*Per Daniella Caverni
Introduction to Tender Law
Law No. 14,133/2021, Bidding Law, is the current legislation that governs the rules for public procurement, in the Brazilian context, it is a set of rules that regulate the contracting of works, services, purchases and disposals by direct, indirect public administration and autonomous, at all federative levels (federal, state, municipal and Federal District). The main purpose of the law is to guarantee the selection of the most advantageous proposal for public administration, with transparency, equal conditions between participants and the search for the best cost-benefit.
ALaw No. 8,666/1993in force until December 2023 (MP No. 1,167/2023). Currently, the regulation of public bidding and contracting is carried out by theLaw No. 14,133/2021 (New Law on Tenders and Administrative Contracts). It is important to clarify here that during the transition period – until December 2023 – the public manager could choose to use the rules of either of the two laws, but not combine them in the same event, that is, when carrying out a bidding process, applied one standard or the other.
After this period, both Law No. 8,666/93 and other legislation linked to bidding (from the Auction -Law No. 10,520/02- and the RDC – Art. 1 to 47-A ofLaw No. 12,462/11) were revoked. However, contracts signed under the old law continue to be governed by it until its complete termination. Today, we still have many contracts regulated by Law No. 8,666/93.
The main objectives of a bidding process are: (i) ensuring the selection of the proposal capable of generating the most advantageous contracting result for the Public Administration, including with regard to the life cycle of the object; (ii) ensure equal treatment between bidders, as well as fair competition; (iii) avoid overpriced contracts or contracts with clearly unenforceable prices and overpricing in the execution of contracts; and (iv) encourage innovation and sustainable national development.
These standards aim to prevent practices of corruption, favoritism and collusion between competing companies, ensuring that public resources are used efficiently and ethically. The Bidding Law establishes the procedures to be followed at each stage of contracting, from publication of the notice to award of the contract. In addition, it defines the types of bidding, criteria for judging proposals, deadlines and resources available to participants in the bidding process.
Article 28 of the Bidding Law defines the bidding modalities, that is, the specific rules according to the nature of the object to be contracted. The bidding modalities are:
- competition: type of bidding for contracting special goods and services and common and special engineering works and services, the judging criteria for which may be: a) lowest price; b) best technique or artistic content; c) technique and price; d) greater economic return;
e) greater discount.
- competition: type of bidding to choose a technical, scientific or artistic work, whose judging criteria will be the best technique or artistic content, and to grant a prize or remuneration to the winner;
- competitive dialogue: type of bidding for contracting works, services and purchases in which the Public Administration carries out dialogues with previously selected bidders based on objective criteria, with the aim of developing one or more alternatives capable of meeting their needs, with bidders submitting a proposal final after the end of the dialogues;
- auction: type of bidding for the sale of immovable property or unusable or legally seized movable property to the highest bidder;
- auction: type of mandatory bidding for the acquisition of common goods and services, the judgment criterion for which may be the lowest price or the highest discount.
In addition to the modalities mentioned above, the Administration may use the auxiliary procedures provided for inart. 78 of the Law of Tenders.
In specific cases provided for by law, the bidding may be: (i) unenforceable (Law No. 14,133/2021, Art. 74) or (ii) waived – exhaustive list (Law No. 14,133/2021, Art. 75)
Despite the fact that hiring a supplier or provider of exclusive services has legal support, it is clear that many entities still encounter difficulties in applying this type of contracting, as it is not uncommon for such agreements to be discussed by control bodies, such as the Audit Courts. , which often recognize imperfections or even illegalities committed by public agents when using this modality.
When looking at this topic, this article aims to study this institute in more detail so that both the public agent and the private company can feel greater legal security when the bidding process is in fact unenforceable.
Unenforceability of Bidding – What is it?
This form of bidding is currently supported by article 74 of the Bidding Law and states that bidding is unenforceable when competition is unfeasible and specifically when: (i) the acquisition of materials, equipment or goods or contracting of services that can only be provided by an exclusive producer, company or commercial representative; (ii) the hiring of a professional from the artistic sector, directly or through an exclusive manager, as long as they are recognized by specialized critics or public opinion; (iii) the contracting of some specialized technical services of a predominantly intellectual nature with professionals or companies with notable specialization, with no requirement for advertising and dissemination services; (iv) objects that must or can be contracted through accreditation and (v) the acquisition or rental of property whose installation and location characteristics make its choice necessary.
Therefore, it is not necessary to carry out a bidding process to contract a certain service or acquire a certain product when the nature of the object to be contracted is specific and the choice of a supplier or service provider is also specific. singular, which makes competition impossible.
In other words, unenforceability occurs when there is a situation in which the hiring of a specific supplier or service provider is justified by its uniqueness, specialization or the unviability of competition. For example, hiring exclusive software whose functionalities uniquely meet the needs of public administration or, once implemented, hiring support and maintenance services for this software.
The lack of a plurality of individuals able to apply for the contract intended by the Administration gives rise to the most classic form of unfeasibility of competition. However, it is important to be clear that being “unique” is different from being “exclusive”. When the supplier is unique it means that something is the only one of its kind or that there is only one instance or copy of that and, on the other hand, when it is exclusive it refers to something that is available or reserved for a single person or group, excluding all others.
We have the consequence that, as per the example given above, it is the duty of the public agent, when contracting through non-enforceability, to demonstrate that the chosen technical solution is, in fact, the only or exclusive one capable of meeting the needs of the Public Administration, and must, in the terms of reference or administrative process, it must be completely clear that there is no other solution on the market with the same characteristics, modules, functionalities, similar to the one intended for contracting.
Proof of Exclusivity
Before we go into the merits of how the legislator determined the form of proof that will justify the unfeasibility of competition, it is important here to highlight the obligation that lies with the public body to technically justify the need to acquire a certain product or service.
When seeking to acquire a technological solution, be it software, hardware or even a service, the public body must carry out a detailed technical study that demonstrates to the market why that solution is unique to its needs. Here lies the great legal discussion on the topic of contracting through exclusivity, and it is not uncommon to come across discussions with the Courts of Auditors, which often recognize imperfections and even illegalities when contracting.
Justified and technically proven the need and exclusivity of service by the solution, article 74, §1 of the Bidding Law provides:
“For the purposes of the provisions of item I of the caput of this article, the Administration must demonstrate the unfeasibility of competition through certificate of exclusivity, exclusivity contract, manufacturer's declaration or other suitable document capable of proving that the object is supplied or provided by an exclusive producer, company or commercial representative, with preference for a specific brand prohibited.”
The main document used in this type of bidding is the certificate of exclusivity (or certificate of exclusivity), which is the legal document capable of certifying the exclusivity of representing products and services before public bodies. This is the document that justifies that that product or service has no competitor, therefore, the bidding process using a format that deviates from non-enforceability becomes unfeasible. Who issues these certificates?
Despite the new Bidding Law not mentioning who are the agents responsible for issuing the certificate of exclusivity, the practice remains that such a document must be issued by a Union, Federation, Employers' Confederation or, even, by equivalent entities, that is, entities that are recognized as suitable for issuing such documents. In the case of technology companies, ABES – Associação Brasileira das Empresas de Software, among others, issues such certificates as long as the applicant company complies with a series of requirements and presents all necessary documents. It is not at all uncommon to see in bidding processes the request for a certificate/attestation from a certain entity, which guarantees the public authority the suitability of the document.
This is because the Federal Court of Auditors has long shown concern with the content of the exclusivity certificates that guide direct award processes due to the non-requirement of bidding, so much so that it has already issued guidance to jurisdictional bodies to ensure that they take care when receiving of documents of this nature. Here is the entry:
SUMMARY 255-TCU In contracts in which the object can only be provided by a producer, company or exclusive commercial representative, it is the duty of the public agent responsible for the contract to adopt the necessary measures to confirm the veracity of the documentation proving the exclusivity condition.
The concern of the Federal Court of Auditors is precisely due to the nature of the certificate, as well as being the reputable issuing entity, with clear and legally traceable processes to truly prove the exclusivity of the software, hardware or services.
The legislation also brought the possibility of proving exclusivity by other means: exclusivity contract, manufacturer's declaration or other suitable document, which are much less common because, in our understanding, they provide less legal certainty for the public entity. However, they are still legally possible instruments to be used.
Conclusion
In view of what is presented here, direct contracting due to non-enforceability is an instrument that allows the Public Authority to choose the technological solution that best meets its needs which, being unique and exclusive, can be contracted directly as long as:
- the choice of the technological solution meets the needs of the public body, it has carried out a detailed technical study and, in fact, the company holding the solution is the only one capable of meeting all the intended requirements, that is, there is exclusivity in the provision of products and /or services.
- that exclusivity is attested by a reputable entity recognized by the Public Administration, and upon receiving the attestations/certificates, public entities, if applicable, can confirm their veracity.
Thus, despite being a suitable and very important legal instrument to allow specific hiring by the Public Administration, the conclusion of this agreement must necessarily follow a rigorous market evaluation process, that is, compatible prices practiced by the company, in addition to technical evidence, unique methodologies, skills, capabilities and know-how. Once this is done, contracting due to non-requirement of bidding will always be a good contracting instrument available to the Public Authorities.
*Daniella Caverni is a lawyer, partner at EFCAN Advogados and Leader of the Data Protection Working Group of the Brazilian Association of Software Companies (ABES)
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
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