News from the Legal World #4: new Brazilian Public Procurement Law
Approved since December 2020 by the Brazilian Congress, the new Brazilian Public Procurement Law was finally enacted. It reshapes and modernizes the public procurement system conducted by the Federal Government and shall also serve as a general rule for States and Municipalities.
The changes range from the extinction of certain procurement modalities, such as the invitation, the creation of new ones, such as the competitive discussion, and the inclusion of new types of competition, such as the higher economic income, higher discount which join the old ones of best technique, best price and best technique and price. The Law divides the works contracts in three (single price, global price and global), and creates new forms of contracting (for task, combined, semi-combined and supply and services.
It addresses the inclusion of environmental criteria in the preparatory documents and in the invitation to bid and allows the Authority to set a variable compensation depending on environmental sustainability goals. It also indicates the assessment of balance between men and women in the bidders as one of the tie-break criteria, evidencing some concern on ESG for public tenders.
The rule also allows the use of alternative dispute resolution, including mediation, negotiation and dispute boards to resolve monetary conflicts, such as the restablishment of the economic balance of the contract.
Federal tenders will pass to be disclosed in an unified Website for Public Hirings and new law brings a set of special requirements for large tenders (involving contracts of more than R$200 million - aprox. USD 35million), such as: a mandatory creation of an integrity program and the possible mandatory use of surety bonds, where insurers shall become an intervening parties and gain supervisory and inspection powers.
The new Law is in force, but for two years, the contracting authorities may choose to use the old or the new regulation.
Our firm is prepared to assist our clients with all the changes implemented by the new law and with the entire bidding proceedings.