:

I - sale and concession of real rights to use assets;

II - purchase, including by order;

III - lease;

IV - concession and permission to use public goods;

V - provision of services, including specialized technician and professional ones;

VI - architectural and engineering works and services;

VII - hiring of information and communication technology.

The law arrives at a good time, especially as it replaces a patchwork quilt formed by the previous procurement regulations (Law 8.666 / 93), the Auction Law (Law 10.520 / 02), and the Differentiated Contracting Law (Law 12.462 / 11 ), modifying the rules regarding government contracting systems.

The new law starts to structure the procurement process in seven (7) phases, in the following sequence:

I - preparatory;

II - disclosure of the bidding notice;

III - submission of proposals and bids, when applicable;

IV - judgment;

V - habilitation;

VI - appeal;

VII - homologation.

It is important to point out that the law provides for phase V’s anticipation before phase III and IV if so stipulating the procurement notice, as was previously done for the competition mode.

The new law will replace the previous procurement modalities (invitation, tender, competition, price taking, auction, reverse auction, reverse electronic auction, and differentiated contracting regime) with the following five (5) procurement modalities:

I – reverse auction;

II - competition;

III - concourse;

IV - auction;

V - competitive dialogue.

Of all the above modalities, the one that logically draws the most attention is the new competitive dialogue modality that can be used in the following situations:

I - AIMS TO CREATE A CONTRACT THAT INVOLVES THE FOLLOWING CONDITIONS:

a) technological or technical innovation;

b) impossibility for the agency or entity to have its needs met without adapting solutions available on the market; and

c) impossibility for the technical specifications to be defined with sufficient precision by the administration.

II - CHECKS TO DEFINE AND IDENTIFY THE ALTERNATIVES THAT MAY SATISFY THE IDENTIFIED NEEDS, HIGHLIGHTING THE FOLLOWING ASPECTS:

a) the most appropriate technical solution;

b) the technical requirements capable of implementing the solution already defined; and

c) the legal or financial structure of the contract.

Nevertheless, the new Procurement Act innovates by admitting, in addition to the above modalities, the following auxiliary procedures:

I - accreditation;

II - pre-qualification;

III - procedure for the expression of interest;

IV - price registration system;

V - registration.

As judgment criteria, the new Procurement Act lists six (6) hypotheses, introducing several new features not considered in the previous (now revoked) legislation:

I - lowest price;

II - greater discount;

III - best technique or artistic content;

IV - technique, and price;

V - higher bid, in the case of auction; and

VI - greater economic return.

Aiming to modernize the rules, the public administration has the explicit right to prohibit a brand or product’s contracting through an administrative process. If it is proven that products acquired and used previously do not meet the requirements for full compliance with the contractual obligation, as well as to indicate one or more brands or models in the supply of goods, provided there is justification in the following hypotheses:

a) due to the need to standardize the object;

b) due to the need to maintain compatibility with platforms and standards already adopted by the administration;

c) when a given brand or model marketed by more than one supplier is the only one capable of meeting the needs of the contractor; and

d) when the description of the object to be auctioned can be better understood by identifying a specific brand or model able to serve only as a reference.

However, this is a device that can be challenged in court by bidders and the new Procurement Act introduces the option of the public administration requesting a letter of solidarity issued by the manufacturer, which ensures the contract’s execution, in the case of a reseller or distributor bidder. In this case, the legislator ignored that the Federal Supreme Court (STF) had already considered a similar situation in 2010, when judging the constitutionality of the requirement of Art. 5, § 3 of Ordinance 2.814 / 1998 of the Ministry of Health that said the following: “Art 5 - In the public procurement of medicines carried out by the own services and contracted by SUS, the following requirements must be observed: § 3 - The distribution companies, in addition to the documents provided for in the caput of this article, will be required to present a declaration of your accreditation as a distributor with the company that holds the registration of the products, as well as a Term of Responsibility issued by the distributor, guaranteeing their delivery within the deadline(s) and quantities established in the bidding process.” The STF considered that the device violated free competition. In this case, the STF is right since the manufacturer may refuse to supply the letter of solidarity to a particular distributor to privilege another distributor of interest, completely undermining free competition.

As for the indirect execution of engineering works and services, the new Procurement Act allows the following regimes but always requires an executive project, except for preliminary technical studies:

I - contract for unit price;

II - contract for global price;

III - full contract;

IV - hiring by task;

V - integrated contracting;

VI - semi-integrated contracting; and

VII - provision and provision of associated service.

In cases of unenforceability and waiver of bidding, we had an increase and decrease of hypotheses, respectively, as shown below:

CASES OF UNEFORCEABLE BIDS

I - acquisition of materials, equipment, or types or contracting of services that an exclusive producer, a company can only provide, or commercial representative;

II - hiring of professionals in the artistic sector, directly or through an exclusive entrepreneur, provided that it is recognized by specialized critics or public opinion;

III - contracting of the following specialized technical services of a predominantly intellectual nature with professionals or companies of 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 advisory 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 goods of historical value;

h) quality and technological controls, analysis, tests and field and laboratory tests, instrumentation, and monitoring of specific parameters of works and the environment and other engineering services that fall within the provisions of this item;

IV - objects that must or can be contracted by means of accreditation;

V - acquisition or rental of property whose characteristics of facilities and location make it necessary to choose.

CASES OF BIDDING WAIVER

I - for contracts involving amounts less than R$ 100,000.00 (one hundred thousand reals), in the case of works and engineering services or maintenance services for motor vehicles;

II - for contracts involving amounts less than R$ 50,000.00 (fifty thousand reals), in the case of other services and purchases;

III - for contracting that maintains all the conditions defined in a bidding notice made less than 1 (one) year ago when it is verified that in that bidding:

a) no interested bidders have appeared, or valid proposals have not been submitted;

b) the proposals presented consigned prices that were manifestly higher than those practiced on the market or incompatible with those set by the competent official bodies;

IV - for contracting whose object is:

a) goods, components, or parts of national or foreign origin necessary for the maintenance of equipment, to be purchased from the original supplier of such equipment during the technical warranty period, when this exclusive condition is indispensable for the duration of the warranty;

b) goods, services, disposals or works, under the terms of a specific international agreement approved by the National Congress, when the conditions offered are manifestly advantageous for the administration;

c) products for research and development, limited to contracting, in the case of engineering works and services, to the value of R $ 300,000.00 (three hundred thousand reais);

d) transfer of technology or licensing of the right to use or exploit protected creation, in the contracting carried out by a public scientific, technological and innovation institution (ICT) or by a development agency, provided that there is an advantage for the administration;

e) horticultural products, bread, and other perishable goods, in the period necessary to carry out the corresponding bidding processes, in which case the contracting will be carried out directly based on the daily price;

f) goods or services produced or rendered in the country that involve, cumulatively, high technological complexity and national defense;

g) materials used by the Armed Forces, except for materials for personal and administrative use, when there is a need to maintain the standardization required by the logistical support structure of naval, air, and land assets, upon authorization by an act of the commander of the military force;

h) goods and services to serve the military contingents of Brazilian singular forces employed in peace operations abroad, in which case the contracting must be justified as to the price and choice of the supplier or executor and ratified by the commander of the military force;

i) supplying or supplying military personnel during a short stay in ports, airports, or locations other than their headquarters, due to operational movement or training;

j) collection, processing, and commercialization of recyclable or reusable urban solid waste, in areas with a selective garbage collection system, carried out by associations or cooperatives formed exclusively by low-income individuals recognized by the government as recyclable material collectors, with the aim of use of equipment compatible with technical, environmental and public health standards;

k) acquisition or restoration of works of art and historical objects, of certified authenticity, as long as it is inherent in the organ’s purposes or compatible with them;

l) specialized services or the acquisition or rental of equipment for tracking and obtaining evidence provided for in items II and V of the caput of art. 3 of Law No. 12,850, of August 2, 2013, when there is a justified need to maintain confidentiality about the investigation;

m) acquisition of drugs intended exclusively for the treatment of rare diseases defined by the Ministry of Health;

V - for contracting to comply with the provisions of arts. 3rd, 3rd-A, 4th, 5th and 20 of Law no. 10,973, of December 2, 2004, observing the general contracting principles contained in said Law;

VI - for hiring that may lead to a compromise of national security, in the cases established by the Minister of State for Defense, upon demand from the commands of the Armed Forces or other ministries;

VII - in cases of war, state of defense, state of siege, federal intervention, or serious disturbance of the order;

VIII - in cases of emergency or public calamity, when there is an urgent need to attend to a situation that may cause damage or compromise the continuity of public services or the safety of people, works, services, equipment, and other goods, public or private, and only for the acquisition of the goods necessary to attend the emergency or catastrophic situation and for the parcels of works and services that can be concluded within a maximum period of 1 (one) year, counted from the date of the occurrence of the emergency or calamity, prohibited the extension of the respective contracts and the rehiring of a company already hired based on the provisions of this item;

IX - for the acquisition, by a legal entity of internal public law, of goods produced or services provided by a body or entity that are part of the Public Administration and that have been created for that specific purpose, provided that the contracted price is compatible with that practiced in the Marketplace;

X - when the Union has to intervene in the economic domain to regulate prices or normalize supply;

XI - to enter into a program contract with a federal entity or with an entity of its indirect Public Administration that involves the provision of public services in an associated manner under the terms authorized in a public consortium contract or in a cooperation agreement;

XII - for contracting in which there is a transfer of technology from strategic products to the Unified Health System (SUS), as listed in the act of the national directorate of SUS, including on the occasion of the acquisition of these products during the stages of technological absorption, and in amounts compatible with those defined in the instrument signed for the transfer of technology;

XIII - for hiring professionals to compose the evaluation committee for technical criteria, in the case of a technical professional with a notorious specialization;

XIV - for the hiring of a non-profit association of persons with disabilities, with proven suitability, by a body or entity of the Public Administration, for the provision of services, provided that the contracted price is compatible with that practiced in the market and the contracted services are provided exclusively by people with disabilities;

XV - for the hiring of a Brazilian institution whose statutory purpose is to support, attract and carry out teaching, research, extension, institutional, scientific and technological development and to stimulate innovation, including to manage these activities administratively and financially, or to hire an institution dedicated to the social recovery of the prisoner, provided that the contractor has an unquestionable ethical and professional reputation and is not for profit; and

XVI - for the acquisition, by a legal entity of internal public law, of strategic health inputs produced by a foundation that, regimentally or statutory, has the purpose of supporting a direct Public Administration body, its autarchy or foundation in teaching, research, extension projects, institutional, scientific and technological development and to stimulate innovation, including in the administrative and financial management necessary for the execution of these projects, or in partnerships that involve the transfer of technology from strategic products to SUS, under the terms of item XII of the caput of this article, and that was created for that specific purpose on a date before the entry into force of this Law, provided that the contracted price is compatible with that practiced in the market.

The new Procurement Act was also innovative in cases where the public administration decides to sell its assets, providing for the following rules:

REAL ESTATE - WITH LEGISLATIVE AUTHORIZATION AND AUCTION, WHICH WILL BE DISPENSED ACCORDING TO THE OPTIONS BELOW:

a) donation in payment;

b) donation, permitted exclusively to another body or entity of the Public Administration, of any sphere of government, except for the provisions of subparagraphs “f,” “g” and “h” of this item;

c) exchange for other properties that meet the requirements related to the primary purposes of the administration, as long as the difference found does not exceed half the value of the property that will be offered by the Union, according to a previous assessment, and there is a change in values, whenever the case;

d) investiture;

e) sale to another body or entity of the Public Administration of any sphere of government;

f) free or onerous alienation, tenure, granting of real right to use, lease and permission to use residential real estate built, intended or effectively used in housing programs or land regularization of social interest developed by a body or entity of the Public Administration;

g) free or onerous alienation, tenure, the concession of real right to use, lease, and permission to use commercial real estate of local scope, with an area of up to 250 m² (two hundred and fifty square meters) and destined to land regularization programs of social interest developed by a Public Administration body or entity;

h) sale and concession of real right of use, free of charge or onerous, of public rural lands of the Union and of the National Institute of Colonization and Agrarian Reform (Incra) where occupations are subject to the limit mentioned in § 1 of art. 6 of Law No. 11,952, of June 25, 2009, for land tenure regularization, in compliance with legal requirements;

i) legitimation of possession referred to in art. 29 of Law No. 6,383, of December 7, 1976, through the initiative and resolution of the competent Public Administration bodies; and

j) land tenure and tenure legitimation referred to in Law No. 13,465, of July 11, 2017;

OTHER GOODS AT AUCTION WITH DISPENSATION:

a) donation, permitted exclusively for the purposes and use of social interest, after an assessment of socioeconomic opportunity and convenience concerning the choice of another form of alienation;

b) exchange, permitted exclusively between bodies or entities of the Public Administration;

c) sale of shares, which may be traded on the stock exchange, subject to specific legislation;

d) sale of securities, in compliance with the relevant legislation;

e) sale of goods produced or traded by entities of the Public Administration, due to their purposes; and

f) sale of materials and equipment that cannot be used by those who have them available to other public administration bodies or entities.

For administrative contracts resulting from tenders, it is important to draw attention to the new Procurement Act’s  concern to condition the procurement document’s prediction in the multiyear plan when the contract’s duration exceeds one (1) financial year.  In these cases, the law establishes specific new conditions for public administrations to enter into contracts up to 5, 10, and 35 years old, ensuring that the chronological order must be respected to make the payments for it.

Concerning infractions, the new Procurement Act lists the following:

I - cause the partial non-performance of the contract;

II - cause the partial non-performance of the contract that causes severe damage to the administration, to the functioning of public services, or the collective interest;

III - cause the total non-performance of the contract;

IV - fail to deliver the documentation required for the event;

V - not to keep the proposal, except as a result of a duly justified supervening fact;

VI - not enter into the contract or failure to deliver the documentation required for contracting when called within the validity period of your proposal;

VII - give rise to the delay in the execution or delivery of the object of the bidding without justified reason;

VIII - submit a false declaration or documentation required for the event or make a false declaration during the bidding process or the execution of the contract;

IX - defraud the bid or performing a fraudulent act in the execution of the contract;

X - behave in an unfaithful manner or commit fraud of any kind;

XI - practice illegal acts to frustrate the bidding objectives; and

XII - to perform a harmful act foreseen in art. 5 of Law No. 12,846, of August 1, 2013.

Thus, whoever incurs one of the above infractions, will be subject to the following penalties:

I - warning;

II - fine;

III - impediment to bid and contract; and

IV - declaration of ineligibility to bid or contract.

Regarding penalties, it is interesting to note that the implementation or improvement of the integrity program (compliance program), according to the control bodies' rules and guidelines, becomes an essential item in the determination of the penalty.

New in the definition of related crimes is creating the National Public Procurement Portal (PNCP). However, hiring agencies, entities of the Executive, Legislative, and Judiciary Powers of all federative entities is optional. They exhaust the innovations brought by the new procurement regulations.

It is hoped that the new Procurement Act will facilitate processes for the acquisition of goods and services and the alignment of assets for public administration, reducing corruption and various frauds, and promoting the moralization of the public sector's interaction with the private sector.

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