In carrying out its administrative function, the Public Authority establishes various legal relationships with private individuals, in addition to creating special bonds of intergovernmental collaboration.
Celso Antônio Bandeira de Mello says:
"An administrative contract is a type of agreement entered into between the Administration and third parties in which, by force of law, agreed clauses or the type of object, the permanence of the bond and the pre-established conditions are subject to changeable impositions of public interest, without prejudice to the patrimonial interests of the private contractor."
Whenever such subjective connections are contractual in nature and are subject to the principles and rules of Administrative Law, we are dealing with administrative contracts.
Examples of administrative contracts include: public service concessions, public-private partnerships (PPPs), management contracts, partnership agreements, and management contracts, etc. We will break down each one in more detail below.
What are administrative contracts and what are their characteristics?
Administrative contracts can be understood as an agreement entered into between the Public Administration and a private individual (natural or legal persons), governed by public law, and whose main objective is an activity that reflects a certain public interest.
They possess typical characteristics such as the presence of the public administration in at least one of the poles of the legal relationship. In this sense, the administrative contract sometimes presupposes the presence of the Public Administration covered by a certain condition of superiority over the private party.
There are contracts entered into by the Public Administration that are not considered administrative contracts. Therefore, it is convenient to differentiate between the general category of contracts of the Administration, which includes all those entered into by the Public Administration, including those governed by private law, and the specific category of administrative contracts, considered as such only those subject to Administrative Law.
Currently, the most appropriate criterion for defining administrative contracts is the formal criterion, which defines as administrative those contracts that are subject to the principles and rules of Administrative Law.
Contracts originated under the aegis of private law, and their central core has always been the expression of will capable of producing effects for the contracting parties.
However, cases where an administrative contract is signed solely between government entities, aiming at mutual cooperation and the pursuit of common objectives, are rare. A typical example is the case of administrative consortia established between federative entities.
Article 22, XXVII, of the Federal Constitution prescribes that it is the exclusive responsibility of the Union to create general rules on bidding and administrative contracts. Since the Union is only responsible for issuing general rules, the other federative entities, however, have legislative competence to issue specific rules regarding bidding and contracts.
While in private law the conclusion of contracts is generally free and independent of prior formalities, requiring only the expression of will, in public law this freedom does not exist, precisely because the principle of formalism prevails in order to better protect the public interest, which must always be at the core of administrative conduct.
This is why contracts signed by the Public Administration, in their vast majority, have formalities that precede their execution. Among these, none is more important than the bidding process, which is an administrative procedure aimed at selecting interested parties for public procurement.
Contracts and bidding processes are inseparable and complementary institutions, meaning that they cannot be studied separately, and this is so much the case that the law that regulates them is rigorously the same – currently Law No. 14.133, of April 1, 2021 – the Bidding and Contracts Statute (ELC).
In this article, we will limit ourselves to administrative contracts; we will address bidding processes and their peculiarities in more depth at another time.
Specific contracts:
Brazilian legislation includes several types of administrative contracts. The most important types of contracts considered by the Brazilian legal system are:
- Public works contract:
This is the agreement through which the Administration selects a private company for the purpose of carrying out the construction, renovation, or expansion of a property intended for public use or public service. Construction contracts can be carried out under two basic execution regimes: the fixed-price contract and the task-based contract.
- Supply contract:
A supply contract is an administrative contract where the government acquires movable goods for use in public offices or establishments. An example is a contract for the supply of food products to public schools, which can be for a full, partial, or continuous delivery.
3. Service provision contract:
It is any service whose purpose is to provide an activity aimed at obtaining a specific benefit of interest to the Public Administration or the community, with the focus being on the action itself rather than the final result. Examples include garbage collection, transportation, and rental services.
4. Public service concession:
Public service concession is the most important administrative contract in Brazil, used whenever the Public Authority chooses to indirectly provide a public service by delegating it to private entities. Examples of services under concession include: air passenger transport, sound broadcasting (radio) and sound and image broadcasting (television), highway concessions, etc.
5. Public service permit:
The concession of public service is not the only instrument capable of promoting the delegation of the provision of public services to private entities.
This is what can be inferred from the rule contained in Article 175 of the Federal Constitution: "It is the responsibility of the Public Authorities, in accordance with the law, directly or under a concession or permit regime, always through bidding, to provide public services."
6. Public service concession preceded by construction work:
Article 2, III, of Law No. 8.987/95, as amended by Law No. 14.133/2021, defines a public service concession contract preceded by the execution of public works as:
"The construction, in whole or in part, conservation, renovation, expansion, or improvement of any works of public interest, delegated by the granting authority, through bidding, in the form of competition or competitive dialogue, to a legal entity or consortium of companies that demonstrates the capacity to carry it out, at its own expense and risk, in such a way that the concessionaire's investment is remunerated and amortized through the operation of the service or the work for a determined period."
7. Granting of the right to use public property :
A concession for the use of public property is an administrative contract by which the Public Authority grants to a private entity, through prior bidding, the exclusive use of a public asset, for a determined period, whether remunerated or not, in a predominantly public interest.
8. Management contract:
A management contract is one in which the contracting public authority transfers the management of a project to a private entity, reserving for itself the final decision-making power.
Thus, the client will remain responsible for the financial costs of executing the planned works and services, including the equipment necessary for their implementation and operation.
9. Management contract :
Management contract is the generic term used in legal doctrine to designate any operational agreement entered into between the central government and social organizations to establish performance targets, allowing for better control of results.
10. Partnership agreement:
It is the instrument signed between the Public Authority and civil society organizations of public interest – OSCIPs, characterized as a bond of cooperation, promotion and execution of activities of public interest (Article 9 of Law No. 9.790/99).
11. Public-private partnership:
Created by Law No. 11.079/2004, public-private partnerships (PPPs) are a contractual instrument designed to encourage private investment in the public sector, through the objective sharing of risks between the State (public partner) and the private investor (private partner).
12. Public consortium:
Traditionally, national doctrine has always defined a public consortium as an administrative contract signed between federative entities of the same type (municipalities with municipalities, member states with member states) for the achievement of objectives of common interest.
Example: Intermunicipal Consortium of Greater ABC (formed by municipalities in the ABC Paulista Region).
13. Cooperation Agreement :
A convention is a multilateral administrative agreement signed between public entities of any kind, or between these and private organizations, aiming at reciprocal cooperation to achieve objectives of common interest to all parties to the convention.
14. Accreditation Agreement:
Accreditation is the administrative contract by which the Public Authority enables any interested party to carry out a specific activity, without the need to establish competition.
Typically, accreditation is used in cases where all interested parties can be contracted, given the convenience of making available the largest possible number of providers of the accredited activity.
Example: accreditation of hospitals for the Unified Health System – SUS;
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References
MAZZA, AlexandreAdministrative Law Handbook. 12th ed. rev., updated. São Paulo: Saraiva Jur, 2022.
Administrative law course.
CARVALHO FILHO, José dos Santos. Manual of Administrative Law. 36th ed. rev., updated, expanded. São Paulo: Atlas, 2022.
