Public Procurement in Brazil

Roger Müller e Sergio Mitsuo Vilela

22/06/2015

Bravest AG

Informativo orienta empresas suíças interessadas a vender para o governo brasileiro.

Considering the interest of Swiss firms in selling their products and services to Brazil, Bravest prepared this streamline fact-sheet (along with a more detailed presentation) on the Public Procurement Market in Brazil.

1. Market size

Brazil does not have official consolidated numbers, since public procurement processes are decentralized (Federal, 26 States, 1 Federal District, 5,565 Municipalities and public controlled entities) over 34,000 purchasing entities.

Federal Government spent BRL 62 billion (CHF 20 billion) in 2014, and, the total market is estimated to be around BRL 350 billion (CHF 116 billion).

2. Market regulation

Although decentralized, all public procurement procedures are subject to the same harmonized system (Federal Laws nº 8,666/93 and 10,520/02):

  •  Concorrência ("Dispute" with greater complexity, over R$ 650,000.00 - document evaluation and then price analysis - famed "envelope" offers);
  •  Pregão ("Auction", usually electronic - first price dispute and then analysis of he best price documentation);
  •  Convite/Invitation, Tomada de Preços/Bid Request (lower complexity and usually restricted to residents) regulated by two federal laws.

3. Participation of foreign companies

Brazil is not a party to the World Trade Organization Plurilateral Agreement on Government Procurement, however, for public officials is forbidden by law (Law nº 8.666/93, art, 3, II) to "establish different treatment of commercial, legal, work, social security, or any other, between Brazilian and foreign companies, including what concerns currency, means and place of payment, even when international financing agencies are involved, except as provided in the following paragraph and in the art. 3 of Law 8,248/91".

The participation of "foreign" companies (without operations in Brazil) is expressly provided for in the law (Law nº 8.666/93, art. 32, par. 4.): "Foreign companies, which do not have operations in Brazil, will observe, whenever possible, in international public procurement events, the requirements of the previous paragraphs with equivalent documents, duly sworn translated and in their respective Consulates authenticated, and shall have a legal representative in Brazil, with express powers to receive summons and to answer administratively or judicially".

3.1 Advantage for Brazilian companies

It may be established margin of preference (Law nº 8.666/93, art. 3, par. 5 and 8.) for products manufactured or services rendered in Brazil, which meet Brazilian technical standards. It is important to note that two Swiss partners establish a "Brazilian" company.

The preference margins by product, service, product group or group of services, shall be defined by the federal executive branch, but they may not exceed the amount of 25% (twenty five percent).

4. Remarks on the "Pregão" / Electronic bidding

We would like to emphasize the fact that the "Pregão" eletrônico / electronic bidding is a very safe and transparent method, which minimizes the chance of "pressure" from corrupt officials.

All the procedures are public (usually available online) and audited.