Welcome to the world of public procurement in Brazil, where the rules of the game are about to change significantly with the implementation of the new Bidding Law. This article has been carefully crafted to offer you, the reader, a comprehensive and in-depth understanding of the changes that the new legislation will bring to the landscape of public procurement in the country.

Law 8.666/1993 is repealed and the new Law 14.133/2021 comes into effect . More than just a numerical change, it represents the replacement of an entire set of norms and rules on one of the most important topics in the relationship between government and businesses: public procurement and administrative contracts.

We previously discussed Administrative Contracts here on the IDP Blog in an article about them: what they are and what their characteristics are? – IDP Law Blog , where we can see how important this subject is to society as a whole. This is because Brazilian legislation includes several types of administrative contracts that are used daily.

Therefore, it's worth checking out this article for those who haven't seen it yet, and it's worth revisiting this work for those who are already familiar with it, after all, such an important subject always deserves to be reviewed. But in this article, we will focus on the New Bidding Law and everything you need to know about it to fully understand its purpose.

The new Bidding Law emerges in a context of constant evolution of contracting practices in the public sector, aiming to modernize and improve procedures, making them more efficient, transparent, and aligned with the principles of good management and cost-effectiveness.

Over the next few paragraphs, we will explore the main aspects of this innovative legislation, covering everything from the fundamentals to the most detailed nuances that will impact companies, public managers, and others involved in the world of public procurement.

If you are an entrepreneur seeking opportunities in the public sector, a public manager responsible for bidding processes, a legal professional, or simply someone interested in understanding the changes in the bidding environment, this article is your definitive guide. Prepare to delve into the nuances of the New Bidding Law and acquire all the knowledge necessary to excel in an increasingly dynamic and challenging environment.

What is a bidding process and how does it work?

Public bidding is an administrative procedure used by public bodies to acquire goods, services, or works. This process aims to select the most advantageous proposal for the public administration, ensuring equal conditions for all those interested in participating.

The fundamental objective of bidding is to guarantee transparency, competitiveness, and efficiency in the contracting of products and services by the public sector. By using bidding, government agencies seek to avoid the possibility of favoritism, promote competition among participants, and consequently achieve better conditions in terms of price, quality, and delivery time in contracts.

There are different types of bidding processes, each suited to specific situations. Each type has specific rules, but all follow basic principles established by law, such as publicity, equality, competitiveness, legality, and impartiality. These principles guarantee the integrity of the bidding process and contribute to selecting the most advantageous proposal for the public administration.

The change and creation of a new Bidding Law causes an immediate mobilization of all public servants involved in the sectors of public procurement and contract management, as well as control bodies, such as the Courts of Auditors, which evaluate and monitor bids and contracts and the movement of related public resources. It is also a concern for lawyers and companies whose economic activities revolve around the government procurement sector, such as a significant portion of the construction industry, industrial production materials/inputs, pharmaceuticals, various materials, data processing equipment, foodstuffs, various services, and other regular or occasional suppliers to the Public Sector.

The New Bidding Law and its Innovations

The New Comparative Bidding Law aims to ensure quick and accurate consultation on the redesign of the bidding and contracting system, based on the creation of the new bidding law that seeks to modernize and consolidate three normative instruments into a single law: Law No. 8.666, of June 21, 1993, which is the former General Law on Bidding and Contracts, Law No. 10.520, of July 17, 2002, which regulates the auction as a bidding modality, and Law No. 12.462, of August 4, 2011, which established the Differentiated Public Procurement Regime – RDC.

The proposal to amend the General Bidding Law is an old one; Law No. 8.666/93 had already been criticized so much that, in 1995, two years after its enactment, the National Congress already had a bill (PL) to amend it, which was PL 1.292. In fact, there were more than 200 attached bills that sought to amend Law No. 8.666 during the legislative process that created the new law. 

However, it must be asserted that, in fact, the most successful initial impetus for the creation of the New Law on Bidding and Contracts was Bill 559 of 2013, which led to the structuring of a commission within the Federal Senate for the purpose of modernizing and compiling various bidding regulations into a single law. 

At the end of 2016, once PLS 559 was approved, it arrived at the Chamber of Deputies as PL 6.814/2017, having been attached to the older project, PL 1.292/95, receiving the latter number only due to its seniority. However, the content of the discussed project had nothing to do with that of 1995, having been obtained from the impetus given by PLS 559, which was again subjected to intense debates within the Chamber of Deputies, which approved a new content in September 2019. 

In 2019, the project returned to the Senate, under the rapporteurship of Senator Anastasia, and received a new number: 4.253, having been approved in the Plenary, without further submission to the Thematic Committees, in a brief and quite symbolic vote, at this final moment, after a long and rich process, on December 10, 2020, henceforth consolidated and sent to presidential sanction on March 12, 2021.

Identifying the factors that contribute to errors and illegalities in public procurement and knowing how to avoid or mitigate their effects are not simple tasks, especially in light of a new Law on Bidding and Contracts. 

Among other innovations, Federal Law No. 14.133/2021 changed paradigms, introduced planning, transparency, and publicity as principles to be constantly observed, sought the professionalization of all those involved in such a noble mission of contracting and overseeing, and introduced a culture of segregation of duties and digital bidding. 

Furthermore, the new Bidding and Contracts Law mandates the observance of the following principles:

Furthermore, Law No. 14.133/2021 seeks to provide a compilation of definitions to guide its interpreter. Ultimately, although Article 6 contains 60 legal definitions, most of the definitions present are either taken from the General Law on Bidding and Contracts or compiled from other specific laws that will be added, such as the Law on Electronic Bidding (Law No. 10.520/2002), the RDC Law (Law No. 12.462/2011), bringing into the normative text definitions from the Law on State-Owned Enterprises (Law No. 13.303/2016), the Federal Administrative Procedure Law (Law No. 9.784/99), the Law on Administrative Improbity (Law No. 8.429/92), and infra-legal normative acts (Decree No. 10.024/2019, regarding electronic bidding; Normative Instruction No. 5/2017 – accreditation and renegotiation; and Decree No. 7.892/2013, with amendments, on (price registration) that incorporate case law from the Courts of Auditors.

Thus, the new Bidding Law practically repeats the content of Law No. 8.666/93, differing only in:

• Public Administration: direct and indirect administration of the Union, the States, the Federal District and the Municipalities, including entities with legal personality under private law controlled by the public authorities and foundations established or maintained by them; and

• Administration: the body or entity through which the Public Administration operates.

However, it is no longer crucial to make such an interpretation regarding the distinction of territorial effects of the sanction, given that the normative text itself is clear in stating that the sanction of prohibition from bidding and contracting, extended from up to two years in the previous regime to up to three years, according to article 156, § 4, of the new law, applies within the scope of the direct and indirect Public Administration of the federative entity that applied the sanction.

Some of the other innovations brought about by the legislation are: prior planning of procurement; new bidding modalities, such as competitive dialogue and auction, and the electronic auction becomes applicable in all spheres of Public Administration; creation of the Federal Government Procurement System (Compras.gov.br), which unifies public procurement from all bodies and entities of the Federal Executive Branch, and can also be used by states and municipalities; creation of the National Public Procurement Portal (PNCP); among other initiatives.

To facilitate understanding of the new law, the Federal Court of Accounts (TCU) has released the fifth edition of the Bidding & Contracts Manual. The material provides updated regulations and jurisprudence on public procurement, focusing on the changes brought about by the new Bidding and Contracts Law. Law 14.133 of 2021 establishes general rules for the public administrations of the Union, states, the Federal District, and municipalities. 

The objective of this new edition of the manual is to provide preventive and pedagogical guidance to facilitate the interpretation and application of Law 14.133/2021 by the senior management of public organizations and by all those involved in the procurement process. 

The intention is to promote compliance of public procurement with the new legislation and to encourage the adoption of good governance and procurement management practices by federal public administration organizations, improving the public sector's procurement capacity. 

The material aims to facilitate the interpretation and application of the law, with preventive and educational guidelines on the new text. The publication is already available for consultation on the Court's website, or by clicking here.

It is worth noting that, starting in January 2024, public procurement processes in the country must be carried out exclusively under the rules of the new Bidding and Contracts Law (Law No. 14.133/2021). As a measure to complete the transition from the old to the current legislation, the Ministry of Management and Innovation in Public Services (MGI) has established guidelines to be followed by federal, state, and municipal agencies and entities.

Laws No. 8.666/1993 and No. 10.520/2002 and the provisions of Law No. 12.462/2011, which until now governed public bidding and contracts, were definitively repealed on December 30, 2023. 

From that date, Compras.gov.br will be configured to only receive contracts under Law No. 14.133/2021. Therefore, procurement processes submitted based on the old regulations will have to have their notices published in the Official Gazette of the Union (DOU) by December 29th.

Regarding contracting, it should also be noted that the law incorporated the efficiency contract, which was addressed in the old RDC regulations. This is a contract whose object is the provision of services, which may include the execution of works and the supply of goods, with the objective of providing savings to the contracting party in the form of reduced current expenses, with the contractor's remuneration based on a percentage of the savings generated.

Types of Bidding

Law 14.133 /2021 also altered the definition of bidding modalities, ceasing to define the bidding modality based on the value of the object. Given this change, the price-taking and invitation modalities no longer exist.

Article 28 of the new law outlined the types of bidding processes, which are:

Auction: Responsible for contracting common goods or services;

Competition: Responsible for contracting goods, special services, and engineering works;

Competition: Hiring of technical, scientific or artistic services;

Auction: Applicable for the sale of movable or immovable property;

Competitive dialogue: contracting for works, services, and purchases in which the Public Administration engages in dialogues with bidders previously selected based on objective criteria, with the aim of developing one or more alternatives capable of meeting its needs, with bidders required to submit a final proposal after the dialogues have concluded.

Considerations on the Bidding Process

The new Bidding Law adds to the principle of equal treatment of bidders, in item II of article 11, the concern for fair competition. This concern, if promoted, effectively generates an increase in public procurement, because, in circumstances of cartelized actions, corruption, fraud and collusion, supplier oligopolies and, consequently, absence of competition, there is a restriction on the possibility of the Administration obtaining a more advantageous contract in terms of both price and quality, which harms the entire society, since the payment of contracts is made through the use of public funds. 

Regarding the prevention of fraud, there was an express statement among the objectives of the bidding process, more specifically in item III of article 11, that of "avoiding contracts with overpricing or with manifestly unfeasible prices and overbilling in the execution of contracts". 

This content is inspired by the provisions of the State-Owned Enterprises Law (Law No. 13.303/2016), which stipulates, in its article 31, that the bidding processes carried out and the contracts entered into by public companies and mixed-economy companies are intended to ensure the selection of the most advantageous proposal, including with regard to the life cycle of the object, and to avoid operations that are characterized by overpricing or overbilling.

The State-Owned Enterprises Law mentions avoiding overpricing or overbilling, which is repeated by the new General Law on Bidding and Contracts, and the latter also adds the issue of avoiding manifestly unfeasible prices.

Avoiding overpricing and overbilling should be a natural consequence of seeking a contract with a more advantageous outcome for the Public Administration, since it is logically deducible that a more advantageous result excludes overpricing and overbilling, given that they do not generate advantages.

Furthermore, the new Bidding Law follows a similar path by focusing on strengthening governance rules in the context of bidding and contracts, as evidenced by the content of the sole paragraph of Article 11 of the Law. This paragraph stipulates that the senior management of the agency or entity is responsible for the governance of procurement and must implement processes and structures, including risk management and internal controls, to evaluate, guide, and monitor bidding processes and the respective contracts, with the aim of achieving the objectives established in the main body of the article, promoting an environment of integrity and trust, ensuring the alignment of procurement with strategic planning and budgetary laws, and promoting efficiency, effectiveness, and efficacy in its procurement.

Therefore, the following are elements that comprise procurement governance:

• responsibility of the senior management of the agency or entity, within the concept of "tone at the top";

• Implementation of processes and structures, which include risk management and improvement of internal control: to evaluate, guide and monitor bidding processes and the respective contracts, in order to achieve the objectives foreseen in article 11 of the Law (most advantageous result also in the life cycle of the object; equal treatment with fair competition; avoiding overpricing, unfeasible prices and overbilling, encouraging innovation and sustainable national development);

• To promote an environment of integrity and trustworthiness, which can also be achieved through the implementation and monitoring of integrity programs in public bodies in general, and in the public procurement sector in particular, in accordance with the requirements of the new law;

• to ensure that procurement is aligned with strategic planning and budget laws; and

• To promote efficiency, effectiveness, and efficacy in contracting.

Furthermore, the actions taken in the bidding process are public, except in cases where confidentiality is essential to the security of society and the State, as provided by law. Publicity will be deferred, with regard to the content of the proposals, until their respective opening; and, with regard to the Administration's budget, in accordance with Article 24, which deals with the optional use of a confidential budget.

Once the adjudication and qualification phases are concluded, and administrative appeals have been exhausted, Article 71 of the law establishes that the bidding process will be forwarded to the superior authority, which may:

Article 71. Once the adjudication and qualification phases are concluded, and administrative appeals have been exhausted, the bidding process will be forwarded to the superior authority, which may:

I – to order the return of the case file for correction of irregularities;

II - to revoke the bidding process for reasons of convenience and opportunity;

III – to annul the bidding process, either on its own initiative or at the instigation of third parties, whenever an irreparable illegality is present;

IV – to award the contract and approve the bidding process.

§ 1. When declaring the nullity, the authority shall expressly indicate the acts with incurable defects, rendering ineffective all subsequent acts that depend on them, and shall give rise to the investigation of the responsibility of whoever caused them.

§ 2. The determining reason for the revocation of the bidding process must result from a duly proven supervening fact.

§ 3. In cases of annulment and revocation, the prior expression of opinions by the interested parties must be ensured. 

§ 4. The provisions of this article shall apply, where applicable, to direct contracting and to ancillary bidding procedures.

This article continues to incorporate the content of Precedent No. 473 of the STF (Supreme Federal Court), which states that the Administration may annul its own acts when there is illegality or revoke them for reasons of convenience and opportunity, respecting acquired rights and reserving judicial review.

However, two points should be emphasized: 

(1) as is known, the revocation that occurs in the bidding process is not solely due to convenience and opportunity, but is conditioned upon the occurrence of a duly proven supervening fact, as provided for in § 2 of art. 71 (the determining reason for revoking the bidding process must result from a duly proven supervening fact); and 

(2) the law emphasizes that the nullity must occur in the face of an incurable illegality, so it is to be assumed that if the defect is capable of being remedied, the Administration must validate it.

The Role of Lawyers and Legal Professionals in Light of the New Bidding Law

Lawyers and other legal professionals play a crucial role in the context of the new Bidding Law, as they are responsible for guiding and representing companies and public entities in all phases of the bidding process, ensuring compliance with the new rules and defending the interests of their clients.

First and foremost, it is important to emphasize that the new Bidding Law brings with it a series of significant innovations and changes compared to the previous legislation. Therefore, lawyers and legal professionals must be properly updated and familiar with the new legal provisions, as well as with the case law and interpretations that may arise in relation to these changes. 

This specialized knowledge will allow these professionals to act proactively in guiding their clients, ensuring full compliance with legal requirements and minimizing potential legal risks.

One of the main areas in which lawyers can work is in the analysis and drafting of bidding documents, such as tender notices, terms of reference, and contracts. With the new Bidding Law, greater standardization and transparency are expected in these documents, which will require special attention from legal professionals to ensure they comply with the new legal requirements. 

Furthermore, lawyers can assist in identifying abusive or illegal clauses in bidding documents, as well as in preparing administrative appeals in case of any irregularities in the bidding process.

Another area in which lawyers can work is in representing companies and public entities in potential legal disputes related to bidding processes. With the implementation of the New Bidding Law, greater speed and efficiency are expected in resolving disputes involving public contracts, especially with the provision for mechanisms such as arbitration and the resolution of technical disputes. 

In this sense, lawyers play a fundamental role in defending the interests of their clients before judicial bodies, contributing to ensuring legal certainty and a level playing field in the context of public procurement.

Furthermore, lawyers can act preventively, offering legal advice to companies and public entities regarding the development of internal compliance policies and the prevention of fraud in bidding processes. 

With the implementation of the new Bidding Law, a greater emphasis on transparency, integrity, and accountability in conducting bidding processes is expected, which will require constant monitoring and control efforts by organizations. 

In this context, lawyers can assist in implementing preventive measures and developing compliance strategies with the new regulations, contributing to the mitigation of legal and reputational risks.

Thus, lawyers and legal professionals play a fundamental role in the context of the new Bidding Law, acting as strategic partners of companies and public entities in conducting transparent, efficient bidding processes that comply with legal requirements. 

Through specialized and proactive work, these professionals contribute to ensuring legal certainty, equal opportunities, and integrity in the public procurement environment, thereby promoting sustainable development and strengthening the rule of law in Brazil.

References

Nohara, Irene Patrícia Diom. New Law on Bidding and Contracts Compared – 2021 Edition. Revista dos Tribunais. ( https://next-proview.thomsonreuters.com/launchapp/title/rt/codigos/256414970/v1/page/VI )

Bidding & Contracts: Guidelines and Jurisprudence of the TCU / Federal Court of Accounts. 5th Edition, Brasília: TCU, General Secretariat of the Presidency, 2023.

L14133 (planalto.gov.br)