What rules or guidance has the government issued on the public tendering process?

The public tendering process in Brazil is regulated by the Brazilian Tendering Process Law – Federal Law No. 8,666/1993, which applies to all levels of Government. On February 6th, 2020, Federal Law No. 13,979/2020 was enacted to regulate the public health emergency originating from the COVID-19 pandemic.

The Law No. 13,979/2020 sets forth that the typical tendering process may be dismissed for the acquisition of goods, services and materials destined to combat COVID-19. This dismissal only applies while the public health emergency is in force and all acquisitions made under this provision must be immediately publicized on the internet along with following information:

• The retained company’s name and ID (CNPJ);
• Term of the contract;
• Amount of the contract; and
• Number of the acquisition process.

Companies that are disbarred from participating in public tendering processes may exceptionally be retained in case they are the only, duly proven, supplier of the item or service to be acquired.

The preliminary studies and projects that precede the public procurement may also be dismissed or simplified.

Additionally, on May 6th, 2020, the Federal Government has enacted the Provisional Measure No. 961/2020, which provides for the authorization of advance payments in tenders and contracts, adjusting the limits for the dismissal of tendering processes for any goods or services and expanding the use of the Differentiated Public Procurement Regime (RDC) due to COVID-19.

According to the Provisional Measure, the tendering process may be dismissed, in the terms of items I and II of caput of article 24 of the Brazilian Tendering Process Law, up to the limit of:

1. for works and services of engineering up to R$ 100,000.00 (one hundred thousand reais), provided that they do not refer to portions of the same constructions or services, or even for works and services of the same nature and in the same place that can be carried out jointly and concurrently;
2. for other services and purchases in the amount of up to R$ 50,000.00 (fifty thousand reais) and for alienations, provided that they do not refer to portions of the same service, purchase or alienation of a higher amount that could be carried out at once.

The authorization of advance payments in tenders and contract applies provided that (i) it represents an indispensable condition for obtaining the goods or ensuring the provision of the services; or (ii) entails significant savings of public resources.

Moreover, in order to allow the advance payments, the Public Administration shall (i) provide for the advance payment in the public tender notice or in the formal instrument for direct award; and (ii) require the total restitution of the anticipated amount in the event of non-execution of the object.

What rules or guidance has the government issued for public contracts currently in operation?

The Law No 13,979/2020 also determines that the public contracts originated under its provisions must have a term of 6 (six) months, which may be successively extended while the need for combating the COVID-19 pandemic continues.

Furthermore, the Law sets forth, regarding the public contracts originated under its provisions, that the Public Administration may determine that the retained companies are obliged to accept, in the same contractual conditions, additions or suppressions to the object of the contract up to fifty percent of the original value of the contract.

With regards to the public contracts that were already in place before the pandemic, no special rules or guidance on the subject have been issued at the federal level.

However, the State of São Paulo has enacted Decree No. 64,898/2020 determining that entities of the Public Administration must draft a report regarding the contracts related to the provision of continuous services with one of the following options, considering the public interest:

1. To maintain the contract and its expenses, in case of a duly justification of the indispensable nature of the service provided;
2. To propose the unilateral suppression of up to 25% of the contract‘s initial value or a superior percentage in case there is an agreement with the retained company, in case of a partial need for the service provided; and
3. To propose the suspension of the contract‘s execution, through an amendment or an unilateral decision, observing the indemnities that may apply, in case there is no temporary need of the service provided.

For more guidance, please contact Ricardo Caiado Lima or Ana Lima of Campos Mello Avogados, or your usual DLA Piper partner.