Administrative contracts are essential for public management in Brazil, being fundamental in the acquisition of goods and services and in the execution of works of collective interest. They formalize legal ties between the Public Administration and private entities, guaranteeing results that promote the public interest and efficiency in the use of resources.

Regulated by Law No. 14.133/2021, the New Law on Bidding and Contracts (NLLC) has brought significant advances, modernizing contractual relations in the public sector. The legislation consolidates principles such as efficiency, transparency, and equality, guiding public procurement and reinforcing the supremacy of the public interest.

Understanding the characteristics and applications of these contracts is essential for professionals in both the public and private sectors. This article analyzes the main aspects that make administrative contracts strategic for Public Administration, highlighting their importance in meeting social demands.

What are administrative contracts?

Administrative contracts are agreements entered into between the Public Administration and private individuals (natural or legal persons), establishing reciprocal obligations to achieve objectives of collective interest. Unlike private contracts, these instruments are governed by Public Law and have specific clauses that ensure the supremacy of the public interest.

These contracts are applicable in various situations, such as:

• Sale and concession of public assets;
• Property rentals;
• Provision of technical and specialized services;
• Execution of public works;
• Contracting for information and communication technology.

The requirement for prior bidding, except in cases of exemption or inapplicability provided for by law, is a key aspect of administrative contracts, guaranteeing equal opportunities for interested parties.

Essential characteristics of administrative contracts

Administrative contracts have unique characteristics that distinguish them from other types of contracts:

1. Presence of the administration as a public power : The Public Administration always occupies a privileged position in the contract, acting with prerogatives aimed at ensuring the collective interest.

2. Public purpose : the main objective is to meet the needs of the community, aligning with constitutional principles such as legality, morality, and impartiality.

3. Formality: administrative contracts must strictly adhere to the forms prescribed by law. Their absence implies nullity.

4. Bilateral nature: the parties have reciprocal obligations. While the contractor undertakes to fulfill the object of the contract, the Administration ensures the counter-performance.

5. Consensualism: agreements must be made voluntarily, respecting the terms stipulated in the bidding process or the direct contracting agreement.

6. Synallagmatic nature: there is interdependence between the obligations of the parties. For example, the supply of goods by the contracted company is conditional upon payment by the Administration.

7. Exorbitant clauses: allow the Administration to modify, monitor, or terminate the contract unilaterally, whenever necessary to protect the public interest.

8. Personalism: administrative contracts are generally entered into " intuitu personae ," requiring the contractor to directly perform the agreed obligations, unless the contract provides for partial subcontracting.

Essential and exorbitant clauses 

Essential clauses: essential clauses ensure legality and clarity in the execution of administrative contracts. According to article 92 of the NLLC, they must contain:

• Object and characteristic elements;
• Implementation regime;
• Rights and obligations of the parties;
• Penalties and calculation bases for fines;
• Guarantees and payment terms.

Exorbitant clauses: these clauses grant the Administration exceptional powers, such as:

• To unilaterally change the contract;
• Terminate the contract in accordance with the law;
• To oversee the execution of the project;
• To apply administrative sanctions.

These prerogatives reflect the supremacy of the public interest over the private interest, one of the pillars of Administrative Law.

Types of administrative contracts

The NLLC (New Legal Framework for Contracts) encompasses different types of administrative contracts, each designed for specific purposes. Below, we highlight the main ones:

1. Management contracts: signed with public or private entities, these contracts establish goals and deadlines for decentralizing state activities, promoting efficiency and results monitoring.

2. Supply contracts: used for the acquisition of movable goods, such as hospital equipment or school supplies. They may provide for full or partial deliveries.

3. Service contracts: these cover technical services, maintenance, and transportation. The execution method may be based on a fixed price or a unit price, as provided for by law.

4. Public works contracts: intended for the construction, expansion, or renovation of public projects. They may be executed directly by the Administration or by third parties, under the regimes of lump-sum contract, unit price contract, task contract, or turnkey contract.

5. Concession contracts: delegate the provision of public services, such as public transportation or highway management, to the private sector. They may or may not include the execution of construction works.

6. Transfer contracts: these deal with the transfer of public assets to private individuals, requiring a competitive bidding process and prior valuation.

Guarantees and advertising

Guarantees: The Administration may require guarantees to ensure the full execution of the contract. Options include cash deposit, surety bond, or bank guarantee. For large-scale projects, the guarantee may reach up to 30% of the initial contract value.

Publicity: the NLLC requires broad disclosure of contracts on the National Public Procurement Portal (PNCP). In the case of public works, the values ​​and quantities must be disclosed on official websites.

Cases of contract termination and modifications

Termination of contract

Administrative contracts can be terminated normally or prematurely, always observing the principles of legality and public interest. Normal termination occurs when the contract achieves its objective, with the full execution of the object and the payment due. Premature termination, on the other hand, results from exceptional situations, such as breach of contractual clauses or administrative irregularities.

• Early termination can occur through annulment, unilateral termination, bilateral termination, or judicial or arbitral determination.
  
• Annulment occurs when there is a flaw in the formation of the contract, invalidating it from its inception.
  
• Unilateral termination is a prerogative of the Public Administration to protect the collective interest, while bilateral termination results from an agreement between the parties. Judicial or arbitral rulings can also terminate the contract, always based on applicable legislation.

In cases of early termination, the Administration must initiate administrative proceedings to determine responsibilities, guaranteeing the right to a fair hearing and full defense. Furthermore, it is essential that the termination of the contract be accompanied by technical and administrative measures that ensure the preservation of public interests and transparency in the process.

Contractual modifications

The modification of administrative contracts can be carried out unilaterally or consensually, always with technical justification and aligned with the public interest. 

• Unilateral changes are the exclusive prerogative of the Administration, allowing adjustments to the specifications of the object or the contracted quantities, respecting the legal limits of increase or decrease of up to 25%, or 50% in the case of renovations.
  
• Consensual changes, in turn, are made by agreement between the parties, and are applicable in situations such as changes in the execution regime or the contractual schedule. 

Regardless of the form, the modifications must be formalized through an addendum, an instrument that ensures the validity and legal security of the changes made.

Practical applications of administrative contracts

Administrative contracts are widely used in various areas of Public Administration, such as:

• Infrastructure: construction of highways, schools and hospitals.
• Health Insurance: contracting hospital services and purchasing medications.
• EducationProvision of teaching materials and maintenance of schools.
• TechnologyDevelopment and maintenance of information systems.

The versatility of these contracts allows them to meet public needs efficiently, ensuring legality and transparency in the processes.

The closing thought

Administrative contracts are indispensable tools for efficient public management, ensuring the execution of works and services essential to society. Regulated by the NLLC (New Public Contracts Law), these contracts balance the supremacy of the public interest with the rights of contractors, promoting efficiency, transparency, and governance.

For professionals working in this field, understanding the nuances of these instruments is fundamental. Courses such as the Postgraduate Program in Bidding and Contracts at IDP offer comprehensive training to meet the challenges of the public sector, enabling students to perform with excellence in a dynamic and challenging environment.

References
IDP Blog. Administrative Contracts: What are they and what are their characteristics? January 27, 2023. Available at: https://direito.idp.edu.br/idp-learning/direito-administrativo/contratos-administrativos/.

NATIONAL SCHOOL OF PUBLIC ADMINISTRATION. Module 3 – Administrative Contracts. Brasília: Enap, 2021. Available at: https://repositorio.enap.gov.br/jspui/bitstream/1/6160/3/M%C3%B3dulo%203%20-%20Contratos%20administrativos.pdf.

JUSTEN FILHO, Marçal. Administrative law course. 15th ed. rev., updated. Rio de Janeiro: Forense, 2024. E-book. (1 online resource). ISBN 9786559649822. Available at: https://integrada.minhabiblioteca.com.br/books/9786559649822.

MAZZA, Alexandre. Administrative law course. 14th ed. rev., updated. São Paulo: Saraiva Jur, 2024. E-book. (1 online resource). ISBN 9788553620296. Available at: https://integrada.minhabiblioteca.com.br/books/9788553620296.