The New Brazilian Public Procurement Law

On the 1st April of 2021, a new Public Procurement Law (Law n. 14.133/21) was enacted in Brazil, replacing the previous legal regime, which was embedded in Law n. 8.666/1993. In this update, we explore the new rules within this new Public Procurement Law.

The Public-Private Partnerships contracts, however, will continue to be regulated by the specific rules under law n. 11,079/2004 (the Public-Private Partnership Act), with the new Public Procurement Law applying to these contracts on a subsidiary basis.

New Rules

Amongst the changes introduced by the new Public Procurement Law, we highlight the following:

• The creation of a new type of bidding called "competitive dialogue", which is intended to cover situations in which the contract depends on the establishment of effective dialogue between the Public Administration and the Suppliers/Bidders (such as contracts for technological innovations).
• The possibility of resolving disputes with the state-controlled entities through arbitration. 
• The increase in the percentage of the required insurance guarantee from 5% to 20% (for construction works, services and supplies) and from 10% to 30% (for larger administrative contracts).
• The possibility of the Invitation to Tender and the Contract to provide that, in case of default in contracts for construction works and engineering services, the Insurer who issued the guarantee shall take over the execution of the contract. The Insurer may also be held liable for the payment of an indemnity to the Public Administration for any fines, extra costs and losses resulting from the breach of contract. 

Opportunities for international players

At the end of 2020, the Brazilian government issued a new privatization plan for 2021, with a portfolio of 115 assets for concessions and auctions, which are expected to attract investments in the total of R$ 70 billion.

Amongst these projects, there is the privatization of Brazilian state-owned companies such as Eletrobras, auctions for electric energy transmission/generation and several concessions for Ports (16), Roads (6) and Airports (24).

For further guidance on the new Brazilian Public Procurement Law, please do not hesitate to contact Denise Medeiros, Patrick Carvalho or Stirling Leech in the Sao Paulo office.