Local Company May Lose Privilege With New Bidding Law

Changes to the Draft of the New Bidding Law, Approved at the End of Last Year and Under Urgent Regime in the Chamber of Deputies, Are Being Discussed by the Jair Bolsonaro Government and Lawmakers.

The main change proposed by the economic team is the defense of three adjustments: removing the possibility of a preference margin for national suppliers in bids, a minimum of 30% for the guarantee insurance on projects with values above R$ 200 million, and a determination that the electronic auction in the lowest price modality be opened.

Deputy Felipe Rigoni (PSB-ES) managed to include in the project the amendment that establishes a deadline for measuring completed works and reduces the maximum time for payment to contractors by the government. Currently, the law does not set a deadline for measuring the works to confirm whether they were executed properly. Once the measurement is done, the contracting party in the public sector still has 90 days to make the payment. Only after this time, if the payment does not occur, the contractor may request unilateral termination of the contract without being subject to penalties.

Rigoni wants the measurement by engineers to have deadlines defined in the contract. When not specified contractually, the assessment would be monthly. After the measurement, payment would have to be made within 30 days.

This change meets demands from the construction sector, which has heavily criticized the lack of payment and delays from federal, state, and municipal governments as factors that not only harm companies but also favor corruption. “When there is discontinuity or unpredictability in payments, it can disrupt the flow of a project or the contractor itself, especially medium and small ones,” says Rigoni.

On the government’s side, one of the requests is to remove the entire chapter that deals with the establishment of preference margins for local suppliers. The current text provides margins of up to 20% in favor of national companies. This means that, even offering a price up to 20% higher than that of a foreign supplier (or from outside the state in the case of state bids), the local company is the one chosen.

“It’s a disastrous possibility,” said the Secretary of Competition Advocacy and Competitiveness (Seae) of the Ministry of Economy, César Mattos. For him, the proposal reflects a protectionist stance and contradicts the discourse of broad economic openness of the current government.

This policy was largely used in previous administrations, first for bids from the Growth Acceleration Program (PAC), and with more impetus starting in 2011, when the Brazil Major Plan was launched.

One point still undefined in the text that will be voted in plenary is the maintenance of an article that effectively prohibits contractors in judicial or extrajudicial recovery from participating in bids. By requiring a negative debt certificate from the companies, the legislation could exclude large firms like OAS, Mendes Júnior, and Triunfo from public tenders.

The proposal for a new bidding law, modernizing the notorious 8.666/93, was approved in the Senate in 2016. Since then, it has made little progress. It was only at the end of last year that it gained new momentum, being analyzed in a special committee. At the beginning of the current legislative session, it received an urgency stamp – thus becoming a priority item on the plenary agenda.

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