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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
INDEX
INTRODUCTION ...... 3 PPP LAW - LAW No. 11.079/04 ...... 4 CONCESSION OF PUBLIC SERVICES LAW - LAW No. 8.987/95 ...... 17 PUBLIC TENDERING LAW - LAW No. 8.666/93 ...... 31 DIFFERENTIATED PUBLIC PROCUREMENT LAW - LAW No. 12.462/11 ...... 82 FISCAL RESPONSIBILITY LAW – COMPLEMENTARY LAW No. 101 ...... 109 INVESTMENT PARTNERSHIP PROGRAM LAW (PPI) - LAW No. 13.334/16 ...... 138 PPI DECREE - DECREEE No. 8.791/16 ...... 144 PPI ORDINANCE No. 1 (GENERAL PROVISIONS FOR INFRASTRUCTURE PROJECTS) ...... 152 PPI ORDINANCE No. 5 (APPROVED CONDITIONS FOR THE AIRPORT PROJECTS) ...... 156
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
INTRODUCTION
We are glad to share with the public in general and with the civil society the product of the work our team developed. Our goal in doing so is to contribute with the dissemination of relevant information to Brazilian and - more importantly in this case, foreign - investors, companies, authorities and other stakeholders, regarding the Brazilian legal framework of the main infrastructure projects hereof.
Our infrastructure and public law team prepared a non-certified translation of the main rules applicable to the procurement of infrastructure projects under Brazilian jurisdiction, especially the laws concerning public tendering, concession agreements and PPPs. We have also translated the recently enacted rules applicable to PPI, which is the central body of the Brazilian federal government in charge of managing the setup, procurement and monitoring of the execution of public-private projects.
Our purpose – in publishing this document with some of the rules applicable to the infrastructure projects announced by the federal government and other public-private partnerships to be developed -, was to spread information, and contribute with our skills and daily practice to this scenario of improvement of the legal framework, business environment and legal certainty for investments in Brazilian infrastructure and/or dealing with the federal, state and municipal government in Brazil.
We hope this document turns into a useful tool for dialogue, assessments and negotiations to be carried out by foreign entities with Brazilian companies, public authorities, among other stakeholders, that wish to invest or attract funds to our infrastructure. Should you need any clarification or have any comments to this document, we will be glad to discuss.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
PPP LAW - LAW No. 11.079/04
I, the President of the Republic, hereby state that the National Congress has enacted and I have sanctioned the following Law: CHAPTER I - PRELIMINARY PREVISIONS
Article 1 – This Law creates general rules for calls for tender and public-private partnership contracts within the scope of the Union, State, the Federal District and Municipal Administration authorities.
Sole Paragraph – This Law applies to all the direct Public Administration bodies of the Executive and Legislative Branches, to special funds, agencies, public foundations, government-owned-companies, partly government owned-companies and other entities controlled whether directly or indirectly by the Union, the States, the Federal District and the Municipalities.
Article 2 – A public-private partnership is the administrative concession agreement, in the sponsored or administrative modality.
§ 1 – A sponsored concession is the concession of public services or public works as referred to in Law No. 8,987, of February 13, 1995, when it involves, besides the tariff charged from the users, a cash compensation from the public partner to the private partner.
§ 2 – Administrative concession is the service agreement in which the public administration is the direct or indirect user, even if it involves the performance of a work or the supply and installation of goods.
§ 3 – As such understood, the concession of public services or public works referred to in Law No. 8,987, of February 13, 1995 is not a public-private partnership when it does not include a cash compensation from the public partner to the private one.
§ 4 – No public-private partnership agreement can be entered:
I – if the contractual amount of which is below twenty million reals (BRL$20,000,000.00); II – if the service period is below five (5) years; or III – that has as sole purpose the supply of manpower, the supply and installation of equipment or the performance of a public work.
Article 3 – The administrative concessions are governed by this Law, and additionally by the provisions of articles 21, 23, 25 and 27 to 39, Law No. 8,987, of February 13, 1995, and article 31, Law No. 9,074, of July 7, 1995.
§ 1 – The sponsored concessions are governed by this Law, and ancillary by the provisions in Law No. 8,987, of February 13 1995, and related laws.
§ 2 – The common concessions continue to be governed by Law No. 8,987, of February 13 1995, and by its related laws, and the provisions herein do not apply to them.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 3 – The administrative agreements which are not a common, sponsored or administrative concession, continue to be governed exclusively by Law No. 8,666, of June 21 1993, and by the related laws.
Article 4 – The following directives shall apply to the contracting of a public-private partnership:
I – efficiency in the fulfillment of the State missions and the employment of the society’s resources; II – respect to the interests and rights of those for whom the services are intended and of the private entities in charge of their performance; III – prohibition to delegate the functions of regulation, jurisdiction, exercise of policy authority and other exclusive activities of the State; IV – fiscal responsibility to execute and carry out the partnerships; V – transparency of the procedures and decisions; VI – objective allocation of risks between the parties; VII – financial sustainability and socio-economic advantages of the partnership projects.
CHAPTER II - PUBLIC-PRIVATE PARTNERSHIP AGREEMENTS
Article 5 – The clauses of the public-private partnership agreements will comply with the provisions of article 23, of Law No. 8,987, of February 13 1995, in whatever applicable, and must also observe:
I – the period of effectiveness of the agreement, compatible with the amortization of the investments performed, not below 5 (five), nor above 35 (thirty five) years, including any extension; II – the penalties applicable to the Public Administration and to the private partner in case of contractual default, always determined as a proportion of the seriousness of the default and the obligations taken; III – the allocation of risks between the parties, including those concerning fortuitous case, force majeure, government restrictions, and extraordinary economic unforeseen events; IV – the rules of compensation and adjustment of the contractual amounts; V – the mechanisms to ensure the services are up to date; VI – the fact that characterizes the cash default of the public partner; the forms and the periods of time to remedy them, and, whenever applicable, the form to enforce the guarantee; VII – the objective criteria to evaluate the performance of private partner VII – the supply, by the private partner, of enforceable guarantees sufficient and compatible with the burdens and risks involved, in compliance with the limits in §§ 3 and 5, article 56, Law No. 8,666, of June 21, 1993, and, concerning the sponsored concessions, what is provided for in subparagraph XV, article 18, Law No. 8,987, of February 13, 1995; IX – the sharing, with the Public Administration, of actual economic gains of the private partner arising from the reduction in the credit risk of financing used by the private partner; X – the performance of an inspection of the reversible assets, when the public partner will be entitled to withhold the payments to the private partner, in the amount required to make up for any noncompliance found. XI – the schedules and deadlines to pay the funds to the private partner, during the investment phase of the project and/or after making the services available, whenever the circumstance in § 2m, Article 6 herein occurs.
§ 1 – The contractual clauses for automatic adjustment for inflation of amounts, based on mathematical indexes and formulas, if any, shall be applied without the need of homologation by the Public Administration, unless it publishes, in the official press, if any, no later than fifteen (15) days after the invoice is delivered, reasons grounded hereon or on the agreement, in order to reject such adjustment for inflation. 5
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 – The agreements may additionally set forth:
I – the requirements and conditions under which the public partner shall authorize the transfer of control or the temporary management of the special-purpose company to its financers and guarantors with which it does not maintain any direct corporate relationship, with the purpose of promoting its financial reorganization and ensuring the continuity of the services, and for such purposes, the provisions in subparagraph I, sole paragraph, article 27, Law No. 8,987 of February 13, 1995 shall not apply; II – the possibility to issue a pledge in the name of the project financers for the pecuniary obligations of the Public Administration; III – the standing of the project financers to be indemnified for the early termination of the agreement, as well as payments made by the funds to state-owned companies that guarantee the public-private partnerships. Article 5-A – For the purposes of item I, § 2, Article 5, the following definitions apply: I – the control of the special-purpose company is the temporary ownership of its shares or quotas by its financers and guarantors that meet the criteria set forth in Article 116, Law No. 6,404 of December 15, 1976; II – that temporary management of the special-purpose company is made by the financers and guarantors when, without transferring the ownership of the shares or quotas, the following powers are granted: a) To appoint members to the Board of Directors to be elected in the shareholders’ general meeting, in the companies governed by Law No. 6,404, of December 15, 1976; or managers to be elected by the quotaholders, in the other companies; b) To appoint members to the Audit Committee to be elected by the controlling shareholders or quotaholders in a general meeting; c) To exercise their right to veto with respect to any proposal submitted by the shareholders or quotaholders in the concessionaire that represents or that may come to represent a disadvantage to the purposes set forth in the heading of this article; d) Other powers necessary to reach the purposes set forth in the heading of this article;
§ 1 – The temporary management authorized by the government does not imply financers’ or guarantors’ liability with respect to taxing, charges, burdens, sanctions, obligations or commitments with third parties, including with the government and employees.
§ 2 – The government shall issue rules regarding the temporary management.
Article 6 – The compensation of the Public Administration in the public-private partnership agreements may be made through:
I – bank order; II – assignment of non-taxable credits; III – granting of rights related to the Public Administration; IV – granting of rights on disposable state-owned property; V – other means admitted in law.
§ 1 – The contract may set forth payment to the private partner of an amount that varies in accordance with its performance, according to goals and quality control, and availability as provided in the agreement.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 – The contract may set forth investment of funds in the private partner to be used towards construction work and purchase of reversible assets, in accordance with the provisions of items X and XI of the heading or article 18, Law No. 8,987, of February 13, 1995, as long as authorized in the bid notice, if regarding new contracts, or specific law, if regarding contracts executed until August 8, 2012. § 3 – The amount of the investment made according to the provisions in § 2 may be excluded from the calculation of:
I – net profit for the purposes of determining taxable income and the tax base for CSLL – social contribution on net income; and II – tax base for payment of contributions to the Social Integration Program and the Public Servant Fund (PIS/Pasep) and Contribution for Social Security Financing (COFINS). III – tax base for the social security contribution on gross income – CRPB owed by the companies mentioned in articles 7 and 8 of Law No. 12,546, of December 14, 2011, as of January 1, 2015.
§ 4 – Until December 31, 2013 for those that have opted in, per article 75 of Law No. 12,973, of May 13, 2014, and until December 31, 2014 for those that have not opted in, the installment excluded per the terms of § 3 must be included in the calculation of net income for the purposes of assessing taxable income, tax base for CSLL and tax base for PIS/Pasep and COFINS, as the cost to have the works done and assets purchased, as referred to § 2 of this article, are realized, including through depreciation or termination of the concession, according to the provisions in article 35 of Law No. 8,987, of February 13, 1995.
§ 5 – When the concession agreement is terminated, the private partner will not receive indemnification for the investment installments connected to reversible assets that have not yet been repaid or depreciated, when such investments have been made with funds from investments made in accordance with § 2.
§ 6 – As of January 1, 2014 for those that have opted in per article 74 of Law No. 12,973, of May 13, 2014, and as of January 1st, 2015, for those that have not opted in, the installment excluded per the terms of § 3 must be included in the calculation of net income for the purposes of assessing taxable income, tax base for CSLL and tax base for PIS/Pasep and COFINS, in each fiscal year for the duration of the contract, as of the public service performance starts.
§ 7 – In the event of § 6, the amount to be added in each fiscal year must be the amount of the installment excluded, divided by the number of fiscal years contained in the remaining term of the agreement.
§ 8 – For the concession agreements in which the concessionaire has already started to perform the public services on the dates referred to in § 6, the subsequent additions will be made in each fiscal year for the remaining duration of the agreement, considering the remaining balance not yet added.
§ 9 – The installment excluded per the provisions of item III, § 3 must be included in the assessment of the tax base for social security contribution provided in item III, § 3 in each fiscal year for the rest of the duration of the contract for the construction, reclamation, renovation, addition or improvement of the infrastructure that will be used for the performance of the public services.
§ 10 – In the event of § 9, the amount to be added in each fiscal year must be the amount of the installment excluded, divided by the number of fiscal years contained in the remaining term of the agreement for the
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
construction, reclamation, renovation, addition or improvement of the infrastructure that will be used for the performance of the public services.
§ 11 – In the event of early termination of the concession agreement, the balance of the installment that had been excluded per the terms of § 3, not yet added, must be included in the calculation of net income for the purposes of assessing taxable income, tax base for CSLL and tax base for PIS/Pasep, Cofins and social security contribution provided in item III, §3 in the fiscal year of the termination.
§ 12 – To the private partner’s income in accordance with § 6, it is applicable the assessment method and the tax rates for the PIS/Pasep and Cofins applicable to their income from public services provided.
Article 7 – The compensation of the Public Administration shall be mandatorily made after the service object of the public-private partnership agreement is provided.
§ 1 – Pursuant to the agreement, the Public Administration may pay the consideration related to the useful part of the service object of the public-private partnership agreement.
§ 2 – The investment mentioned in § 2, article 6, when made during the investment stage for which the private partner is responsible, must be proportional to the stages that have actually been performed.
CHAPTER III – GUARANTEES
Article 8 – The pecuniary obligations contracted by the Public Administration in a public-private partnership agreement may be guaranteed by means of:
I – committing revenues, as provided for in subparagraph IV, article 167, of the Federal Constitution; II – incorporation or use of special funds set forth in law; III – contracting of a performance bond with insurance companies which are not controlled by the Public Administration; IV – guarantee granted by international organisms or financial institutions which are not controlled by the Public Administration; V – guarantees granted by a guarantee fund or a state-owned company incorporated for such purpose; VI – other lawful mechanisms.
CHAPTER IV – SPECIAL-PURPOSE COMPANY
Article 9 – A special-purpose company, in charge of implementing and managing the partnership purpose, shall be incorporated before the execution of the concession agreement.
§ 1 – The transfer of control of the special-purpose company shall be subject to express authorization by the Public Administration, in compliance with the call for tender and the agreement, as provided for in the sole paragraph, of article 27, of Law No. 8,987, of February 13, 1995.
§ 2 – The special-purpose company may be a publicly-traded company, with its securities traded in the market.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 3 – The special-purpose company shall comply with standards of corporate governance and adopt standard accounting and financial statements, in compliance with the regulation.
§ 4 – The Public Administration is forbidden to hold the majority of the voting capital of the companies dealt with in this Chapter.
§ 5 – The prohibition set forth in § 4 of this article is not applicable to the purchase of the majority voting capital of the special-purpose company by a financial institution controlled by the Public Authority in case on default of financing agreements. CHAPTER V – CALL FOR TENDER
Article 10 – The contracting of the public-private partnership shall be preceded by a bidding procedure as a competitive tendering [modalidade de concorrência], and the procedure shall require:
I – authorization of the pertinent authority, based on a technical study showing: a) convenience and opportunity of the contract, by identifying the reasons that justify the choice for the public- private partnership modality; b) the created or increased expenses shall not affect the targets for tax results set forth in the Schedule referred to in § 1, article 4, of Complementary Law No. 101, of May 04, 2000, and their financial consequences should be set off by either the permanent increase in revenues or the permanent reduction of expenses in the next periods; and c) when applicable, in accordance with the rules issued in the form of article 25 hereof, the compliance with the limits and conditions arising from the application of articles 29, 30 and 32, of Complementary Law No. 101, of May 04, 2000, by the obligations contracted of the Public Administration associated with the scope of the agreement;
II – preparation of an estimate of the budgetary-financial impact in the fiscal years during which the public- private partnership agreement is to be effective; III – a statement by the expense manager establishing that the obligations contracted by the Public Administration during the agreement term are compatible with the budgetary directives law, and that they are set forth in the annual budgetary law; IV – estimate of a flow of public funds sufficient to meet, during the agreement effectiveness and per fiscal year, the obligations contracted by the Public Administration; V – its scope must be set forth in the multiannual plan in force to which the agreement is related; VI – submission of the draft of the call for tender and the agreement, to public inquiry through its publication in the official press, in large circulation newspapers and electronic means, which should inform the justification for contracting, the identification of its purpose, the agreement effectiveness, the estimated contractual amount, giving at least thirty (30) days for receiving suggestions, the deadline of which shall be at least seven (07) days before the date established for the publication of the call for tender; and VII – prior environmental license or enactment of directives for the environment licensing of the undertaking, in the form of regulations, whenever the agreement purpose so requires.
§ 1 – The proof referred to in letters b and c of item I in this article shall contain the principles and the calculation methodology used, in compliance with the general rules for consolidation of public accounts, without prejudice 9
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
to the review of the compatibility of the expenses with the other rules of the multiannual plan and the budgetary directive law.
§ 2 – Whenever the agreement is entered in a fiscal year other than the one in which the call for tender is published, it should be preceded with an update of the studies and statements referred to in items I to IV of this article. 7
§ 3 – The sponsored concessions in which seventy percent (70%) of the private partner compensation is paid by the Public Administration shall depend on a specific legislative authorization.
§ 4 – The engineering studies used to establish the amount of the PPP’s investment must be as detailed as an engineering draft, and the amount of the investments so that the reference price for the bidding process is defined will be calculated based on market prices, considering the total cost of similar works in Brazil or abroad or based on cost systems that use market prices of the specific sector of the project as input, calculated, in either case, upon summarized tender, made by using expedited or parametric methodology.
Article 11 – The call for tender shall contain the agreement draft, it shall expressly set forth the submission of the bid to the provisions hereof and shall comply, as applicable, with §§ 3 and 4, of article 15, articles 18, 19 and 21, of Law No. 8,987, of February 13, 1995, and it may further set forth:
I – the requirement of a bid bond of the bidders, in compliance with the limits set forth in subparagraph III, article 31, Law 8,666, of June 21, 1993; II – [repealed] III – use of private mechanisms to solve disputes, including arbitration, to be carried out in Brazil, in Portuguese, in compliance with Law No. 9,307, of September 23, 1996, in order to solve any conflicts arising hereof or related hereto.
Sole Paragraph – The call for tender shall specify the guarantees of the public partner’s compensation, if any, to be granted to the private partner.
Article 12 – The process to contract public-private partnerships shall comply with the procedure set forth in the laws in force about bids and administrative agreements, and also with the following:
I – the award may be preceded with a stage to qualify technical proposals, eliminating the bidders who do not reach the minimum score, who shall not take part in the next stages; II – the award may adopt as criteria, in addition to those set forth in items I and V, article 15, of Law No. 8,987, of February 13, 1995, the following: a) the lowest compensation amount to be paid by the Public Administration; b) the best bid from the combination of the criterion in letter a with the best technique, pursuant to the standards established in the call for tender;
III – the call for tender shall establish the mean of submission of the economic bids, admitting: a) bids in writing, in sealed envelopes; or b) written bids followed by oral bidding; 10
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
IV – the call for tender may allow remedy to flaws, complementing insufficiencies or further, or even making formal corrections in the course of the procedure, provided the bidder can meet all the requirements within the deadline established therein.
§ 1 – In the case of letter b, item III of this article:
I – oral bidding shall always be made in reverse ranking order of bids in writing, and the call for tender shall not limit the number of bids; II – the call for tender may restrict the oral bidding to the bidders whose written bids are at most twenty percent (20%) higher than the amount of the best offer.
§ 2 – The review of the technical proposals, for purposes of qualification or award, shall be carried out based on requirements, parameters and indicators of results related to its object, clearly and objectively defined in the call for tender notice.
Article 13 – The call for tender notice may invert the order of the qualification and ranking stages, and in this case:
I – with the end of the bid-ranking stage or the oral bidding, the envelope containing the qualification documents of the best ranked bidder shall be opened, in order to check the compliance with the requirements set forth in the call for tender; II – as long as the requirements of the call for tender are complied with, the bidder will be considered as winner; III – should the highest ranked bidder be disqualified, the qualification documents of the 2nd ranking bidder shall be examined, and so on, until a qualified bidder meets the requirements set forth in the call for tender; IV – once the final result of the contest is announced, the winner will be awarded the object as per the technical and economic conditions offered by him.
CHAPTER VI – PROVISIONS APPLICABLE TO THE UNION
Article 14 – A management body will be established for the management of the federal public-private partnerships, competent to:
I – define the priority services to be carried out under the public-private partnership regime; II – control the procedures required to enter such agreements; III – allow for the opening of call for tender and approve the call for tender notice; IV – review the reports on the performance of the agreements.
§ 1 – The body mentioned in this article will include the nominal appointment of an incumbent representative and his respective substitute for each of the following bodies:
I – Ministry of Planning, Budget and Management, which shall coordinate the respective activities; II – Ministry of the Treasury; III – Office of the President’s Chief of Staff.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 – The meetings held by the body referred to in this article, intended to review public-private partnership projects, will be attended by a representative of the direct Public Administration body, whose area of expertise is relevant to the subject of the agreement at issue.
§ 3 – For the management body to deliberate about a public-private partnership contract, the case record must have attached thereto a prior and reasoned statement:
I – by the Ministry of Planning, Budget and Management on the merit of the project; II – by the Ministry of the Treasury, as regards to the feasibility of granting a guarantee and the form thereof, concerning the risks for the National Treasury and the compliance with the limit referred to in article 22 hereof.
§ 4 – To carry out its tasks, the body mentioned in this article can develop a technical support structure including representatives from public institutions.
§ 5 – The body referred to in this article will forward to the Congress and the Federal Audit Court, on an annual basis, performance reports on the public-private partnership agreements.
§ 6 – For the purposes of complying with the provisions of item V, article 4 hereof, except for the information deemed confidential, the reports mentioned in the § 5 of this article will be made publicly available by means of the public data transmission network.
Article 14-A – The House of Representatives and the Senate, through their respective boards, may provide on the subject in article 14 in public-private partnerships they have made, in a manner that the Ministry of Finance’s authority described in item II, § 3 of the referred article is kept.
Article 15 – The Ministries and the Regulatory Agencies, under their respective areas of competence, shall submit the call for tender to the management body, proceed with the tender, monitor and inspect the public-private partnership agreements.
Sole Paragraph – The Ministries and the Regulatory Agencies will forward to the body referred to in article 14 hereof, on a biannual basis, circumstantial reports on the performance of the public-private partnership agreements, as set forth by the regulation.
Article 16 – The Union, its special funds, government agencies, public foundations and government-controlled companies are hereby allowed to take part, within the overall limit of six billion Reais (BL$ 6,000,000,000.00) in a Public-Private Partnership Guarantee Fund – FGP, which purpose is to provide guarantee for the payment of financial obligations undertaken by federal, state, municipal, and federal district’s public partners by virtue of the partnerships referred to herein.
§ 1 – The FGP will have a private nature and its own property, separate from the shareholders´ equity, and will be subject to its own rights and duties.
§ 2 – The Fund property will include the assets and rights contributed by the shareholders, through the payment in full of their shares and through the gains from the management thereof.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 3 – The assets and rights transferred to the Fund will be appraised by a specialized company, which must submit a grounded report indicating the reviewing criteria used, and attach the documents in connection with the appraised assets.
§ 4 – The full payment of the shares may be made in cash, government securities, disposable state-owned real estate, chattel, including shares of federal partly state-owned companies beyond the amount required to maintain the control thereof by the Union, or other valuable rights.
§ 5 – The FGP will meet its liabilities with the assets and rights of its property, and the shareholders will not be liable for any Fund obligation, except for the full payment of the subscribed shares.
§ 6 – The full payment with the assets referred to in § 4 hereof will be made with no need of a tender, upon prior review and specific authorization by the President of the Republic, upon proposal by the Minister of the Treasury.
§ 7 – The apportionment of special use or common use assets to the FGP will be subject to their release on an individual basis.
§ 8 – The FGP capitalization, when made via budgetary funds, will be made by budgetary action for that specific purpose, within the Union’s Financial Charges scope.
Article 17 – The FGP will be created, administered, managed and represented in and out of court by a financial institution controlled either directly or indirectly by the Union, in compliance with the rules referred to in item XXII, of article 4, Law No. 4,595, of December 31, 1964.
§ 1 – The FGP by-laws and regulations shall be approved at its shareholders´ meeting.
§ 2 – The Union representation at the shareholders´ meeting will occur pursuant to item V, of article 10, of Decree-Law No. 147, of February 3, 1967.
§ 3 – The financial institution shall decide on the management and disposal of the FGP assets and rights, while taking care to maintain their profitability and liquidity.
Article 18 – The FGP’s articles and bylaws must provide on the policy of guaranties granted, including pertaining the funds’ assets and liabilities.
§ 1 – The guarantee shall be provided as approved in the meeting of shareholders under the following modalities:
I – surety, with no benefit of discussion for the surety grantor; II – pledge of chattel or rights that are property of the FGP property, without transferring the possession of the pledged asset before the enforcement of the guaranty; III – mortgage of real estate owned by the FGP; IV – fiduciary sale with the direct possession of the goods remaining with FGP or with trustee hired by it before the enforcement of the guaranty; V – Other agreements whose effects products are those of guaranty, provided they do not transfer the title or direct possession of the goods to the private partner before the enforcement of the guaranty;
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
VI – collateral or personal guaranty linked to a property to be encumbered, created as a result of the separation of goods and rights belonging to the FGP;
§ 2 – The FGP may provide counter-guaranties to insurance companies, financial institutions and international bodies that guarantee the compliance of the cash obligations of shareholders in public-private partnership agreements.
§ 3 – The discharge by the public partner of each debt installment guaranteed by the FGP will imply a proportional discharge of the guaranty.
§ 4 – In case of liquidated credit, consisting of a payable security, acceptable but not paid by the public partner, the guaranty may be enforced by the private partner starting from the forty-fifth (45th) day of its maturation.
§ 5 – The private partner may file against FGP in the following events:
I - irrefutable and liquid credit, described in enforceable instrument that had been accepted and has not been paid by the governmental partner after 15 (fifteen) days as of their due date; and II – debts described in invoices issued and not accepted by the governmental partner after 45 (forty-five) days as of their due date, provided they had not been expressly rejected by justified act.
§ 6 – The discharge of the debt by the FGP will entail its subrogation in the rights of the private partner.
§ 7 – In case of default, the goods and rights from the fund may be subject of court intervention and disposition to meet the guaranteed obligations.
§ 8 – FGP may use part of the Union’s share to give guaranty to its special funds, its agencies, its public foundations and to government-owned companies.
§ 9 – FGP must make full payment towards invoices that have been accepted but not paid by the public partner.
§ 10 – FGP shall not pay invoices that have been expressly rejected via justified act.
§ 11 – The public partner shall inform FGP regarding any rejected invoice and the reasons for the rejection within 40 (forty) days as of their due date.
§ 12 – The lack of acceptance or express rejection of an invoice by the public partner within 40 (forty) days as of their due date will mean they have been tacitly accepted.
§ 13 – The governmental agent contributing, by action or omission, to the tacit acceptance referred to in § 12 or that rejects an invoice without reason will be liable for the damages caused, in accordance with legislation in force, whether civil, administrative or criminal.
Article 19 – The FGP will pay revenues to its shareholders, ensuring to all of them the right to apply for the full or partial redemption of their shares, corresponding to the property still not used for the concession of guaranties, and the settlement shall be based on the equity position of the fund.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Article 20 – The dissolution of the FGP, decided in meeting of shareholders, will be subject to the prior discharge of all the guaranteed debts or the discharge of the guaranties by the creditors.
Sole Paragraph – Once the FGP has been dissolved, its property shall be distributed pro-rata among the shareholders based on the equity position on the date of the dissolution.
Article 21 – The creation of a lien over property is authorized, but this property shall be separate from the remaining property of the FGP and will be used exclusively for the collateral for which it was created and may not be subject of any pledge, seizure, attachment, search warrant or any court enforcement resulting other FGP obligations.
Sole Paragraph – The creation of the security interest on that property shall be made through registration in a Title Deed and Documents Registry or, in the case of a real estate in the corresponding real estate registry.
Article 22 – The Union may only enter a public-private partnership when the sum of expenses on a continuing basis, resulting from the set of already contracted partnerships, has not exceeded in the prior year one percent (1%) of the net current revenues of the fiscal year, and when the annual expenses of the agreements in force in the ten (10) subsequent years does not exceed one percent (1%) of the projected net current revenues for the respected fiscal years. CHAPTER VII – FINAL PROVISIONS
Article 23 – The Union is authorized to grant incentives according to the Program of Incentive to the Implementation of Social Interest Projects – PIPS, created through Law No. 10,735 of September 11, 2003, to invest in funds created by financial institutions in credit rights originating from public-private partnership agreements.
Article 24 – The National Monetary Council will establish, according to the applicable laws, the directive to grant credit intended for the financing of public-private partnership agreements, as well as to take part in closed complementary pension entities.
Article 25 – The National Treasury Office shall issue, according to the applicable laws, general norms concerning the consolidation of public accounts applicable to public-private partnership agreements.
Article 26 – item 1, § 1, of article 56, Law No. 8,666 of June 21, 1993 will be effective with the following wording: “Article 56……………………………………………………………...
§ 1 …………………………………………………………......
I – Surety in cash or in public debt securities, which must be recorded as book entries, upon registration in the centralized settlement and custody system authorized by the Brazilian Central Bank and appraised according to their economic values, as defined by the Treasury Department; Article 27 – The credit operations performed by state-owned companies [empresas públicas e sociedades de economia mista] controlled by the Union may not exceed seventy percent (70%) of the total sources of financial funds of the special-purpose company and for the areas of the Northern, Northeastern and Midwestern regions, where the Human Development Index – HDI is below the national average, the stake may not exceed eighty percent (80%). 15
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 1 – The cumulative credit or capital contribution operations made by the following entities may not exceed eighty percent (80%) of the total sources of funds of the special-purpose company or ninety percent (90%) in the Northern, Northeastern and Midwestern regions, where the Human Development Index – HDI is below the national average:
I – closed complementary pension entities; II – state-owned companies controlled by the Union.
§ 2 – For the purposes of the provisions hereof, source of funds is understood as the credit operations and capital contributions to the specific purpose company.
Article 28 – The Union may not grant any security interest nor perform any voluntary transfer to the States, the Federal District and the Municipalities, if the sum of expenses on a continuing basis resulting from the set of public-private partnerships already contracted by these entities has exceeded in the prior year five percent (5%) of the net current revenues of the fiscal year, or if the annual expenses of the agreements in force in the subsequent ten (10) years exceeds five percent (5%) of the projected net current revenues for said fiscal years.
§ 1 – The States, the Federal District and the Municipalities that contract businesses through public-private partnerships must sent to the Federal Senate and to the National Treasury Office, prior to the contracting, the information necessary in order to comply with the provisions of this article.
§ 2 – The limit set forth in this article shall include the expenses resulting from partnership agreements entered by the direct public administration, agencies, public foundations, state-owned companies and other entities controlled whether directly or indirectly by the respective entity.
§ 3 – [repealed]
Article 29 – The Penalties set forth in Decree-Law No. 2,848 of December 7, 1940 – Criminal Code, in Law No. 8,429 of June 2, 1992 – The Law of Administrative Impropriety, in Law No. 10,028 of October 19, 2000 – Law of Tax Offenses, in Decree-Law No. 201 of February 27, 1967 and in Law No. 10,079 of April 10, 1950, shall apply in whatever applicable, without prejudice to the financial penalties set forth in the contract.
Article 30 – This Law becomes effective on the date of its publication.
Brasília, December 30, 2004; 183rd of the Independence and 116th of the Republic.
LUIZ INÁCIO LULA DA SILVA Bernard Appy Nelson Machado
This text replaces the one published in the Official Gazette of the Union on December 31, 2004.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
CONCESSION OF PUBLIC SERVICES LAW - LAW No. 8.987/95
Provisions on concession and permission in the provision of public services as set forth in Article 175 of the Federal Constitution, and other measures.
The PRESIDENT of the REPUBLIC – I hereby state that the National Congress has enacted and I have sanctioned the following Law:
CHAPTER I – PRELIMINARY PROVISIONS
Article 1 – The concessions of public services and works and the public services permissions will be subject to the provisions of Article 175 of the Federal Constitution, as well as these law’s and pertinent legal rules and mandatory agreement clauses. Sole Paragraph. The Union, the States, the Federal District and the Municipalities shall review and make any adaptations necessary to their laws and regulations so that they comply with the provisions herein, to meet the peculiarities of their several different types of services.
Article 2 – For the purposes of this law:
I – Grantor: the Union, State, Federal District or Municipality under which jurisdiction is the service to be provided, whether prior or not to having certain public construction work done, and object of concession or permission; II – concession of public service: the delegation of its rendering by the grantor, upon bidding process, under the competition type, to the legal entity or consortium of companies that demonstrate ability to do so at their own risk and for a certain period of time; III – concession preceded by public construction work: total or partial construction, conservation, renovation, addition work or improvement of any public interest work, delegated by the grantor, upon a bidding process under competition, to the legal entity or consortium that shows the ability to carry out the work at their own risk, so that the investment made by the concessionaire is paid and repaid upon exploitation of the service or work for a certain period of time; IV – public service permission: temporary and revocable delegation, upon bidding process, of public services to be provided, granted by the grantor to the natural person or legal entity that demonstrates ability to perform such services at their own risk.
Article 3 – The concessions and permission shall be subject to supervision by the grantor responsible for its delegation, with the cooperation of its users.
Article 4 – The public service concession, whether preceded or not by public work, will be formalized upon the execution of an agreement that will be subject to the provisions herein, as well as the applicable rules and the bid notice.
Article 5 - The grantor shall publish, prior to the bid notice, an act with the reasons to grant such concession or permission, describing its purpose, area and duration.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
CHAPTER II – ADEQUATE SERVICE
Article 6 – Every concession or permission assumes that the provision of the service will be adequate to fully serve the users, as provided herein, as well as the applicable rules and the respective agreement.
§ 1 – Adequate service is the service that meets conditions regarding regularity, continuity, efficiency, safety, modernity, generality, courtesy in its rendering and affordable tariffs.
§ 2 – The current aspect refers to modern techniques, equipment and premises and their state of conservation, as well as improvement and expansion of service.
§ 3 – A service will not be considered discontinued if interrupted in an emergency or upon previous notice, when:
I – due to technical reasons or reasons of maintaining the safety of the premises; and, II – due to the user’s default, taking into consideration the interest of the collectivity.
CHAPTER III – USERS’ RIGHTS AND OBLIGATIONS
Article 7 – Without prejudice to the provisions of Law No. 8,078, of September 11, 1990, the following are the users’ rights and obligations:
I – be provided with adequate service; II – be provided with the information, to be sent by the grantor or the concessionaire, necessary to defend their individual or collective rights; III – obtain and use the service, freely choosing among several service providers, when applicable, and in compliance with the rules issued by the grantor. IV – make detected improprieties with respect to the service provided known to the grantor and the concessionaire; V – give notice to the competent authorities of illegal acts practiced by the concessionaire in providing the service; VI – contribute to maintain in good conditions the public goods used to provide the services.
Article 7-A – The state-owned or private concessionaires of public services, in the States and Federal District, are under the obligation of providing the consumer and user, within the maturity month, at least six different dates for their debts to be paid.
Sole Paragraph - [repealed]
CHAPTER IV – FISCAL POLICY
Article 8 - [repealed]
Article 9 - The rate charged for the public service awarded to a concessionaire will be fixed by the price in the proposal that won the bid and will be preserved in accordance with the review rules provided in law, the bid notice and the concession agreement.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 1 – The rate will not depend on prior specific legislation, and only in the cases expressly provided for in the law will they be charged based on condition of there being an alternative and gratuitous public service.
§ 2 – The agreements may provide mechanisms to have the rates adjusted with the purpose of maintaining economic-financial balance.
§ 3 – Except for income taxes, the creation, changes to or extinction of any taxes or legal charges, after the proposal is presented and when its impact is proven, will bring upon changes to rates, representing an increase or decrease, as the case may be.
§ 4 – In the event of unilateral changes made to the agreement that affect its initial economic-financial balance, the grantor shall reestablish the balance concurrently to the change.
Article 10 - Whenever the conditions of the agreement are met, its economic-financial balance is considered to be maintained.
Article 11 - The grantor may, when seeing to the peculiarities of each public service, provide for in the bid notice sources of income that are alternative, supplementary, accessory or related to associated projects, whether exclusive or not, so that reasonable rates are possible, in accordance with Article 17 of this Law.
Sole Paragraph - The sources of income set forth in this article will mandatorily be considered in the assessment of the agreement’s initial economic-financial balance.
Article 12 - [repealed]
Article 13 - The rates may be differentiated because of technical characteristics and specific costs caused by the service to different user segments.
CHAPTER V – BIDDING PROCESS
Article 14 - Every public service concession, whether preceded or not by public works, must be object of bidding process, according to the provisions found in specific legislation and in accordance with principles of legality, morality, equality, and publicity, and judgment according to objective criteria and strictly bound to the bid call notice.
Article 15 - One of the following criteria shall be used when deciding on bidding processes:
I – the lowest rate value for the public service to be provided; II – the highest bid, in which case there is payment to the grantor for granting the concession; III – a combination of any two items at a time, of the criteria referred to in items I and II, and VII; IV – best technical proposal, with price fixed in the bid notice; V – best proposal regarding the combination of the lowest rate for public service to be provided and best technical proposal; VI – best proposal regarding the combination of the largest offer for the granting of the concession and best technical proposal; or VII – best payment offer for the granting after the technical proposal approval. 19
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 1 - The criteria in item III will only be applied when previously provided in the bid notice, including precise rules and formulas for the economic-financial assessment.
§ 2 - For the purposes of the provisions in items IV, V, VI e VII, the bid notice will have the parameters and demands to prepare technical proposals.
§ 3 - The grantor will not accept proposals that are obviously unfeasible or financially incompatible with the purposes of the bid.
§ 4 - On equal conditions, proposals from Brazilian companies will be preferred.
Article 16 - The granting of concession or permission will not be exclusive, except in case of technical or economic unfeasibility justified in the act referred to in Article 5 herein.
Article 17 - The proposal that needs advantages or subsidies that had not been previously authorized by law and made available to all presenting proposals will be disqualified.
§ 1 - Proposals presented by grantor entities that, to be feasible, need advantages or subsidies from the grantor body controlling the referred entity will also be disqualified.
§ 2 - Any differentiated tax treatment will be considered as an advantage or subsidy as referred herein, even if the referred treatment is a consequence of the legal nature of the bidder, that compromises the tax isonomy, which must exist among all bidders.
Article 18 - The grantor will prepare the bid notice, in compliance, if applicable, with the criteria and general rules in the legislation regarding bidding processes and contracts containing, more specifically:
I – the purpose, goals, and concession duration; II – the description of the conditions necessary for the service to be adequately provided; III – the deadlines for the proposals to be filed, for there to be a decision made regarding the bidding process and the execution of the agreement; IV – place, time and period of time within which the data, studies and projects necessary for budgets to be prepared and proposals to be presented will be provided; V – the criteria and the list of documents required for the assessment of technical ability and financial, fiscal and legal good standing; VI – possible alternative, supplementary or accessory sources of income, as well as those from related projects; VII – grantor’s and concessionaire’s rights and obligations with respect to the changes and additions to be made in the future, to ensure continuity of services provided; VIII – criteria for adjustment and revision of the rates; IX – the criteria, indexes, formulas and parameters to be used in the technical and economic-financial decision with respect to the proposal; X – a list of the reversible assets; XI – characteristics of the reversible assets and conditions upon which they will be made available, in those cases where the prior concession is terminated;
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
XII – express indication of the party responsible for the burden of the expropriations necessary for the service or public work, or for the administrative servitude; XIII – leadership conditions of the leading company in charge, for the cases in which companies are allowed to take part in consortium; XIV – in cases of concession, the drafted concession agreement, containing the essential clauses referred to in Article 23 herein, when applicable; XV – in cases of concession of public services preceded by public work, the information regarding the work, among which the elements of the basic engineering project that permit its full characterization, as well as the guaranties required for this specific part of the contract, adjusted to each case and limited to the amount of the work; XVI – in cases of permission, the terms of the adhesion contract to be executed.
Article 18-A - The bid notice may provide for the change in the order of the qualification and decision stages, in which case:
I – upon conclusion of the screening of the proposals or bidding, the case containing the qualification documents presented by the best ranked bidder to check whether the conditions contained in the bid notice are met; II – if the requirements in the bid notice are met, the bidder will be declared to be the winner; III – if the best ranked bidder is disqualified, the bidder’s qualification documents of the second best proposal will be reviewed, and so on and so forth, until a ranked bidder meets the requirements in the bid notice; IV – upon publication of the final result of the bidding process, the object will be adjudicated to the winner within the technical and economic conditions offered by such bidder.
Article 19 - When the participation of companies in a consortium is permitted, the following rules will apply:
I – proof of public or private agreement to organize the consortium, executed by all the members; II – indication of the leading company of the consortium; III – documents required in items V and XIII of the previous articles must be presented by each member of the consortium; IV – companies members in a consortium may not participate in the same bidding process whether they do it on their own name or as a member of another consortium.
§ 1 - The winning bidder must take the necessary measures to incorporate and register the consortium prior to the execution of the concession agreement in accordance to the terms of the agreement referred to in item I of this article.
§ 2 - The consortium leading company is liable before the grantor for the compliance with the concession agreement, without prejudice to the joint and several liability of the additional members of the consortium.
Article 20 - The grantor may, as long as the bid notice so permits, in the interest of the service to be granted by concession, determine that the winning bidder, in case of consortium, forms a company or incorporates prior to executing the agreement.
Article 21 - The studies, investigations, assessments, projects, works and expenses or investments already made and connected to the concession, and that are useful for the bidding process, made by the grantor or upon its
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
authorization, will be made available to the interested parties; the winner of the bidding process must reimburse for the corresponding expenses, as described in the bidding notice.
Article 22 - It will be ensured that any person is able to obtain certificates regarding acts, contracts, decisions or opinions related to the bidding process or the concessions themselves.
CHAPTER VI – CONCESSION AGREEMENT
Article 23 - The clauses referring to the following are considered to be essential to the concession agreement:
I – purpose, area and duration of the concession; II – manner, form and conditions for providing the service; III - criteria, indexes, formulas and parameters that define the service quality; IV – price of the service and the criteria and procedures to adjust and review the rates; V – the grantor’s and concessionaire’s rights, guaranties and obligations, including those related to foreseeable needs to have the service altered or expanded, and the consequent modernization, improvement and additions to equipment and premises; VI – users’ rights and obligations in obtaining and using the service; VII – how to inspect the premises, equipment, service methods and practices, and indication of the competent bodies to conduct such an inspection; VIII – contractual and administrative penalties to which the concessionaire is subject and how they can be applied; IX – cases of termination of the concession; X – reversible assets; XI – criteria to calculate and to establish the form of payment of damages owed to the concessionaire, when applicable; XII – conditions to have the term of the agreement extended; XIII – the concessionaire’s duty to account to the grantor, in what manner and how regularly; XIV – the requirement to have the concessionaire’s financial statement published from time to time; and XV – the forum and alternative dispute resolution to settle issues arising from the agreement.
Sole Paragraph - The concession agreements regarding public services preceded by public work must, additionally:
I – set forth a physical and financial schedule for the works relating to the concession to be done; and II – demanding guaranty of full compliance, by the concessionaire, of the obligations related to the works connected to the concession.
Article 23-A - The concession agreement may provide for the use of private mechanisms to resolve disputes arising out of the agreement or related to it, including arbitration, to take place in Brazil and in Portuguese, pursuant to Law No. 9,307, of September 23, 1996.
Article 24 - [repealed]
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Article 25 - The concessionaire is responsible for the provision of the service granted in concession, and is liable for any and all damages to the grantor, users or third parties, it being understood that the inspection carried out by the competent body does not exclude nor mitigates such liability.
§ 1 - Without prejudice to the liability referred to in this article, the concessionaire may hire third parties to develop activities that are inherent, accessory or supplementary to the service granted in concession, as well as for any associated projects to be implemented.
§ 2 - The agreements entered into between the concessionaire and the third parties referred to in the previous paragraph will be subject to private law, and no legal relationship will exist between said third parties and the grantor.
§ 3 - The development of activities by third parties shall be subject to the regulations regarding that type of service granted.
Article 26 - Subconcession is permitted within the terms of the concession agreement, as long as expressly authorized by the grantor.
§ 1 - Granting of a subconcession will always depend on bidding process by competition.
§ 2 - The subconcessionaire subrogates to the rights and obligations of the party granting the subconcession within the limits of the subconcession.
Article 27 - Transfer of the concession or the concessionaire’s control without previous authorization from the grantor will result in the concession’s forfeiture.
§ 1 - For the purposes of obtaining the authorization mentioned in the heading of this article, interested parties must:
I – meet the requirements regarding technical ability, and financial, legal and fiscal good standing necessary to assume the service; and II – undertake to comply with all the clauses of the agreement in force.
§ 2 - [repealed]
§ 3 - [repealed]
§ 4 - [repealed]
Article 27-A - Within the conditions set forth in the concession agreement, the grantor shall authorize the assumption of the control or temporary management of the concessionaire by its financers or guarantors with those with whom there are not direct corporate relationship, to carry out its financial reorganization and the continuity of the services provided.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 1 - In the case referred to in the heading, the grantor will request that the financers and guarantors meet the requirements of legal and fiscal good standing, and may alter or waiver the remaining criteria in item I, sole paragraph, of Article 27.
§ 2 - The assumption of control or temporary management authorized in accordance to the terms of the heading of this article will not alter the concessionaire’s obligations or its controller’s with respect to third parties, grantor and public services users.
§ 3 - Control of the concessionaire is, for the purposes of the provisions in the heading of this article, terminable ownership of shares or quotas by its financers and guarantors that meet the criteria in Article 116, Law No. 6,404, of December 15, 1976.
I – To appoint members to the Board of Directors to be elected in the shareholders’ general meeting, in the companies governed by Law No. 6,404, of December 15, 1976; or managers to be elected by the quotaholders, in the other companies; II – To appoint members to the Audit Committee to be elected by the controlling shareholders or quotaholders in a general meeting; III – To exercise their right to veto with respect to any proposal submitted by the shareholders or quotaholders in the concessionaire that represents or that may come to represent a disadvantage to the purposes set forth in the heading of this article; IV - Other powers necessary to reach the purposes set forth in the heading of this article;
§ 5 – The temporary management authorized by the grantor does not imply financers’ or guarantors’ liability with respect to taxing, charges, burdens, sanctions, obligations or commitments with third parties, including with the grantor and employees.
§ 6 – The grantor shall issue rules regarding the temporary management. Article 28 - In the financing agreements, the concessionaires may offer the rights arising from the concession as guaranty, up to a limit that does not compromise the operational aspect and the continuity of the provision of the service.
Article 28-A - To guarantee long-term loan-for-consumption agreements related to investments connected to concession agreements in any modality, the concessionaires may assign to the lender, with a fiduciary nature, part of its future operational credits, if the following conditions are met:
I – the credit assignment agreement must be registered with the competent registry (Cartório de Títulos e Documentos) to have full effect upon third parties; II – without prejudice to the provisions in item I of the heading of this article, the assignment of credits will not have effect with respect to the grantor if not when formally recorded; III – future credits assigned per the terms of this article are created under the lender's ownership, with no need for any additional formality; IV – the lender may indicate a financial institution to be in charge of collection efforts and receive payments of credits assigned or permit that the concessionaire does so as its representative and depositary; V – if a financial institution has been indicated, per the terms of item IV of the heading of this article, the concessionaire must present the credits to said institution for collection;
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
VI – the payments of the credits assigned shall be deposited by the concessionaire of the institution in charge of collection efforts in a bank account linked to the loan-for-consumption agreement; VII – the depositary financial institution shall transfer the amounts received to the lender as the obligations under the loan-for-consumption agreement become enforceable; and VIII – the assignment agreement will have the provisions concerning the return of the funds in excess to the concessionaire, it being prohibited retaining the balance after full compliance of the agreement.
Sole Paragraph - For the purposes of this article, long-term agreements shall be those whose obligations have an average maturity term that is longer than 5 (five) years.
CHAPTER VII – GRANTOR'S CHARGES
Article 29 - The grantor shall:
I – regulate the service granted in concession and permanently ensure it is being provided; II – apply penalties provided in the regulations and agreements; III – intervene in the provision of the services pursuant to cases and conditions provided in law; IV – terminate the concession, in accordance with the cases provided herein and as provided in the agreement; V – approve adjustments and review the rates according to the provisions herein, pertinent regulations and the agreement; VI – comply with and ensure that the provision in the service regulation and the service concession contractual clauses are complied with; VII – make efforts to ensure the good quality of the service, receive, investigate and resolve complaints from users, who will receive notice of the measure taken; VIII – exercise eminent domain powers to order that the goods necessary for the performance of the service or public works, carrying out expropriations, directly or by granting powers to the concessionaire, in which case the former will be responsible for the applicable indemnification payments; IX – order, directly or by granting powers to the concessionaire to do so, that the goods necessary for the performance of the service or public works be of eminent domain or of public necessity, for the purposes of administrative servitude; X – foster quality improvement, productivity, environmental conservation and preservation; XI – foster competitiveness; and XII – foster the organization of user associations to defend their interests relating to the service.
Article 30 - To exercise its inspection powers, the grantor shall have access to the concessionaire’s data related to the management, accounting, and technical, economic and financial resources.
Sole Paragraph - The inspection of the service will be carried out from time to time by a grantor’s third-party representative or entity associated with it, in accordance with the regulation, by a committee formed by representatives of the grantor, the concessionaire and the users.
CHAPTER VIII – CONCESSIONAIRE’S OBLIGATIONS
Article 31 - The concessionaire undertakes to:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – provide adequate services, in accordance with the provisions herein, as well as with the applicable technical rules and the agreement; II – keep the inventory and records of the assets related to the concession; III – account for the service management to the grantor and to the users, per the provisions of the agreement; IV – comply with and make sure that the concession service rules and contractual clauses are complied with; V – allow free access to those in charge for the inspection, at any time, to the works, equipment and premises related to the service, as well as to its accounting records; VI – carry out the expropriations and take measures for the easements authorized by the grantor to be done, pursuant to provisions in the bid notice and in the agreement; VII – make efforts to maintain the assets related to the provision of the service in good conditions and adequately insure them; and VIII – raise, invest and manage the financial resources necessary to provide the service.
Sole Paragraph - The contracts and hiring, including of labor, to be done by the concessionaire will be governed by private civil law and labor law, there being relationship between third parties hired by the concessionaire and the grantor.
CHAPTER IX – INTERVENTION
Article 32 - The grantor may intervene in the concession, with the purpose of ensuring the service provision is adequate, and that the contractual rules, as well as any pertinent regulation or legal provision is being complied with.
Sole Paragraph - Intervention will take place by means of a decree issued by the grantor, and it shall mention the intervening party, the duration of the intervention and the objectives and limits of such measure.
Article 33 - When the intervention is in effect, the grantor shall, within thirty days, begin an administrative procedure to determine the material causes for such measure and to determine parties’ responsibilities, allowing the faulty party to be heard.
§ 1 - If it is established that the intervention has not complied with the requirements provided in law and the regulations, it will be considered null and the service must be immediately returned to the concessionaire, without prejudice to its right to receive damages.
§ 2 - The administrative proceeding to which the heading of this article refers must be completed within one hundred and eight-days, or the intervention will not be considered valid.
Article 34 - After the intervention is concluded, if the concession is not terminated, service management will be returned to the concessionaire, after the intervening party, who will be liable for the measure taken during the period they were responsible for management, has accounted for their actions.
CHAPTER X – TERMINATION OF THE CONCESSION
Article 35 - The concession shall be terminated upon:
I – expiration of the contract; 26
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
II – nationalization; III – forfeiture; IV - rescission; V - annulment; and VI – bankruptcy or dissolution of the concessionaire, if it is a company, and death or incompetence of the owner, if a sole proprietorship (empresário individual).
§ 1 - Upon termination of the concession, all the reversible assets, rights and privileges transferred to the concessionaire, per the terms of the bid notice and the contract, are returned to the grantor.
§ 2 - Upon termination of the concession, the grantor will assume the service, and all necessary surveys, assessments, and liquidation will be carried out.
§ 3 - By assuming the service, the grantor is authorized to enter into possession of the premises and use all reversible assets.
§ 4 - In the events of items I and II of this article, the grantor, prior to the termination of the concession, shall carry out the surveys and assessments necessary for the determination of the amounts to be paid to the concessionaire as damages, per the provisions in articles 36 and 37 herein.
Article 36 - The reversion upon the forfeiture of the contract will cause payment of the damages for the investment installments related to the reversible assets not yet amortized or depreciated, and that have been made with the purpose of ensuring the continuity of the services and its modernity.
Article 37 - Assumption means having the grantor to start providing the service again during the duration of the concession, because of public interest, upon law that authorizes such assumption and after having paid damages, per the terms of the previous article.
Article 38 - The total or partial noncompliance with the agreements shall, at the grantor’s discretion, cause the concession to be considered forfeited or contractual penalties be applied, in accordance with the provisions of Article 27, and the rules agreed upon by the parties.
§ 1 - The concession caducity may be adjudicated by the grantor when:
I – the service is being provided inadequately or inefficiently, based on the rules, criteria, indexes, and parameters that define service quality; II – the concessionaire is in breach of contract or does not comply with the provisions in the law or regulations related to the concession; III – the concessionaire stops the service or contributes to that, except for force majeure or Acts of God; IV – the concessionaire not longer has economic, technical or operational conditions to keep providing adequate service, granted by concession; V – the concessionaire does not comply with the penalties applied for violation within due time; VI – the concessionaire does not respond to a notice issued by the grantor requesting the service be provided adequately; and
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
VII – the concessionaire does not respond to a notice issued by the grantor to, within 180 (one hundred and eighty) days, present, during the concession, documents regarding its fiscal good standing, per Article 29 of Law No. 8,666, of June, 21 1993.
§ 2 - Prior to having the caducity of the concession adjudicated, there shall be an administrative process to investigate the concessionaire’s default status, ensuring the concessionaire its right to be heard.
§ 3 - The administrative procedure shall only start upon prior notices sent to the concessionaire, detailing the default instances referred to in § 1 of this article, giving the concessionaire ample time to correct the mistakes and default events described, in order to be in compliance with the agreement again.
§ 4 - After the administrative procedure has been installed and the default event demonstrated, the caducity will be adjudicated by means of a decree issued by the grantor, regardless of payment of damages calculated within the administrative procedure.
§ 5 - The damages referred to in the previous paragraph will be payable per the provisions of Article 36 herein and contractual provision; from the damages amount, the contractual penalties and damages caused by the concessionaire will be subtracted.
§ 6 - After the caducity is adjudicated, the grantor will not be liable for any charges, burdens, obligations or agreements with third parties or with the concessionaire’s employees.
Article 39 - The concession agreement may be unilaterally terminated if the concessionaire wishes to do so, if the grantor does not comply with contractual provisions, upon legal action filed especially for this purpose.
Sole Paragraph - In the event of the case in the heading of this article, the services provided by the concessionaire cannot be interrupted or completely stopped until there is an unappealable legal judgment.
CHAPTER XI – PERMISSIONS
Article 40 - Public service permission is formalized upon an adhesion agreement, subject to the terms herein, additional pertinent rules and bid notice, including those with respect to its being subject to revocation at any time and the agreement being subject to unilateral termination by the grantor.
Sole Paragraph - The provisions herein are applicable to permissions.
CHAPTER XII – FINAL PROVISIONS
Article 41 - The provisions herein are not applicable to concessions, permissions and authorizations to sound and image broadcasting.
Article 42 - The public service concessions granted prior to this law coming into effect shall be valid and in effect for the duration provided in the agreement or grant, subject to the provisions of Article 43 herein.
§ 1 - Upon forfeiture of the agreement or grant, the service may be provided by a grantor body or entity, or delegated to third parties, upon execution of a new agreement. 28
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 - The concessions that may be revoked at any time, those that have expired and those that are in effect for an indeterminate period of time, including because of prior legislation, will remain valid for the period of time necessary to have surveys and assessment needed for the organization of bidding processes to have the concessions that will be granted in substitution to the ones then in force, for a period that shall not be shorter than 24 (twenty-four) months.
§ 3 - The concessions referred to in § 2 of this article, including those not formalized in an instrument or that have provisions to have them extended, will be valid until December 31, 2010 at the most, provided that, the following conditions have been met until June 30, 2009:
I – an assessment as broad and going as far back as possible of the physical infrastructure elements of the reversible assets and of the financial, accounting and commercial data regarding the provision of services, sufficiently large as it is necessary to calculate possible compensation to be paid for investments not yet amortized by income arising from the concession, and subject to the statutory provisions as well as contractual provisions regarding the provision of services, or applicable to it within twenty (20) years prior to this law publication;
II – execution of an agreement between the grantor and the concessionaire regarding the criteria and indemnification procedures relative to possible remaining investments not yet amortized or depreciated, calculated based on the surveys referred to in item I of this paragraph and audited by a specialized entity chosen by mutual agreement of the parties; and
III – publication on the official gazette of formal act issued by the grantor, authorizing that the services be provided precariously for up to six (6) months, and renewable up to December 31, 2008, upon proof that the provisions in items I and II of this paragraph are complied with.
§ 4 - If no agreement can be reached as set forth in item II, § 3 of this article, the calculation of the amount of the indemnification for investments will be made based on criteria set forth in the concession instrument that had been previously executed or, if such provisions are lacking, through an assessment of the economic amount or asset revaluation (reavaliação patrimonial), depreciation and amortization of fixed assets as defined in the fiscal law and the business corporation act, made by independent auditing company chosen by mutual agreement between the parties.
§ 5 - In the case of § 4 of this article, payment of possible indemnification will be made, upon security interest, in 4 (four) successive yearly installments in the same amount, of the partial amount not yet amortized regarding investments and other indemnifications related to the provision of the services, to be made with the concessionaire’s or the concessionaire’s controlling person’s owner’s equity, or from financing transactions, or obtained upon issuance of shares, bond and other securities, the first installment to be paid by the last business day of the fiscal year in which the reversion occurs.
§ 6 - If the parties can reach an agreement, the indemnification set forth in § 5 of this article may be paid by using income from a new agreement that comes to regulate the provision of services.
Article 43 - All public services concessions granted outside of a bidding process after the 1988 Federal Constitution has come into effect are considered terminated. 29
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Sole Paragraph - All concessions granted outside of a bidding process prior to the 1988 Federal Constitution, whose works or services have not yet been started or that have been suspended when this law comes into effect, will also be considered terminated.
Article 44 - The concessionaires with works that are behind schedule on the date of publication of this law, shall present to the grantor, within one hundred and eighty days, a schedule to have the works finished.
Sole Paragraph - In case the concessionaire fails to present the schedule referred to in this article or if this schedule does not permit that the work actually is concluded, the grantor may order the concession related to this work to be terminated.
Article 45 - In the cases provided in arts. 43 and 44 herein, the grantor will pay indemnification for the works and services made and provided only if there is a new bidding process and with funds therefrom.
Sole paragraph - The bidding process referred to in the heading of this article shall mandatorily take into consideration, for the purposes of assessment and evaluation, the stage the suspended or delayed works are, so that the judging criteria in item III, Article 15 herein may be applied.
Article 46 - This Law becomes effective on the date of its publication.
Article 47 - All legal provisions to the contrary rare hereby revoked.
Brasília, February 13 1995; 174th of Independence and 107th of the Republic.
FERNANDO HENRIQUE CARDOSO Nelson Jobim
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
PUBLIC TENDERING LAW - LAW No. 8.666/93
Regulates article 37, paragraph XXI of the Federal Constitution, establishes rules for bidding processes and agreements of the Public Administration and sets forth other provisions.
THE PRESIDENT OF THE REPUBLIC – I hereby state that the National Congress has enacted and I have sanctioned the following Law: CHAPTER I – GENERAL PROVISIONS SECTION I – PRINCIPLES
Article 1 – This Law establishes general rules on bidding procedures and administrative agreements regarding works, services, including publicity, purchases, disposals and leasing within the scope of the powers of the Union, the States, the Federal District and the Municipalities.
Sole Paragraph – Besides direct Administration entities, special funds, government agencies, public foundations, state-owned companies [empresas públicas e sociedades de economia mista], and other entities directly or indirectly controlled by the Union, the States, the Federal District and the Municipalities shall also comply with this Law.
Article 2 – Public Administration’s works, services, including publicity, purchases, disposals, concessions, permits and leases, where outsourced, shall be mandatorily preceded by bidding, with due regard to the exceptions herein provided for.
Sole Paragraph – For the purposes of this Law, agreement means every and all agreement between agencies or entities of the Public Administration and private entities, to establish a relationship and reciprocal obligations, regardless of the denomination used for such purpose.
Article 3 – The bidding aims at guaranteeing compliance with the constitutional isonomy principle and at selecting the most advantageous offer for the Administration and the promotion of the sustainable national development, and shall be considered and decided on pursuant to the strict principles of legality, impersonality, morality, equality, impartiality, publicity, administrative probity, binding to the invitation to bid, objective judgment and related principles.
§ 1 - Public agents are forbidden to:
I - admit, plan, include or tolerate, in the bidding notice acts, clauses or conditions that impair, restrain or frustrate the competitive character thereof, including in cases of cooperatives, and that establish priorities or privileges as regards the nationality, location of the head office or of the domicile of the bidders or as regards any other inappropriate or irrelevant condition for the specific purpose of the agreement; except for the provisions of §§ 5 to 12 of this article and Article 3, of Law No. 8,248, of October 23, 1991; II – establish a discriminatory treatment of commercial, legal or labor nature, or to give priority to Brazilian or foreign companies as regards currency, modality and local for payment, even when financing from international agencies are involved, except for the provisions set forth in the next paragraph and in article 3 of Law No. 8,248 of October 23, 1991.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 – Under equal conditions, as a criterion to settle any tie, sequential priority shall be given to goods and services as follows:
I – [repealed]; II – manufactured in the country; III – manufactured or rendered by Brazilian companies; IV – manufactured or provided by companies that invest in research and in technology development in the country; V – manufactured or provided by companies that demonstrate being in compliance with the job position quotas provided for in the law for people with disabilities or for those rehabilitated by Social Security and who meet the accessibility rules provided for in the law.
§ 3 – The bidding shall not be kept in secrecy and the acts along the bidding process shall be public and open to the public, except as regards the content of the bid, up to its respective opening.
§ 4 – [repealed]
§ 5 – In the bidding processes, a preference margin may be provided for:
I – manufactured products and national services that are in compliance with the Brazilian technical rules; II – goods and services manufactured or provided by companies that demonstrate compliance with the job positions legal quota for people with disabilities or people who have been rehabilitated by Social Security and that are in compliance with the legal accessibility laws.
§6 – The preference margin provided for in § 5 will be set forth based on studies reviewed from time to time, at the most within 5 (five) years, that take into consideration:
I – creation of jobs and income; II – effects on the federal, state and municipal tax revenues; III – technological development and innovation created in the country; IV –additional product and service costs; and V – retrospective analysis results in their reviews.
§ 7 – For the manufactured products and national services resulting from technological development and innovation in the country, a margin of preference in addition to that set forth in § 5 may be provided;
§ 8 – The preference margins by product, service, group of products or group of services referred to in §§ 5 and 7 will be established by the federal executive branch; it being set forth that the result from the sum of the margins may not be in excess of 25% (twenty-five per cent) over the price of foreign manufactured products and services.
§ 9 – The provisions in §§ 5 and 7 of this article are not applicable to the goods and services whose manufacturing or rendering capacity or in the country is below:
I – the quantity to be acquired or contracted; or 32
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
II – the value set based on § 7, Article 23 herein, if applicable.
§ 10 – The preference margin set forth in § 5 may be extended, in total or in part, to products and services from countries in the Mercosur.
§ 11 – The bidding notices for products, services and works may, upon prior justification from the competent authority, demand that the hired party promotes, in favor of a body or entity part of the public administration or those the public administration indicates in accordance with the principle of equality before the law, commercial, manufacturing, and technological offsetting measures, or access to advantageous financing conditions, whether cumulatively or not, in the form set forth by the federal executive branch.
§ 12 – In those contracts regarding setting up, providing support and improving information technology and communication systems, considered strategical through a federal executive branch act, the bidding process may be restrict to products and services with technology developed in the country and made in accordance with the basic production model provided in Law No. 10,176, of January 11, 2001.
§ 13 – Every fiscal year a list of the companies benefiting from the provisions set forth in §§ 5, 7, 10, 11 and 12 of this article will be provided in the internet, indicating the amount of resources destined to each of them.
§14 – The advantages set forth in this article and additional bidding and contracts regulations shall privilege the differentiated and preferred treatment offered to very small and small businesses in accordance with the law.
§15 – The preferences set forth in this article prevail over other preferences set forth in the law when these are applied to foreign products or services.
Article 4 – All of the participants to the bidding sponsored by the agencies or entities referred to in Article 1 have the public right, subject to due compliance with the pertinent procedures set forth herein, and any citizen may follow the progress of such procedures, provided that he/she does not cause any disturbances nor prevents the development of the works.
Sole Paragraph – Bidding procedures provided for by this Law characterize formal administrative acts, irrespective of the level of the Public Administration in which it takes place.
Article 5 – Any and all amounts, prices and costs used in the bidding shall be expressed in domestic currency, except for the provisions of article 42 of this Law, and each unit of the Administration shall, upon payment of the obligations related to the supply of goods, leasing, completion of works and service rendering, comply with, depending on each different source of resources, the strict chronological order of the date of its obligations, except when material reasons of public interest are present and upon prior justification by the pertinent authority, duly published.
§ 1 – The credits referred to in this article shall be adjusted by criteria provided for in the invitation to bid and such criteria shall preserve their amounts.
§ 2 – The adjustment mentioned in the above paragraph, whose payment shall be made together with the principal, shall comply with the same budget appropriation related to the credits to which it refers.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 3 – the provisions in the heading of Article 5, the payments originated by the expenses whose values do not surpass the limit established on item II of Article 24, without prejudice to its sole paragraph, shall be made within 5 (five) business days as of the date when the invoice is presented.
Article 5-A – The rules regarding bidding and contracts shall privilege the differentiated and preferred treatment given to very small and small businesses pursuant to the law.
SECTION II – DEFINITIONS
Article 6 – For purposes of this Law, the following terms shall mean:
I – Work – any construction, refurbishment, manufacture, recovery or enlargement, directly or indirectly carried out; II – Service – every activity aimed at obtaining a specific benefit of the interest of the Administration such as: demolition, repair, installation, assemblage operation, conservation, repair, adaptation, maintenance, transportation, lease of assets, publicity, insurance or technical-professional works; III – Purchase – every remunerated acquisition for the supply of goods, to take place just once or in as many times as necessary; IV – Disposal – every transfer of the ownership of assets to their parties; V – Large scale works, services and purchases – those whose estimated amount is higher than twenty five times (25) the limit established in sub-item c of item I, Article 23 of this Law; VI – Bid/Performance Bond – the bond that guarantees due compliance with the obligations assumed by companies in the bid and agreements; VII – Direct Execution – the one carried out by the Administration’s agencies and entities, with their own resources; VIII – Indirect Execution – the one that the agency or entity contracts third party’s services, under any of the following systems: a) contract work for a global price – work or service contracted for a fixed and global price; b) contract work for a unit price – work or service contracted for a fixed price regarding specific units; c) [repealed] d) task contract – labor contracted for small services, for a fixed price, whether including or not the supply of materials; e) total contract work – work contracted in its entirety, including all of its stages, the necessary services and installations, under the total responsibility of the contractor until delivery of the work to the client, and in conditions to start operation pursuant to technical and legal requirements for its use under structural and operational safety conditions and having the characteristics adequate to the purposes to which it was contracted.
IX – Basic Engineering Project – a set of essential and sufficient elements with the adequate level of precision to characterize the work or service, or the group of works or services which are the purpose of the bidding, prepared according to the preliminary technical studies that guarantee the technical feasibility and the adequate treatment of the work’s environmental impact and which allows for an assessment of the work cost and the definition of the methods and term for the execution. The Basic Engineering Project shall include the following items:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
a) development of the selected solution so as to provide for a global overview of the works and clear identification of all its components; b) global and focused technical solutions, described in sufficient details so as to minimize the need of reformulating or adopting alternatives during the various stages of the detailed design and performance of works and assemblage; c) identification of the types of services to be executed and the material and equipment to be incorporated to the works, as well as their respective specifications, in order to ensure the best results for the enterprise, without impairing the competitive character of its execution; d) information that allow for the study and assumption of constructive methods, temporary facilities and organizational conditions for the work, without impairing the competitive character of its execution; e) subsidies for the preparation of the bid’s plan and management of works, including its time schedule, supply strategy, rules for inspection and other essential data for each case; f) detailed budget of the works’ global cost, based on duly appraised quantity of services and supplies;
X – Executive Engineering Project – the set of essential and sufficient elements for the complete execution of the work, according to applicable rules set forth by the Associação Brasileira de Normas Técnicas – ABNT (The Brazilian Association of Technical Standards); XI – Public Administration – the Union, States, Federal District and Municipalities’ direct or indirect Administration, including public legal entities under the control of the state or of the foundations created or maintained by it; XII – Administration – agency, entity or administrative unit through which the Public Administration effectively operates and acts; XIII – Official Press – official press used to publicize acts of the Public Administration, where the “Federal Official Gazette” is the one used by the Federal Government; and the ones determined in the respective laws are used by the States, the Federal District and the Municipalities; XIV – Contracting Party – entity or agency which signs the the agreement; XV – Contractor – individual or legal entity undersigning the agreement entered into with the Public Administration; XVI – Committee – permanent or special committee, established by the Administration with the purpose of receiving, examining and judging all of the documents and procedures related to bidding and the registration of bidders. XVII – national manufactured products – manufactured products, made within the national territory in accordance with the basic production process or origin rules provided by the federal executive branch; XVIII – national services – services provided within the country, in accordance with the conditions provided by the federal executive branch; XIX – strategic communication and information technology systems – information technology products and services that, if discontinued, will significantly cause damage to the public administration and that involve at least one of the following criteria related to the critical information: availability, trustworthiness, safety and confidentiality. XX – research and development products – goods, inputs, services and works necessary for scientific and technological research, technology or technology innovation development described in research project approved by the contracting institution.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
SECTION III – WORKS AND SERVICES
Article 7 – Bidding for the execution of works and for service rendering shall comply with the provisions of this article and, especially, to the following sequence:
I – basic engineering project; II – executive engineering project; III – execution of works and services.
§ 1 – The execution of each stage shall be mandatorily preceded by the conclusion and the approval, by the proper authority, of the works regarding previous stages, except for the executive engineering project that may be developed concurrently with the performance of works and services, provided that also authorized by the Administration.
§ 2 – Works and services shall only be object of bidding where:
I – a basic engineering design has been duly approved by the proper authority and is available for examination by the interested parties; II – a detailed budget is presented in spreadsheets showing the breakdown of all unit costs; III – funds have been provided for in budget so as to guarantee the payment of the obligations resulting from works or services to be carried out during the current fiscal year according to the respective time schedule; IV – the product resulting from such works and services is contemplated in the goals set forth in the Multiannual Plan referred to in article 165 of the Federal Constitution, if applicable.
§ 3 – The bidding shall not include as its purpose the raising of financial funds for its execution, regardless of their sources, except in the case of enterprises carried out and exploited under the concession regime, according to the specific legislation.
§ 4 – The bidding shall not included as its purpose the supply of materials and services without estimating their respective quantities or which quantities do no correspond to the real estimates of the final or detailed design.
§ 5 – Goods and services with no similarities or with exclusive brand, characteristics or specifications are forbidden to be included in a bidding, except in cases in which this is technically justifiable or when the supply of such materials and services takes place under contracted administration regime, provided for and specified in the invitation to bid.
§ 6 – Infringement of provisions herein shall imply the cancellation of acts or contracts that took place and liability of the one who caused them.
§ 7 – For purposes of awarding of price proposals, monetary adjustment on the payment of obligations shall not be computed as amounts of the works or service from the final date of each period of verification up to the date of the respective payment; this shall be calculated by the same criteria that are mandatorily established in the invitation to bid.
§ 8 – Any citizen may require information from the Public Administration regarding the figures corresponding to works and unit prices of a certain work already completed. 36
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 9 – The provisions of this article shall also apply, where appropriate, to cases that are exempt from bidding or where bidding is not required.
Article 8 – The execution of works and services shall always include estimates on its current and final costs, taking into account the terms set forth for the performance thereof.
Sole Paragraph – The unjustified delay of the execution of works and services, or their installments is prohibited, if a budgetary allowance exists for their total performance, except in cases of insufficient funds or if a proved reason of technical nature, justified by an evidentiary document signed by the authority referred to in article 26 herein.
Article 9 – The following persons are prohibited from participating, directly or indirectly, in the bidding or in the execution of the work or service and the supply of goods necessary to them:
I – the author, either an individual or a corporate entity, of the basic or the executive engineering design; II – the company, individually or under a consortium, responsible for drawing up the basic or the detailed design or of which the author of the project is an officer, manager, shareholder, or holder of more than five per cent (5%) of the voting stock, or a controlling shareholder, or the responsible technical engineer or subcontractor; III – employee or officer of the client-agency or entity or the person responsible for the bidding;
§ 1 – The author of the project or the company referred to in paragraph II of this article is allowed to participate in bidding for works or services or in the execution of such works or services, as consultant or technician, in the positions concerning the control, supervision or management, exclusively at the service of the interested Administration.
§ 2 – Provisions herein do not prevent the bidding or the contracting of work or service that includes the drawing up of the detailed design as a duty of the contractor or at a price previously established by the Administration.
§ 3 – For purposes of this article, indirect participation means the existence of any link of technical, commercial, economic, financial or labor nature, between the author of the project, whether an individual or a corporate entity, and the bidder or the person responsible for the services, supplies and works, including the supply of goods and services necessary to them.
§ 4 – The previous paragraph shall also apply to the members of the bidding committee. Article 10 – Works and services may be carried out as follows:
I – direct execution; II – indirect execution, under the following systems: a) contract work per global price; b) contract work per unit price; c) [repealed] d) task; e) integral contract work.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Sole Paragraph - [repealed]
Article 11 – Works and services for the same purposes shall have projects standardized per types, categories or classes except where the standard project does not comply with the specific conditions of the site or the specific enterprise requirements.
Article 12 – The basic engineering designs and the executive engineering designs for goods and services shall take into account the following requirements:
I – safety; II – usefulness and adequacy to public interest; III – savings as regards execution, maintenance and operation; IV – possibility of using local labor, material, technology and raw material for the execution, maintenance and operation; V – easiness of execution, maintenance and operation without prejudice to the durability of the work or service; VI – adoption of adequate technical and labor health and safety rules; VII – environmental impact.
SECTION VI – SKILLED PROFESSIONAL TECHNICAL SERVICES
Article 13 – For the purposes of this Law, skilled professional technical services mean:
I – technical studies, planning and basic or detailed designs; II – legal opinions, expert reports and appraisals in general; III – technical advisory or consulting services and financial or tax auditing; IV- inspection, supervision or management of works or services; V – justification or defense of judicial or administrative cases; VI – staff training and development; VII – restoration of works of art and assets of historical value; VIII – [repealed]
§ 1 – Except for the cases in which bidding is not required, the agreements for rendering of skilled professional technical services shall be executed upon examination contest, with prior specification of an award or remuneration.
§ 2 – Article 111 of this Law shall apply, as relevant, to the technical services provided for in this article.
§ 3 – Any company that renders skilled professional technical services and that includes a list of the persons that are part of its technical staff in the bidding procedures, or that does this with the purpose of justifying exemption from bidding or justifying that the bidding is not required, shall be under the obligation of guaranteeing that such persons will perform, personally and directly, the services that are object of the agreement.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
SECTION V – PURCHASES
Article 14 – No purchase shall be made without the pertinent specification of its scope and evidence of the budgetary funds for their payment, under the penalty of nullity of the act and liability of the person that gave cause to it.
Article 15 – Whenever possible, purchases shall:
I – comply to the principle of standardization which requires that technical and performance specifications to be compatible, as the case may be, to the conditions offered regarding maintenance, technical assistance and guarantee offered; II – be processed by means of a price recording system; III – accept payment and acquisition conditions similar to the ones adopted by the private sector; IV – be subdivided in a number of installments as may be necessary to benefit from market characteristics, so as to obtain favorable economic conditions; V – be based on the prices prevailing within the scope of agencies and entities of the Public Administration;
§ 1 – Price recording shall be preceded by an extensive market research.
§ 2 – Recorded prices shall be published quarterly in the Official Press, to serve as guidance to the Administration;
§ 3 – The price recording system shall be governed by decree, according to regional characteristics, pursuant to the following conditions:
I – competitive selection; II – previous specification of the system to control and update registered prices; III – validity of record shall not exceed one year.
§ 4 – The existence of registered prices does not require that the Administration enter into the agreements that may result therefrom, and the Administration may use other means, as it deems appropriate in accordance with the legislation on public bids, it being assured to the record beneficiary that they shall be given priority under equal conditions.
§ 5 – The control system originated from the general price table shall be computer based, whenever possible.
§ 6 – Any citizen is a legitimate party in interest to challenge the price included in the general table due to non- compatibility of such price with the prices prevailing in the market.
§ 7 – Purchases shall also include:
I – complete specification of the asset to be purchased, with no indication of brand; II – definition of the units and quantities to be purchased, taking into account possible consumption and utilization, an estimate of which shall be obtained, whenever possible by means of adequate estimate quantitative techniques; III – safekeeping and storage conditions that protect material from deteriorating.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 8 – The receipt of material whose price exceeds the limit established in article 23 of this Law, in the invitation modality, shall be trusted to a committee made up of at least three (3) members.
Article 16 – A list of all the purchases made by the direct or indirect Administration shall be monthly announced by an official press media or in bulletin boards fully accessible to the public, so as to clarify the identification of the purchased asset, its unit price, the purchased quantity, the seller’s name and the total amount of the transaction; purchases which are exempt from bidding or regarding to which bidding is not required may be aggregated by items.
Sole Paragraph – The provisions of this article do not apply to the cases exempt from bidding provided for in item IX of article 24.
SECTION VI – DISPOSALS
Article 17 – Disposal of assets pertaining to the Public Administration, subject to the existence of duly justified public interest, shall be preceded by appraisal and shall comply with the following rules:
I – when the assets are real estate property, it depends up on legislative authorization in the case of direct Administration agencies and quasi-governmental agencies and foundations and for all of them, including state- owned companies, it shall depend on the previous appraisal and bidding, in the modality of competitive bid; and the latter shall be exempted in the following cases: a) payment in kind; b) donation, exclusively permitted to any other agency or entity of the Public Administration, at any level of the government, except for the provisions in items f, h and i; c) exchange for another real estate property that complies with the requirements of item X of article 24 of this Law; d) vesting; e) sale to another agency or entity of the Public Administration, at any level of the government; f) gratuitous or onerous disposal, emphyteusis, granting of real right to use (concessão de direito real de uso) residential property built and destined to be used or actually used within the scope of housing programs or regularization of social interest land of public interest developed by agencies or entities of the Public Administration. g) procedures to make possession legitimate, provided in Article 29, of Law No. 6,383, of December 7, 1976, by initiative and resolution of the Public Administration bodies legally competent to do so; h) gratuitous or onerous disposal, emphyteusis, granting of real right to use (concessão de direito real de uso) property for local commercial use with up to 250 square meters within the scope of regularization social interest land of public interest developed by agencies or entities of the Public Administration; i) gratuitous or onerous disposal and granting of real right to use rural land owned by the federal government in the Legal Amazon where occupation is within the limit of 15 (fifteen) inspection modules or 1500 ha (one thousand and five hundred hectares) for the purposes of land regularization, within the legal criteria;
II –regarding chattels, it will depend on prior appraisal and bidding; and the following cases are exempt from bidding: a) donation, which is exclusively permitted for purposes of social interest use after assessment of its timely and social-economic convenience, as compared to other types of disposal; 40
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
b) exchange, exclusively permitted between agencies or entities of the Public Administration; c) sale of stocks that may be traded in the stock exchange, pursuant to specific legislation; d) sale of bonds, pursuant to specific legislation; e) sale of goods manufactured or marketed by agencies or entities of the Public Administration, in view of their purposes; f) sale of material and equipment to other agencies or entities of the Public Administration, with no expected use for the ones who dispose of them.
§ 1 – Real estate property donated pursuant to sub-item b of item I hereof – where the reasons that justified its donation no longer exists – shall revert to the assets of the legal entity that donated it, and its disposal by the beneficiary is forbidden.
§ 2 – The Administration may also grant real right to use (direito real de uso) real property, without a bidding process when the use of such real estate is:
I – made by another Public Administration body or agency, regardless of where the property is located; II – made by an individual who, in accordance with the law, regulation or normative act issued by the competent body, who has implemented the required minimum criteria (land cultivation, peaceful occupation and direct exploration of rural area located in the Legal Amazon with area larger than 1 (one) inspection module and limited to 15 (fifteen) inspection modules, provided it is no larger than 1,500 ha (one thousand and five hundred hectares));
§ 2-A – The cases in item II, § 2 do not require legislative authorization, but are subject to the following conditions:
I – exclusively applicable to areas where private possession is proven to have happened prior to December 1, 2004; II – subject to the remaining legal and administrative criteria and impediments regarding the purpose of the use and regularization of public land; III – prohibition to concessions for uses that are not included in the rural, use-of-government-owned land or in the legal and administrative rules regarding the economic and environmental zoning; IV – provision for the automatic termination of the concession, regardless of notification given, in cases of social interest or public need or utility.
§ 2-B – The case provided in item II, § 2 of this article:
I – only applicable to real property located in the rural area, not subject to having its use, upon farming/stockbreeding prohibited, impeded or inconvenienced; II – is limited to the areas up to 15 (fifteen) inspection modules, as long as it is not larger than 1500ha, being the bidding process not to be waived for areas larger than that; III – may be added to area quantity as provided in item g, I, of the heading of this article, up to the limit provided in item II of this paragraph; IV – [repealed].
§ 3 – For the purposes of this Law, vesting means:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – the disposal, to owners of abutting real estate of the remaining area or the area resulting from public works – an area that separately became unusable – for a price which shall never be lower than the appraisal price and provided that it does not exceed fifty per cent (50%) of the amount included in sub-item a, item II, of article 23 hereof; II- the disposal, to the legitimated direct owners or, in case they do not exist, to the Public Authority, of real estate for residential purposes constructed in urban centers annexed to hydroelectric power plants, as long as they are deemed dispensable during the operation stage of these units and they are not considered as reversible real property by the end of the concession.
§ 4 – Donation that includes charge shall be subject to bidding and the instrument related thereto shall mandatorily include the respective charges, their maturity term and the reversion clause, under the penalty of nullity of the act; bidding shall be exempt in the case of duly justified public interest.
§ 5 – In the event contemplated in the previous paragraph, should the donee need to offer the real estate as financing guarantee, then the reversion clause and the other obligations shall be guaranteed by second-degree mortgage in favor of the donor.
§ 6 – Auction may be permitted by the Administration as regards the selling of real properties whose appraisal, individually or globally, does not exceed the limit provided for in article 23, item II, sub-item b hereof.
§ 7 – [repealed].
Article 18 – As it regards bidding for real estate sale, the qualification stage shall be limited to evidencing the payment of an amount corresponding to five per cent (5%) of the appraisal amount.
Article 19 – Real estate owned by the Public Administration, whose acquisition has resulted from judicial proceedings or accord and satisfaction may be disposed of by an act of the pertinent authority, according to the following rules:
I – appraisal of disposable assets; II – evidence of the need or convenience of the disposal; III – adoption of bidding procedures, under the form of bidding or auction.
CHAPTER II – BIDDING SECTION I – MODALITIES, LIMITS AND EXEMPTION
Article 20 – Bidding shall be carried out at the place where the agency interested in the bidding is located, unless for duly justified reasons of public interest.
Sole Paragraph – This article shall not prevent interested parties resident or headquartered in other places from qualifying.
Article 21 – Although bidding shall be carried out at the place where the interested agency is located, the notices containing the summary of invitations to bid, bid quotes, contests and auctions, shall be previously published, at least once:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – In the Federal Official Gazette, in the case of bidding called by an agency or entity of the Federal Public Administration and also in the case of works, partially or totally financed with federal funds or guaranteed by federal institutions; II – In the State’s or Federal District’s Official Gazette, in the case of bidding called by an agency or an entity of the State or Municipal Public Administration or the Federal District, respectively. III – In a daily newspaper of large circulation in the State as well as in a newspaper, if any, of large circulation in the municipality or in the region in which the work will be constructed, the service will be rendered, disposed of or leased, and the Administration may also, depending on the size of the bidding, resort to other media to broaden the area of the bidding.
§ 1 – The published notice shall include the indication of the place where the interested parties may read and obtain the full content of the invitation to bid and all information regarding the bidding.
§ 2 – The term to the receive bids or for the event to take place shall be of at least:
I – forty five days for: a) competitive selection; b) competitive bidding, whenever the contract to be entered into provides for integral contract work or whenever bidding is of the “better technique" or “technique and price” types.
II – thirty days for: a) competitive bidding, in the cases not specified in item b of the above item; b) bid quotes, whenever bidding is of the type “better technique” or “technique and price”.
III – fifteen days for bid quotes, in the cases not specified in sub-item b of the previous item, or in the case of auction; IV – five business days for invitation.
§ 3 – The terms established in the previous paragraph shall start on the date on which the last abridged invitation to bid was published or the invitation was dispatched or on the date the invitation to bid, the invitation and their respective attachments were made available, the latest date prevailing.
§ 4 – Any modification to the invitation to bid shall require publicity in the same form as it was done for the original one, and the initially established term shall be re-opened, unless, unequivocally, such modification does not affect the formulation of the bids.
Article 22 – Modalities of bidding:
I – competitive bidding [concorrência]; II – bid quotation [tomada de preços]; III – invitation [convite]; IV – competitive selection [concurso]; V – auction [leilão].
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 1 – Competitive bidding is a type of bidding among any interested parties who, in the initial preliminary stage of qualification prove to have the minimum qualification requirements set forth in the invitation to bid in order to perform the object of the bidding.
§ 2 – Bid quotation is a type of bidding among interested parties duly registered or who have met all the conditions required for register up to the third day before the date on which the bids are received, with due regard to the necessary qualification.
§ 3 – Invitation is a type of bidding among interested parties of the sector related to the purpose of the bidding, either registered or not, chosen and invited, in a minimum number of three (03), by the administrative unit, that shall display, in an appropriate place, a copy of the invitation to bid and shall extend it to other persons registered in the corresponding sector and who show their interest up to twenty four hours (24) before delivery of proposals.
§ 4 – Competitive selection is a type of bidding among any interested parties for the purpose of choosing a technical, scientific or artistic work, by establishing awards or remuneration to winners, pursuant to criteria set forth in the invitation published in the official press at least forty-five (45) days in advance.
§ 5 – Auction is a type of bidding among any interested parties for the purposes of selling chattels that are of no use to the Administration, or products legally seized or attached, or for the disposal of real estate as provided for in article 19, to the one who offers the highest bid, equal or higher than the appraisal amount.
§ 6 – Regarding paragraph 3 hereof, if there are more than three (03) prospective interested parties, at each new invitation to bid announced for the same or similar purposes, an invitation to at least one more interested party shall be obligatory whenever any one of the registered parties was not invited to recent bidding procedures.
§ 7 – In the event that, due to market restrictions or evident lack of interest by the invited parties, the minimum number of bidders required in paragraph 3 of this article cannot be achieved, then such circumstances shall be duly justified in the proceeding, under the penalty of the invitation being restated.
§ 8 – The creation of other bidding modalities or the combination of the bidding modalities referred to in this article shall be forbidden.
§ 9 – In the event of paragraph 2 of this article, the Administration shall only require non-registered bidders to submit the documents referred to in articles 27 to 31, which documents evidence qualification that is compatible with the object of the bid, pursuant to the invitation to bid.
Article 23 – The bidding modalities referred to in items I to III of the previous article shall be determined according to the following limits, in view of the estimated amount of the agreement:
I – for engineering works and services: a) invitation: up to BRL$150,000.00 (one hundred and fifty thousand reals ); b) bid quotation: up to BRL$1,500,00000 (one million five hundred thousand reals ); c) competitive bidding – larger than BRL$ 1,500,000.00 (one million five hundred thousand reals ); 44
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
II – for purchases and services not referred to in the previous sub-item: a) invitation: up to BRL$ 80,000.00 (eighty thousand reals ); b) bid quotation: up to BRL$ 650,.000.00 (six hundred fifty thousand reals ); c) competitive bidding – higher than BRL$ 650,000.00 (six hundred fifty thousand reals ).
§ 1 – Works, services and purchases made by the Administration shall be divided into as many installments as may be evidenced as technically and economically feasible, and bidding shall be carried out with the purpose of making the best use of the resources available in the market and fostering competitiveness without losing the economy of scale.
§ 2 – As regards the execution of works and services and the purchase of goods divided into installments according to the previous paragraph, each stage or set of stages of the work, services or purchase shall correspond to a separate bidding, pursuant to the pertinent modality for execution of the object of the bidding.
§ 3 – Competitive bidding is the appropriate modality of bidding, regardless of the amount of its object, to be adopted in the purchase or disposal of real estate, with the exception of the provisions of article 19, such as in granting of real right to use (concessões de direito real de uso) and in international bidding. In the latter case, and in compliance with the restrictions hereof, bid quotation – whenever the agency or entity is provided with the international register of suppliers – or invitation – whenever no supplier of goods or service is available in the country – shall be permitted.
§ 4 – In the cases where invitation is adequate, the Administration may resort to bid quotation and, in any other case, to competitive bidding.
§ 5 – Invitation or bid quotation, as the case may be, are forbidden for portions of a the same work or service, or for works or services of the same nature and at the same place, that may be executed jointly and concurrently, whenever the sum of their amounts justifies invitation or bid quotation, respectively, pursuant to this article, except for portions of a specific nature that may be executed by individuals or companies specialized in sectors different than the ones of the person who is executing the work or service.
§ 6 – Industrial organizations from the direct Federal Administration, in view of their peculiarities, shall comply with the limits established in item I of this article also as regards purchases and services in general, provided that they are related to the purchase of material to be exclusively used to maintain, repair or manufacture military equipment owned by the federal government.
§ 7 – In the event of purchase of divisible nature goods, and as long as there is no damage to the unity or to the complex, it is permitted the quotation of less quantity than such demanded in the bidding, aiming to a competitive bidding. The Notice to Bid/Procurement Notice may establish a minimum quantity to maintain the economics of scale.
§ 8 – In case of public consortiums, double the amounts mentioned on the heading of this article will be applicable when the consortium is formed by up to three (3) federal entities and three time that amount when formed by more than three (3) entities.
Article 24 – The following cases are exempt from bidding: 45
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – engineering works and services amounting to up to ten per cent (10%) of the limit established in sub-item a, item I, of the previous article, provided that they do not refer to portions of the same work or service or to works or services of the same nature or at the same place that may be jointly and concurrently executed; II – other services and purchases up to ten per cent (10%) of the limit provided for in sub-item a, item II, of the previous article, and for disposals, as set forth in this Law, provided that they do not refer to portions of the same service, purchase or disposal involving a bigger amount that may be carried out all at once; III – war or serious social upheaval; IV – emergency or public calamity, whenever there is urgency in assisting a situation which may result in damages, or impair the safety of people, works, services, equipment and other assets, either public or private, and only as regards the assets requiring assistance in the case of emergency or public calamity; for the portions of works and services that may be concluded within the maximum term of one hundred and eighty (180) consecutive and uninterrupted days as from the occurrence of the emergency or calamity, extension of the respective contracts is forbidden; V –when no bidder responded to the previous bidding and the current bidding, may not, justifiably, be repeated without loss to the Administration, and in this specific case, all of the pre-established conditions shall be maintained; VI – when the federal government had to intervene in the economic scenario so as to control prices or normalize the supply; VII – when bidding prices are substantially higher than the ones charged in the domestic market or non- compatible with the ones established by the proper official agencies and in such cases, pursuant article 48, sole paragraph of this Law, and if the situation persists, the direct adjudication of goods or services for a value not higher than the one included in the price or service register shall be permitted. VIII – acquisition, by a public domestic legal entity, of goods produced or services rendered by an agency or entity integrating the Public Administration and that has been created for such specific purpose in a date preceding the validity of this Law, provided that the established price is compatible with market prices; IX – when the national security may be at risk, in the cases set forth in a decree by the President of the Republic, with due consultation to the National Security Council; X – purchase or leasing of real estate destined to meet the basic needs of the Administration, whose selection depends on its necessity of installation and location, provided that the price is compatible with market value, according to prior assessment; XI – contracting of the remaining portions of a work, service or supply, as a result of contractual termination, provided that the classification order of the previous bidding is followed and the same conditions offered by the bid winner are accepted, including duly corrected price; XII – purchase of fruits and vegetable, bread and other perishable goods, within the period of time necessary for carrying on the corresponding bidding procedures, directly based on the price of the day; XIII – contracting of a Brazilian institution in charge, pursuant to regulation or statutory laws, of research, education or institutional development, or an institution engaged in the social recovery of prisoners, provided that the contractor is a non-profit organization of unquestionable moral and professional repute; XIV – acquisition of goods and services pursuant to the specific international agreement approved by Congress when the offered conditions are obviously beneficial to the Public Administration; XV – acquisition or restoration of works of art and historic objects whose authenticity is duly recognized, provided that compatible with or inherent to the purposes of the agency or entity; XVI – printing of Official Gazettes, standard forms to be used by the Administration and official technical publications, as well as rendering computer services to domestic public law entity, by agencies or entities integrating the Public Administration, and organized for such specific purpose; 46
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
XVII – acquisition of components or parts of national or foreign origin necessary for the maintenance of equipment during the technical warranty period, with the original supplier of such equipment, whenever such exclusiveness condition is essential for the guarantee; XVIII – purchase or service contracting for the supply of ships, vessels, aircraft or troops and their transportation during contingent short period stay on ports, airports or localities which are not their headquarters, due to operational action or training, whenever the short term allowed by law may impair the regular operations and the purposes thereof and provided that their value does not exceed the limit contemplated in sub-item a, item II, in article 23 hereof; XIX – purchase of material to be used by the Armed Forces – except for material of the personal and administrative use – upon decision by a committee created by decree, in order to maintain the standard required by the logistic support structure of the naval, aeronautical and land units; XX – contracting of a non-profit organization for the physically disabled, of indisputable moral repute, by agencies or entities of the Public Administration, for the rendering of services or labor, provided that the agreed price is compatible with market prices; XXI – acquisition or contracting product for research and development, limited, in the cases of engineering works and services, to 20% (twenty per cent) of the amount in sub-item b, item I of the heading of article 23; XXII – contracting of electric power and natural gas supply with a concessionary, permittee or authorized party, according to specific Legislation; XXIII – contracting entered into between government-owned company or government-controlled company with their subsidiaries and controlled companies, for the acquisition or disposal of assets, providing or obtaining services, as long as the contracted price is compatible with the market prices; XXIV – execution of service agreements with social organizations duly qualified within the respective government spheres to those performing activities provided for in the managing contract; XXV – contracting by Scientific and Technologic Institution – ICT [Instituição Científica e Tecnológica] or by furtherance agency for the transfer of technology and licensing of right to use or exploit creation protected under the law. XXVI – execution of programme agreements [contrato de programa] with federal entity or entity under its indirect administration with the purpose of providing public services in association and in accordance with the terms that have been authorized in public consortium agreement or cooperation agreement. XXVII – contracting the following services: collecting, processing and selling recyclable or reusable urban solid waste, in areas served by collection of recyclable materials done by associations or cooperatives organized exclusively by individuals of low income known by the government to collect recyclable materials by using equipment that is compatible with the technical, environmental and public health standards. XXVIII – goods and services to be provided, produced or performed in Brazil that concurrently involve high technological complexity and national defense, upon opinion especially issued by the highest authority of the body. XXIX – acquisition of goods and services for the military contingent in the Brazilian Army serving in peace operations abroad, upon mandatory justification regarding the price and choice of provider or vendor and ratified by the Force Commander. XXX – hiring government or private institution or organization, whether it be non-profit or not, to provide technical support and rural education programs within the scope of the National Technical Support and Rural Education Programs in Family Farming and Land Reform, as created by federal law. XXXI – contracts entered into to comply with the provisions in articles 3, 4, 5 and 20 of Law No. 10,973, of December 2, 2004, and in accordance with the general contracting principles therein. XXXII – agreements in which there is technology transfer of strategical products to the Universal Healthcare System (Sistema Único de Saúde) – SUS, pursuant to law No. 8,080 of September 19, 1990, as listed on national 47
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
directing act issued by SUS, including those occasions when these products are acquired during the technology absorption phases. XXXIII – contracts with non-profit private organizations to set up water tanks and other social technologies to allow access to water for human consumption and food production, to benefit low-income rural families suffering drought effects or regular limited access to water. XXXIV – acquisition by internal public legal entities of strategic inputs for the health sector produced or distributed by a foundation whose objective – as provided in their articles of organization or association, or bylaws – is to support direct public administration bodies, its agency or foundation in projects related to teaching, education, research, institutional or scientific or technological development, and incentives to innovation, including with respect to the administrative and financial management necessary for the projects, or in partnerships that involve technology transfer of products strategic to the Universal Healthcare System (SUS), in accordance with the provisions of item XXXII of this article, and that had been created for this specific purpose prior to this law coming into effect, as long as the price in the contract is compatible with the market price.
§ 1 – The percentages referred to in items I and II of this article shall be 20% (twenty per cent) for the purchases, works and services contracted by private and state-owned companies, as well as for government agency and foundation, which are qualified by Law as Executive Agencies.
§ 2 – The time limitation for the creation of the body or entity part of the public administration as provided in item VIII in this articles is not applicable to bodies or entities that manufacture strategic products for SUS, within the scope of Law No. 8,080, of September 19, 1990, as listed in an act issued by the SUS national management.
§ 3 – The exemption case provided for in item XXI of the heading of this article, when applied to engineering works and services, will be subject to special procedures created in specific regulation.
§ 4 – The prohibition provided for in item I of the heading or article 9 is not applicable to the case in item XXI of the heading.
Article 25 – Bidding is not required where competition is not possible, especially in the following cases:
I – acquisition of material, equipment, or goods that may be supplied exclusively by the manufacturer, company or exclusive commercial agent; the preference for brands forbidden and exclusiveness shall be evidenced by a document duly supplied by the agency responsible for the registration of the trade in the place in which the bidding, or the work or the service is to be carried out by trade union, employers' union or Federation or by pertinent entities; II – contracting technical services listed in article 13 of this Law, of special nature, with qualified professionals or companies; advertising and publicity services do require bidding; III – contracting of a professional of any artistic area, directly or through an exclusive contractor, provided that duly acclaimed by specialized reviewers and by the public opinion;
§ 1 – A professional or company is considered highly skilled by the public where his/its work in the field he/it is an expert on, by reason of previous performance, studies, experiences, publications, organization, machinery, technical team or other requirements related to his/its activities, allow people to infer that his/its work is essential and, undoubtedly, the most adequate to fully serve the object of the contract.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 – In the event provided for in this article or in any other cases in which bidding is not required, if overpricing is evidenced, the supplier or the person rendering the service shall be jointly liable for damages caused to the Public treasury, without prejudice to other applicable legal penalties;
Article 26 – Exemptions provided in paragraphs 2 and 4 of article 17 and in items III to XXIV of article 24, the cases in which bidding is not required, referred to in article 25, necessarily justified, and the delay contemplated in the final part of the sole paragraph of article 8 hereof shall be informed to the higher authority, within three days to be ratified and published in the Official Press, within five days, as a condition for the validity of the acts.
Sole Paragraph – The following elements shall be attached to the proceeding regarding exemption, non- requirement or delay:
I – characteristics of the emergency or calamitous situation that justifies the exemption, as the case may be; II – reasons for choosing the supplier or performer; III – price justification; IV – Document approving the research project to which the goods shall be allocated.
SECTION II – QUALIFICATION
Article 27 – In order to qualify for the bidding the interested parties shall only be required to submit the following documents:
I – legal capacity; II – technical ability; III – economic and financial qualification; IV – tax and labor clearance; V – compliance with the provisions of Federal Constitution, Article 7, item XXXIII.
Article 28 – Documents related to legal capacity, as the case may be, shall include:
I – Identity card; II – trade registration, in the case of individual company; III – duly registered articles of incorporation, bylaws or articles of association in force, in the case of business companies and documents evidencing the election of directors, in the case of joint stock companies; IV – registration of the articles of incorporation, in the case of civil associations, together with evidence of election of the board of officers presently in office; V – authorization decree, in the case of a foreign company operating in the country and the registration or authorization issued by the proper agency, where the activity so requires.
Article 29 – Documents related to regular tax and labor status, as the case may be, shall include:
I – evidence of enrollment with the Individual Taxpayer Register (Cadastro de Pessoas Físicas - CPF – Cadastro Geral de Contribuintes – CGC – currently called CNPJ/MF); II – evidence of enrollment with the state or municipal taxpayer register, if applicable, with respect to the bidder’s domicile or headquarter, and its activity field, as well as compatible with its corporate purpose;
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
III – evidence of regular status as regards payment of federal, state or municipal taxes in the place in which the bidder is domiciled or headquartered, or equivalent pursuant to the law; IV – evidence of regular status as regards payment of Social Security and Guarantee Fund for Length of Service (Fundo de Garantia por Tempo de Serviço – FGTS), showing the regular payment of social charges determined by law; V – evidence that there are no outstanding debts with the Labor Courts, by providing a debt clearance certificate, pursuant to the provisions of Section VII of the Consolidation of Labor Laws, as approved by Law-Decree No. 5452, of May 1st, 1943.
Article 30 – Documents related to technical ability shall be restricted to:
I – registration or enrollment with the proper professional entity; II – evidence of the proficiency to develop activity that is relevant and compatible, as regards characteristics, quantities and terms, with the object of the bidding and indication of the facilities and machinery and of the appropriate and available technical staff for carrying out the object of the bidding as well as the qualification of each one of the members of the technical staff who shall be responsible for the works; III – confirmation, supplied by the bidding agency, that documents were received, and, whenever required, that the bidder is aware of all information and local conditions for complying with the obligations object of the bidding; IV – evidence that requirements provided for by special law were met, if applicable.
§ 1 – Evidence of proficiency referred to in item II of the caput of this article, in the case of bidding related to works and services, shall be provided by certificates supplied by public or private legal entities, duly registered with the proper professional entities, shall be limited to:
I – technical and professional ability: bidder’s evidence of having in its permanent staff, and on the date established for submitting the proposal, a university-degree professional or another professional duly recognized by the relevant entity, holding a certificate of technical responsibility as regards to the execution of works and services of similar characteristics and to such characteristics being exclusively limited to portions of the object of the bidding having the highest value and relevance; requirements regarding minimum quantities or maximum terms are forbidden; II – [repealed]; a) [repealed]; b) [repealed].
§ 2 – The portions having the highest technical relevance or significant value, mentioned in the previous paragraph, shall be defined in the invitation to bid.
§ 3 – Evidence of ability by means of documents or certificates related to similar works or services having the same, or higher, technological and operating complexity.
§ 4 – Regarding bidding for the supply of goods, evidence of ability, as the case may be, shall be presented by means of certificates supplied by private or public legal entity.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 5 – Evidence of activity or ability that is restrictive to certain periods or occasions, or to specific places, or any other restriction not provided for by law, and that inhibit participation in the bidding is forbidden to be required.
§ 6 – Minimum requirements regarding the setting up of sites, machinery, equipment and a specialized technical team – considered essential in order to accomplish the object of the bidding – shall be met by submitting a specific list and the formal representation of the availability thereof, under applicable penalties, and the requirements related to ownership and prior location shall be forbidden.
§ 7 [repealed];
I – [repealed]; II – [repealed];
§ 8 – In the case of highly complex major works, services and purchases, the Administration may require bidders to submit the execution methodology, the assessment of which, for the purposes of its acceptance or not, shall always precede the price analysis and shall be carried out exclusively according to objective criteria.
§ 9 – A highly technically complex bidding means a bidding that involves a high level of specialization which is essential to guarantee performance of the object to be contracted, or that may impair the continuance of primary utilities;
§ 10 – Professionals appointed by the bidder for the purposes of confirming the technical and operational proficiency contemplated in item I, paragraph 1, of this article shall participate in the work or service that is the object of the bidding and their replacement by professionals having an equal or higher experience is allowed, provided that approved by the Administration.
§ 11 – [repealed].
§ 12 – [repealed].
Article 31 – Documents regarding the economic and financial qualification shall be limited to:
I – balance sheet and financial statements of the previous fiscal period, required and submitted pursuant to the law, and that confirm the company’s good financial standing; replacement of these documents by trial balances or interim balances is forbidden. When the balance sheet and financial statements are closed for more than three (3) months from the date on which the proposal was submitted, they may be corrected according to official indexes; II – affidavit of non-existence of bankruptcy or agreement with creditors, issued by the court clerk of the legal entity’s headquarters, nor of foreclosure of assets, issued in the domicile of the individual; III – guarantee, according to the same modalities and criteria provided for in the heading and in paragraph 1 of article 56 hereof, limited to one per cent (1%) of the estimated amount of the agreement.
§ 1 – Any rate requirement shall be restricted to evidence of the bidder’s financial ability to meet the obligations it shall have to assume in the event the contract is awarded to it; minimum amounts regarding previous sales, and profitability ratio shall be forbidden.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 – As regards purchases for future delivery and the performance of works and services, the Administration may establish, in the invitation to bid, a minimum capital or net worth requirement, or establish that the guarantees contemplated in paragraph 1, article 56, hereof are objective data to evidence the bidders’ economic and financial standing and to guarantee the performance of the contract to be entered into.
§ 3 – The minimum capital or the net worth referred to in the previous paragraph shall not exceed ten per cent (10%) of the estimated amount of the agreement, and evidence shall be presented on the date on which the proposal is submitted, pursuant to the law, and the use of official indexes for monetary correction is permitted up to such date.
§ 4 – The list of the obligations assumed by the bidder that imply a decrease of the operating capacity or the absorption of financial availability may also be required, and such financial availability is to be calculated according to the corrected net worth and its turnover capacity.
§ 5 – The company’s good financial standing shall be evidenced with impartiality by means of accounting rates set forth in the invitation to bid, and duly justified in the administrative bidding procedure that opened the bidding; rates and values not usually adopted for the correct appraisal of the financial standing – which shall be sufficiently comfortable to meet the obligations resulting from the bidding – shall be forbidden.
§ 6 - [repealed];
Article 32 – The documents required for qualification may be submitted in the original form, or in a copy duly certified by a proper notary or by an officer of the Administration or by publication in the Official Press.
§ 1 – Invitation, competitive selection, supply of goods for prompt delivery and auction shall be exempt, in whole or in part, from the documents referred to in articles 28 to 31 of this Law.
§ 2 – The reference file certificate referred to in paragraph 1 of article 36, replaces the documents listed in articles 28 to 31considering the information available system mentioned on the bid notice, forcing the part to declare, under legal penalties, the occurrence of the circumstances that challenge its qualification.§ 3 – The documents referred to in this article may be replaced by a reference file issued by a public agency or entity, provided that this is included in the invitation to bid and that such file is prepared pursuant to this Law.
§ 4 – Foreign companies that do not operate in the country shall meet, as far as possible, in the event of international bidding, the requirements set forth in the previous paragraphs by submitting equivalent documents, certified by their respective consulates and translated by a sworn translator; such companies shall have legal representatives in Brazil with express powers to receive summons and to respond on behalf of the company for any administrative and legal proceeding.
§ 5 – Previous payment of fees or emoluments shall not be required for the qualification contemplated herein, except for those fees and emoluments related to the copy of the invitation to bid to be supplied, whenever required, with its integrating elements restricted to the amount of the effective cost of the printed copies of the supplied documentation.
§ 6 – Provisions in paragraph 4 of this article, paragraph 1 of article 33 and paragraph 2 of article 55 shall not apply to international biddings carried out for the acquisition of goods and services, whose payment is made 52
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
with funding granted by an international financial institution to which Brazil is a member or by a foreign cooperation agency, not even in the event of contracting foreign companies for the purchase of equipment manufactured and delivered abroad, provided that, in this case, a previous authorization has been granted by the President of he Republic, and such provision shall not apply, also, for the acquisition of goods and services by administrative units headquartered abroad.
§ 7 – The documents mentioned in articles 28 to 31 herein and in this article may be waived in total or in part, pursuant to the terms of the regulation, in case of products for research and development purposes, provided that they are available for immediate delivery or up to the amount provided in sub-item a, item II, of the heading of article 23.
Article 33 – When participation of companies under a consortium is permitted in bidding, the following rules shall be complied with:
I – evidence of a private or public commitment to organize a consortium, duly signed by the consortium members; II – indication of the company responsible for the consortium that shall act as the leader and meet the requirements mandatorily set forth in the invitation to bid; III – submission of the documents required in articles 28 to 31 of this Law by each participant of the consortium. For the purposes of technical ability, the summing up of figures regarding each participant in the consortium, and for purposes of economical and financial capacity, the summing up of the amounts regarding each member of the consortium, according to its respective participation; the Administration may establish, for the consortium, an increase of up to thirty per cent (30%) of the amounts required for the individual bidder and such increase is not required for consortia composed, exclusively, by micro and small-sized companies as defined by law; IV – impediment of a company that participates in a consortium from participating, in the same bidding, through more than one consortium or individually; V – joint liability of participating companies for the acts practiced under the consortium, either in the bidding stage or in the stage of the performance of the agreement.
§ 1 – In a consortium formed by Brazilian and foreign companies, leadership shall be given to the Brazilian company obligatorily, pursuant to provisions in item II of this article.
§ 2 – Before execution of the contract, the bid winner shall be under the obligation of providing for the organization and registration of the consortium, pursuant to the commitment referred to in item I of this article.
SECTION III – REFERENCE FILES
Article 34 – For the purposes of this Law, the agencies and entities of the Public Administration, that frequently carry out bidding, shall keep reference files for qualification, under the ordinary form and valid for at least one year.
§ 1 – The reference file shall be broadly publicized and shall be permanently opened to interested parties and the unit responsible for such reference file shall proceed, at least every year, by means of the Official Press and a daily newspaper, to a public call for updating the existing reference files and entry of new participants.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 – Administrative units may use reference files from other agencies or entities of the Public Administration.
Article 35 – Upon requiring its enrollment in the reference file, or any updating thereof, the interested party shall provide the necessary elements to meet the requirements in article 27 of this Law.
Article 36 – Registered participants shall be classified by categories, pursuant their specialization, and subdivided into groups, according to technical and economic appraisal based on the elements included in the documents listed in articles 30 and 31 hereof.
§ 1 – Registered participants shall be given a certificate, renewable whenever the reference file is updated.
§ 2 – The bidder’s performance of assumed obligations shall be marked down in the respective reference file.
Article 37 – A registered participant that fails to meet requirements set forth in article 27 of this Law or those established for file registration may have its registration changed, suspended or canceled.
SECTION IV – BIDDING PROCEDURES AND DECISION
Article 38 – Bidding procedures shall start with the opening of a duly announced, officially recorded and numbered administrative proceeding containing the respective authorization, a concise indication of its purpose and of own provisions for expenses and the following documents shall be attached to it:
I – invitation to bid or invitation and respective attachments, as the case may be; II – evidence of the publications of the abridged invitation to bid, pursuant to article 21 of this Law or evidence of the delivery of the invitation; III – act for the appointment of a bidding committee, of the administrative or official auctioneer or persons responsible for the invitation; IV – original copy of the proposals and the documents attached thereto; V – minutes, reports and resolutions by the Awarding Committee; VI – expert or legal opinions issued on the bidding, bidding exemption or non-requirement; VII – awarding acts regarding the scope of bidding and respective homologation; VIII – appeals eventually submitted by bidders and their respective opinions and decisions; IX – order for bidding cancellation or revocation, as the case may be, well-founded on detailed conditions; X – contract or equivalent instrument, as the case may be; XI – other evidence of publications; XII – other documents regarding the bidding.
Sole Paragraph – The drafts of the invitations to bid, as well as the drafts of contracts, agreements, covenants or arrangements shall be previously examined and approved by the Administration’s legal staff.
Article 39 – Whenever the estimated amount for the bidding or for a set of simultaneous or successive bidding procedures is higher than one hundred (100) times the limit provided for in article 23, item I, sub-item c of this law, the bidding shall commence, mandatorily, with a public hearing by the proper authority, to be held at least fifteen (15) days before the date planned for the publication of the invitation to bid and announced at least ten (10) business days before the bidding, through the same media used in the publication of the invitation to bid,
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
to which all interested parties shall have assured access to all relevant information and shall have the right to express their opinion.
Sole Paragraph – For purposes of this article, simultaneous bidding processes are the ones with similar objects and which shall be carried out within periods of time not exceeding thirty days, and successive bidding proceedings are the ones, also with similar objects, in which the date of the subsequent invitation to bid occurs before one hundred and twenty days have elapsed as of termination of the contract resulting from the previous bidding.
Article 40 – The preamble to the invitation to bid shall contain the number of the order, in annual series, the name of the interested division and its sector, the modality, the system of execution and the type of bidding, the indication that the bidding shall be governed by this Law, the local, date and time for receiving the documentation and the proposal as well as for the opening of the envelopes and shall, mandatorily, include the following:
I – a concise and clear description of the scope of the bidding; II – the term and conditions for the performance of the agreement, or withdrawal of the documents, as provided for in article 64 hereof, for the performance of the agreement and for the delivery of the scope of the bidding; III – penalties for events of default; IV – place at which the basic engineering project may be examined and acquired; V – if a executive engineering project is available on the date of the publication of the invitation to bid and the place where it may be examined and acquired; VI – conditions for participation in the bidding, according to articles 27 to 31 of this law and form to submit the proposals; VII – criterion for decision, including clear provisions and objective parameters; VIII – place, time and access codes of the remote media which shall supply the elements, information and clarification regarding the bidding and the conditions to meet the obligations necessary for the performance of the object of the bidding; IX – equivalent payment conditions for Brazilian and foreign companies, in the case of international bidding; X – criteria for the acceptance of unit and global prices, as the case may be, setting maximum prices being permitted and setting minimum prices being prohibited, statistical criteria or ranges for price variations as regards reference prices, with exception of the paragraphs 1 and 2 of article 48. XI – adjustment criterion that shall reflect the effective production cost variation. The adoption of specific or sectoral indexes from the date scheduled for submitting the proposal or the budget to which this proposal refers to until the date of the performance of each installment shall be allowed; XII – [repealed]; XIII – limits for the payment of the facilities and preparation to execute works or services that shall, mandatorily, be provided for separately from the other installments, stages or tasks; XIV – payment conditions, providing for: a) payment term not exceeding thirty days, from the final date of the period for payment of each installment; b) schedule for maximum disbursement per period, according to the availability of financial funds; c) criterion for the financial adjustment of payable amounts, from the final date of the period for payment of each installment up to the date of effective payment; d) financial offsetting and penalties for contingent delays and discounts, or possible prepayment; e) insurance requirement, as the case may be. 55
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XV – instructions and rules regarding the appeals provided for in this Law; XVI – conditions regarding receipt of the object of the bidding; XVII – other bidding’s specific or peculiar indications.
§ 1 – The original copy of the invitation to bid shall be dated, and all of its pages shall be initialed by the authority that issued it and shall be kept attached to the bidding proceedings. Integral or concise copies of the invitation to bid may be taken for its publicity and supply to the interested parties.
§ 2 – The following are attachments to the invitation to bid and shall be an integral part thereof:
I – the basic and/or executive engineering design, including all of its parts, drawings, specifications and other complements; II – estimated budget, in spreadsheets, containing the quantities and unit prices; III – a draft of the contract to be entered into by and between the Administration and the bid winner; IV – complementary specifications and performance rules relevant to the bidding;
§ 3 – For purposes of this Law, performance of the contractual obligation means service rendering, the performance of the works, the delivery of the goods or of portion thereof, as well as any contractual event whose occurrence is bound to the issue of collection instruments.
§ 4 – Prompt-delivery purchases, that is, the ones with delivery terms up to thirty days from the date scheduled for submitting the proposal shall be exempt from: I – the provisions of item XI of this article; II – financial adjustment referred to in sub-item c of item XIV of this article corresponding to the period between the performance date and the date estimated for payment, provided that such period does not exceed fifteen days.
Article 41 – The Administration is under the obligation of complying with the rules and conditions of the invitation to bid to which it is strictly bound.
§ 1 – Any citizen is a real party in interest to challenge the invitation to bid as regards irregularities in the application of this Law and shall register its petition within five (5) business days before the date settled for the opening of the qualification envelopes and the Administration shall decide on and respond to such challenge within three (3) business days, without prejudice of the provisions of paragraph 1 of article 113.
§ 2 – The bidder shall loose its right to challenge the terms of the invitation to bid if it fails do so up to the second business day preceding the opening of envelopes containing the qualification for competitive bidding, the opening of envelopes containing the proposals under invitation, solicitation of prices or competitive selection or the realization of the auction; in which case the defects or irregularities that impaired the invitation to bid shall not have the effect of appeal.
§ 3 – Timely challenge by the bidder shall not prevent it from participating in the bidding procedures until the decision related thereto is passed in rem judicatam.
§ 4 – Bidder’s disqualification shall preclude it from participating in the subsequent bidding stages. 56
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Article 42 – Regarding international bidding, the invitation to bid shall be adapted to the monetary policy and foreign trade rules and meet the requirements made by the proper agencies.
§ 1 – Whenever foreign bidders are allowed to quote the price in foreign currency, the same procedure shall be valid for Brazilian bidders.
§ 2 – Payment to the Brazilian bidder eventually contracted as a result of the bidding referred to in the previous paragraph shall be made in Brazilian currency at the exchange rate in force on the business day immediately preceding the date of the effective payment.
§ 3 – Payment guarantees to the Brazilian bidder shall be equivalent to the ones offered to the foreign bidder.
§ 4 – For the purposes of awarding the bidding, the proposals submitted by foreign bidders shall be added by the burdens resulting from the same taxes imposed exclusively on Brazilian bidders upon the final sales operation.
§ 5 – For the purposes of carrying out works, rendering services or acquiring goods with funds originated in financing or donation from a foreign official cooperation agency or multilateral financial institution to which Brazil is a member, the conditions resulting from agreements, contracts, conventions or international treaties approved by Congress may be accepted in the respective bidding, as well as the rules and procedures adopted by these entities, including the selection criterion of the most beneficial proposal for the Administration, which may take into account, not only the price, but also other appraisal factors, provided that required by such entities, for the purposes of obtaining financing or donation, and also provided that they are not contrary to the principle of the objective awarding, and are the object of order from the agency enforcing the contract, and such order shall be confirmed by the immediately higher authority.
§ 6 – Quotations from all bidders shall be for delivery to the same place of destination.
Article 43 – Bidding shall be processed and awarded according to the following procedures:
I – opening of the envelopes containing the documents regarding the bidders’ qualification and appraisal; II – return of closed envelopes to disqualified bidders, containing their respective proposals, provided that no appeal has been filed, or after rejection thereof; III – opening of the envelopes containing the proposals from qualified bidders, provided that no appeal is filed in the period for their submission or an express waiver has occurred or after decision on the appeals. IV – checking if each proposal meets the requirements of the invitation to bid and, as the case may be, the market current prices or those established by the relevant official agency or, further, the prices included in the price record systems, which shall be duly registered in the minutes of judgment, and any proposals that do not conform to such requirements or are unsuitable shall be disqualified; V – awarding and classification of the proposals according to the appraisal criteria included in the invitation to bid; VI – resolution by the proper authority as regards the homologation and adjudication of the object of the bidding.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 1 – The opening of the envelopes containing the documents for qualification and the proposals shall be always carried out in a public session previously appointed, minutes of which shall be drawn up and signed by the bidders in attendance and by the Committee.
§ 2 – All of the documents and proposals shall be initialed by the bidders in attendance and by the Committee.
§ 3 – The Committee or higher authority shall be entitled, in any stage of the bidding, to carry out a diligence with the purpose of clarifying or complementing the documents to be attached to the proceeding and the subsequent inclusion of any document or information to be originally attached to the proposal shall be forbidden.
§ 4 – Provisions of this article shall apply to the bidding, as the case may be, to the competitive selection, auction, bid quotation and invitation.
§ 5 – When the stage for bidder qualification is over (items I and II) and after the proposals are opened (item III), disqualification of bidders for any reason related to their qualification shall not be allowed, except for supervening facts or facts that became known only after the decision is taken.
§ 6 – After the qualification stage, the proposal may not be waived, except for justifiable reason resulting from a supervening fact and accepted by the Committee.
Article 44 – When analyzing the proposals, the Committee shall take into account the objectives defined in the invitation to bid or in the invitation, that shall not contest the rules and principles set forth by this Law.
§ 1 – Any confidential, secret, subjective or reserved element, criterion or factor that may, even indirectly, annul the principle of equity among bidders shall be prohibited.
§ 2 – No offer of any privilege not provided for in the invitation to bid or in the invitation, including subsidized funds or without expected return, nor prices or benefits based on offers by other bidders shall be considered.
§ 3 – A proposal shall not be accepted if it includes symbolic, trivial or zero-value global or unit prices, prices that are not compatible with input prices and market wages, added up by their respective taxes, even though the invitation to bid has not established minimum limits, except when such prices are related to material and facilities owned by the bidder itself and regarding to which the bidder waives remuneration, in whole or in part.
§ 4 – The previous paragraph is also applicable to proposals that include overseas labor or imports of any kind.
Article 45 – Awarding the proposals shall be objective and the Bidding Committee or entity responsible for the invitation shall render such decision in compliance with the type of concession and criteria previously established during the summoning act and pursuant to the factors exclusively referred to in such act, in order to ensure bidders and controlling entities the means to verify the decision.
§ 1 – For purposes of this article, the following are types of bidding, except in the case of a competitive selection:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – lowest price bidding – whenever the selection criteria for choosing the most advantageous proposal for the Administration determines that the winner shall be the one who submits a proposal according to specifications set forth in the invitation to bid and offers the lowest price; II – the best technique bidding; III – price and technique bidding; IV – highest bidding or offer – in the case of disposal of assets or concession of real right to use (direito real de uso).
§ 2 – In the event of a tie between two or more proposals, and upon compliance with the provisions set forth in paragraph 2, article 3 hereof, the classification shall be decided by public draw, to which all bidders shall be summoned and no other classification process shall be allowed.
§ 3 – In the case of a “Lowest Price” bid, the qualified bidders shall be classified according to the increasing order of the proposed prices and, in case of a tie, the criteria established in the paragraph above shall prevail exclusively.
§ 4 – For the purposes of contracting computer goods and services, the Administration shall comply with the provisions set forth in Article 3, Law No. 8,248, of October 23, 1991, shall take into account the factors specified in paragraph 2 hereof and shall obligatorily adopt the “technique and price” bidding modality, allowing for the use of other bidding modalities whenever indicated by a decree announced by the Executive Branch.
§ 5 – The use of any other type of bidding modality not provided for in this article shall be forbidden.
§ 6 – On the hypothesis established in article 23, paragraph 7, it will be selected as many purposes as required, in order to reach the bidding demanded quantity.
Article 46 – The “best technique” or “technique and price” bidding modalities shall be adopted only in services of a predominantly intellectual character, especially as regards the preparation of projects, calculations, inspection, supervision and management and general engineering consulting, and particularly in the preparation of preliminary technical studies and final and detailed designs, with the exception of the terms set forth in paragraph 4 of the afore-mentioned article.
§ 1 – In bids of the “best technique” modality, the following procedures shall be adopted, clearly stated in the invitation to bid which shall establish the highest price the Administration agrees to pay:
I – Opening of the envelopes containing the technical proposals developed exclusively by previously qualified bidders. The evaluation and classification of such proposals shall then take place, and shall be accomplished according to the relevant and appropriate criteria of the purpose of the bid, such criteria having been clearly and objectively defined in the invitation to bid and that consider the bidder’s capacity and experience, the technical quality of the proposal, including the methodology, organization, technology and material resources to be used in the works, and the technical qualifications of the expert staffs to be hired for the execution of such works. II – After the technical proposals are classified, the price proposals submitted by the bidders shall be examined, provided that such price proposals reach the minimum amount established in the invitation to bid. Subsequently, the proposed conditions shall be negotiated, and the best classification decision shall be based on detailed price estimates and the respective unit prices submitted in the proposal, the reference being the limit represented by the lowest price proposal among the bidders that have been able to obtain the minimum amount; 59
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III – In the event of a stalemate in the previous negotiation, identical procedures shall be adopted in succession with other bidders, by order of classification, until a contracting agreement is reached. IV – Price proposals shall be returned intact to the bidders who have not been previously qualified or who have not been able to obtain the minimum amounts established for the technical proposal.
§ 2 – In biddings of the “technique and price” modality, the following procedures, clearly explained in the invitation to bid, shall be adopted, in addition to item I of the paragraph above:
I – An evaluation and valuation of the price proposals shall be made, according to the pre-established objective criteria contained in the invitation to bid; II – The proponents shall be classified according to the weighted average between the valuation of the technical proposals and the price, according to the standards pre-established in the invitation to bid.
§ 3 – In exceptional circumstances, the bidding modalities set forth in this article may be adopted by means of explicit authorization from and the relevant justification by the highest Administrative authority, who is the constant promoter of the summoning act, for purposes of supplying goods, building works or rendering services of considerable size, which are largely dependent on highly sophisticated technology and limited domain. Such purposes shall be attested by certifiably qualified technical authorities, in cases where the scope of the invitation to bid allows alternate solutions and execution variations, with significant impact on its quality, productivity, performance and durability, all of which can be effectively measurable and which can be freely adopted at the bidders’ discretion, pursuant to the objective criteria established in the invitation to bid.
§ 4 – [repealed].
Article 47 – In bids for the supplying of goods and rendering of services, whenever contract work for a global price modality is adopted, the Administration shall be required to provide, along with the invitation to bid, all the necessary information and elements to allow bidders to prepare their proposals and price estimates with full and complete knowledge of the object of the invitation to bid;
Article 48 – The following proposals shall be disqualified:
I – proposals that do not comply with the requirements set forth in the invitation to bid; II – proposals whose global amounts are higher than the established limit or with evidently unfeasible prices, such prices being those whose feasibility cannot be evidenced by means of documents proving that input prices are coherent with market prices and that productivity ratios are compatible with the execution of the object of the agreement, such conditions being necessarily included in the invitation to bid.
§ 1 – To the effects of the provisions established in item II of this article, the proposals whose amounts are lower than 70% of the lowest following values, will be considered infeasible: a) Arithmetic average of the amounts of the proposals higher than 50% of the amounts budgeted by the Administration; b) The amount budgeted by the Administration.
§2 – To the bidders that were classified pursuant to the above mentioned paragraph, whose purposes' amount are lower than 80% of the lowest price referred to in items a and b, it will be required for the purposes of 60
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execution of the agreement, a additional warranty among the modalities predicted in paragraph 1 of article 56 ,which will be equal to the amount resulting from on the prior paragraph, and the amount of the corresponding proposal.
§ 3 – In case no bidders are qualified or if all proposals are disqualified, the Administration may establish that bidders shall have an additional 8 (eight) business days to submit new documents or other proposals without the causes referred to in this article. In the event of an invitation, such term may be reduced to 3 (three) business days.
Article 49 – The proper authority with the power to approve the procedures may only revoke the bidding competition for reasons of public interest resulting from duly evidenced supervening event, such event being pertinent and sufficient to justify such action. The bidding competition should be annulled for reasons of illegality, ex officio or upon the initiative by third parties, by means of a written and duly documented opinion.
§ 1 – Annulment of the bidding procedures for reasons of illegality does not oblige to indemnification, with the exception of the terms set forth in the sole paragraph of Article 59 hereof.
§ 2 – The invalidity of the bidding procedures leads to the invalidity of the agreement, with the exception of the terms set forth in the sole paragraph of Article 59 of this Law.
§ 3 – In the event of cancellation of the bidding procedures, contesting and the right to full legal defense are ensured.
§ 4 – The terms set forth in this article and its paragraphs apply to acts for exemption of bidding or where bidding is not required.
Article 50 – The Administration shall not enter into any agreement if it has disregarded the classification order of the proposals, nor shall it enter into any contracts with third parties alien to the bidding procedures, under penalty of nullity.
Article 51 – Preliminary qualification, registration in reference files, alteration or cancellation of the registration and the proposals themselves shall be processed and examined by a permanent or special Committee made up of a minimum of three (3) members, two (2) of whom at least shall be qualified civil servants working as permanent staff in the Administration’s entities that are responsible for bidding competitions.
§ 1 – In the event of an invitation to bid, the Bidding Committee may exceptionally be substituted by a formally appointed civil servant, duly designated by the relevant authority, in cases where the administrative units are small or there is a lack of available personnel.
§ 2 – The Committee which shall examine the requests for registration in reference files, or alterations or cancellations of such requests, shall be made up of legally qualified professionals in the case of works, services or equipment purchases.
§ 3 – Members of the Bidding Committee shall be jointly responsible for all acts carried out by the Committee, except in cases where an individual dissenting opinion is duly documented and registered in the minutes of the meeting at which the pertinent decision has been taken. 61
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§ 4 – The term of each member of the permanent Committees shall not exceed one (1) year, and the installation of all members in the same Committee for the subsequent period is hereby forbidden.
§ 5 – In the event of a competition, the decision shall be taken by a special Committee made up of members whose reputation is faultless and whose familiarity with the subject is widely acknowledged, be they civil servants or not.
Article 52 – The bidding competition referred to in paragraph 4, article 22 hereof shall be preceded by its own regulations to be obtained by the interested parties at the place specified in the invitation to bid.
§ 1 – The regulations shall indicate:
I – The participants’ required qualifications; II – Rules and form to submit the proposal; III – Conditions to hold the bidding competition and the awards to be granted;
§ 2 – In the event of a design, the bid winner shall authorize the Administration to perform it whenever the Administration so deems convenient.
Article 53 – The auction may be conducted by an official auctioneer or by a civil servant, duly appointed by the Administration, and shall be held in compliance with the relevant legislation in force.
§ 1 – Any asset up for auction shall be previously evaluated by the Administration for the purpose of establishing the minimum auction price.
§ 2 – The price of the auctioned goods shall be paid for in cash or in the amount corresponding to the percentage figure established in the invitation to bid, such amount to be no less than five percent (5%) and, after signing of the pertinent records at the place of the auction, such assets shall be immediately delivered to the bidder, who shall be obliged to pay the remaining amount within the period of time established in the invitation to bid, under penalty of handing to the Administration the amount already paid.
§ 3 – At international auctions, payment of the cash amount may be made within twenty-four (24) hours.
§ 4 – The invitation to bid shall be widely publicized, especially throughout the Municipality where the bidding session shall take place. CHAPTER III – THE CONTRACTS SECTION I – PRELIMINARY PROVISIONS
Article 54 – The administrative agreements referred to in this Law are regulated by their own clauses and by precepts of public law, in addition to which general theory principles governing agreements and private law provisions are also applicable.
§ 1 – The agreement shall establish clear and precise performance conditions, expressed in clauses that set forth the rights, obligations and responsibilities of the parties, pursuant to the invitations to bid and to the proposals to which they are bound. 62
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§ 2 – Contracts resulting from cancellation or unfeasibility of the invitation to bid must comply with the terms of the act which authorized them and with the competent proposal.
Article 55 – The following provisions shall be included in all the agreements:
I – The scope and nature of the agreement; II – The performance regime or the means of supply; III – Price and payment conditions, the criteria, the base date and the price adjustment periods, criteria for monetary adjustment between the date of the performance of the agreement and the effective payment; IV – The terms to commence the performance, conclusion, and delivery stages, for compliance with and definitive delivery, as the case may be; V – The budgetary credit against which expenses shall run, and indication of the program’s functional classification and economic category; VI – Guarantees offered to ensure full performance, whenever such guarantees are required; VII – Rights and responsibilities of the parties, the applicable penalties and fine amounts; VIII – Events of termination; IX – Acknowledgment of the rights of the Administration in the event of administrative termination, pursuant to Article 77 of this Law; X – Conditions to carry out imports, the date and exchange rate in force for conversion purposes, as the case may be; XI – The binding effect to the invitation to bid or to the document that exempted an object from the invitation to bid or did not require it, and to the proposal by the bid winner; XII – Legislation applicable to enforce the agreement and especially to silent cases; XIII – Obligation of the contractor to maintain, during the term of the agreement, and in compliance with the obligations undertaken therein, all the qualification and classification conditions required by the invitation to bid.
§ 1 – [repealed].
§ 2 – Agreements entered into by and between the Administration and individuals or legal entities, including those domiciled abroad, shall necessarily contain a clause establishing the court of the Administration’s main place of business as the proper jurisdiction to settle any doubts or controversies that may arise out of any contract, with the exception of the provisions set forth in paragraph 6, article 32 hereof.
§ 3 – Upon the settlement of the expenses, the accounting services shall notify the tax collecting agencies responsible for collecting Federal, State and Municipal taxes, of the nature and amounts paid, pursuant to article 63, Law No. 4,320 of March 17, 1964.
Article 56 – At the discretion of the proper authority in each case, and provided that such provision was set forth in the invitation to bid, rendering of guarantee may be required in contracting works, services and purchases.
§ 1 – The contractor shall elect one of the following modalities of guarantee:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – Security in cash or government bonds, which must be issued as book entries registered in centralized settlement and custody system authorized to operate by the Brazilian Central Bank and appraised according to their economic value, as defined by the Ministry of Finance; II – Performance Bond; III – Bank-issued guarantee.
§ 2 – The guarantees referred to in the heading shall not be higher than five percent (5%) of the amount involved in the agreement, and shall be adjusted according to the same conditions set forth therein, with the exception established in paragraph 3 herein.
§ 3 – For major goods, services and works, involving highly complex technology and considerable financial risk, as evidenced by means of expert opinion approved by the proper authority, the limit of the guarantee established in the previous paragraph may be increased to up to ten percent (10%) of the amount involved in the agreement.
§ 4 – The guarantee given by the contractor shall be released or returned after the performance of the agreement, and if a cash guarantee, returned with inflation adjustment.
§ 5 – In the cases involving agreement that include the delivery of assets by the Administration, of which the contractor shall be the depositary, the amount of the guarantee shall be added by the value of such goods.
Article 57 – The validity term of the agreements governed by this Law shall be limited by the term of the respective budget credits in force, with the exception of:
I – Projects whose products are included in the goals established by the Multiannual Plan, which can be extended if the Administration so desires, and provided that such extension has been provided for in the invitation to bid; II – Rendering of services to be performed in a continuous manner and whose term shall be extended for equal and successive periods with the objective of allowing the Administration to obtain more favorable prices and conditions. Such term shall be limited to a sixty (60) month period. III – [repealed]. IV – Leasing of equipment and use of computer software. The term may be extended to up to forty eight (48) months after the initial validity of the agreement.
§ 1 – The terms to start performance, completion and delivery stages may be extended, provided that the other clauses of the agreement are maintained and that the financial-economic balance is kept, and if any of the following reasons occur, duly recorded in the files: I – Modifications, by the Administration, of the design or specifications; II – Supervenience of unpredictable or exceptional event, beyond the control of the parties, which may fundamentally change the conditions for the performance of the agreement; III – Interruption of the performance of the agreement or a slow-down of the work pace, by order from and in the interest of the Administration; IV – An increase in the original quantities first established in the agreement, within the limits set forth by this Law; V – Impediment to the performance of the agreement resulting from event or act caused by a third party and acknowledged as such by the Administration by means of a document presented at the time of the occurrence;
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
VI – Negligence or delay in the measures to be taken by the Administration, including those related to established payments, which may directly result in impediment or delay of the performance of the agreement, without prejudice to the applicable legal sanctions imposed on the parties responsible for such acts.
§ 2 – Any term extension shall be justified by means of a written document, previously authorized by the proper authority executing the agreement.
§ 3 – Any agreement for an indeterminate duration term shall be forbidden.
§ 4 – Exceptionally, the term mentioned in item II of the heading of this article shall be extended up to 12 (twelve) months, duly justified and authorized by the superior authority.
Article 58 – The legal regime of the administrative agreements established by this Law grants the Administration the following privileges regarding them:
I – The right to modify them unilaterally so as to make them more appropriate for public interest objectives, with due regard to the rights of the contractor; II – The right to terminate the agreement unilaterally, in the cases specified in item 1 of Article 79 of this Law; III – Supervision of performance thereof; IV – Impose sanctions in the event of total or partial nonperformance of the agreement; V – As regards essential services, temporarily take over goods and chattels, real properties, personnel and services bound to the purpose of the agreement, in the event of need to guarantee administrative verification of noncompliance by the contractor with the terms of the agreement, as well as in the event of termination of the administrative agreement.
§ 1 – Clauses concerning economic, financial and monetary issues contained in administrative agreement shall not be changed without prior consent from the contractor.
§ 2 – In the event contemplated in item 1 of this article, the economic and financial clauses contained in the agreement shall be revised in order to maintain the balance of the agreement.
Article 59 – Declaration of annulment of the administrative agreement is retroactive, thereby preventing any judicial effects it might ordinarily case, in addition to canceling the ones already produced.
Sole Paragraph – Nullity does not exempt the Administration from the obligation to indemnify the contractor for the work executed up to the date of the annulment of the agreement, nor from indemnification for any other properly evidenced losses, provided that the contractor is not held liable for such losses, and providing for liability of whosoever generated such losses.
SECTION II – FORMAL ASPECTS OF THE CONTRACTS
Article 60 – The agreements and amendments thereto shall be drawn up at the competent government offices, that shall maintain chronological records of their autographs and systematic records of their transcriptions, with the exception of those related to mortgages (direitos reais sobre imóveis), which are formalized by means of a document drawn up at the notary public, and including a copy of the process which originated such document.
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Sole Paragraph – Verbal agreements with the Administration are null and void, with the exception of those related to cash purchases, such purchases being in the amount no higher than five percent (5%) of the limit established in Article 23, Paragraph II, sub-item a of this Law, and paid for in advance.
Article 61 – Every agreement shall mention the names of the parties and their representatives, as well as the purposes, the act which authorized the agreement to be drawn up, the number of the invitation to bid, release from bidding or non-requirement, compliance by the contracting parties with the rules contained in this Law and with contractual clauses.
Sole Paragraph – Publication in the Official Press of an abridged version of the contractual document or of the related amendments is an essential requirement for the agreement’s validity. Such version shall be provided for by the Administration up to the fifth business day following the execution thereof, to be published within twenty (20) days as of the afore-mentioned date, irrespective of the amount of the agreement, even if of non-onerous nature, with the exception of the provisions set forth in article 26 hereof.
Article 62 – The contractual instrument is mandatory in the case of competitive bidding and bid quotation, as well as in the event of exemptions and non-requirement of bidding in which prices are included within the limits of these two bidding modalities. The contractual instrument is optional in cases in which the Administration can replace it by other legally qualified documents, such as a letter of contract, bill of expenses incurred, authorized purchase order or an administrative order.
§ 1 – The draft of the future agreements shall always be included in the invitation to bid or the summoning act to the bidding session.
§ 2 – Article 55 of this Law is applicable, as the case may be, to a letter of contract, a bill of expenses incurred, an authorized purchase order, or an administrative order.
§ 3 – Articles 55 and 58 to 61 of this Law, as well as other general rules, are applicable to the following, as the case may be:
I – To insurance agreements, financing agreements, lease agreements in which the Administration is the Lessee, and all other agreements governed predominantly by private law rules; II – To agreements in which the Administration is the user of public utility services;
§ 4 – The contractual document is not necessary and the substitution, as provided for in this article, is optional in the event of purchase and full and immediate delivery of the purchased goods which do not result in future obligations, including rendering of technical assistance services.
Article 63 – Any bidder is allowed access to the terms of the agreement and the respective bidding procedures and any interested party is allowed to obtain a certified copy, upon the payment of the respective fees.
Article 64 – The Administration shall summon the interested party to sign the contractual document, accept or take the equivalent instrument, under the established terms and conditions, under the penalty of losing the right to the contracting, without prejudice to the penalties set forth in article 81 hereof.
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§ 1 – The term for the summons may be extended once, for the same length of time, whenever such extension is requested by the party while such term is lapsing, and provided that there is a justifiable reason, accepted by the Administration, for such request.
§ 2 – If the summoned party does not sign the contractual instrument, nor accepts or takes the corresponding document pursuant to the terms and conditions set forth therein, the Administration shall be empowered to summon the other bidders, according to their ranking order, to sign the terms of the agreement, accept or withdraw the corresponding document within the same period and under the same conditions proposed by the bid winner, including those conditions related to updated prices, pursuant to the invitation to bid. Or the Administration may revoke the bidding, irrespective of the penalties set forth in article 81 hereof.
§ 3 – If no bid winners are summoned to sign the terms of the agreement sixty (60) days after the proposals have been submitted, the bidders shall be exempted from any undertaken commitments.
SECTION III – AMENDMENTS TO THE CONTRACTS
Article 65 – The agreements governed by this Law may be amended, with due justifications, in the following cases:
I – unilaterally, by the Administration: a) whenever the project or its specifications are modified, for a better technical adequacy to its objectives; b) when the amounts specified in the agreement have to be adjusted by reason of the quantitative increase or decrease of the scope of the agreement, within the limits established by this Law; II – upon agreement between the parties: a) whenever replacement of the performance bond is convenient; b) whenever it is necessary to modify the works performance or the service rendering regime, as a result of the technical verification that original agreement’s terms are no longer applicable; c) whenever the form of payment has to be modified, as a result of supervening circumstances, provided that the initial amount is adjusted and maintained, given that payments established in the payment schedule cannot be advanced if the corresponding supply of goods or works performance or service rendering does not occur; d) to re-establish the relationship initially agreed upon by the parties, as regards the obligations of the contractor and reward by the Administration through the fair remuneration for the works, services or supply, with the objective of maintaining the agreement’s initial financial and economic balance, in the event that unforeseen events or foreseen events whose consequences cannot be estimated, or such consequences delay or prevent the full performance of the terms of the agreement, or furthermore, in any event of force majeure, or acts of God, that may result in financial losses or liability for economic damages not contemplated in the agreement.
§ 1 – The contractor is obliged to accept, under the same contractual conditions, that works, services or supplies be increased or decreased, up to a maximum of twenty-five percent (25%) of the adjusted initial adjusted amount in the contract. In the specific case of building or equipment refurbishing, the related amount shall correspond to a maximum of fifty percent (50%) for any additional works, services or supplies.
§ 2 – No increase or decrease shall exceed the limits established in the preceding paragraph, except for:
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II – the suppression resulted from an agreement entered into by the parties
§ 3 – If the agreement does not establish unit prices for works or services, then such prices shall be established according to an agreement between the parties thereof, with due compliance to the limits set forth in paragraph 1 of this article;
§ 4 – In the event of decrease of works, goods or services, and if the contractor has already acquired the pertinent material and placed it at the work site, the contractor shall be reimbursed by the Administration, provided that purchase costs are duly evidenced and monetarily adjusted. The contractor shall also be indemnified by the Administration for other damages eventually caused by the decrease, provided that such damages are duly evidenced.
§ 5 – Any taxes or other legal charges that may be created, modified or extinguished, as well as legal dispositions enacted, when they occur after the date the proposal was submitted, and that have a proven impact on the contracted prices, shall result in the review of these prices, which may increase or decrease, as the case may be.
§ 6 – In the event of a unilateral amendment to the agreement, and if such amendment increases the charges of the contractor, the Administration shall re-establish, by means of an amendment to the agreement, the initial economic and financial balance;
§ 7 – [repealed];
§ 8 – The variation of the initial amount established in the agreement, to compensate for price adjustments contemplated in the agreement itself, or for other adjustments, offsetting or financial penalties resulting from the payment conditions established therein, as well as the obtaining of supplementary funding up to the limit of the adjusted amount, shall not be considered as modifications of the initial amount, and may be registered by means of a simple attachment, without the need for execution of an amendment.
SECTION IV – PERFORMANCE OF THE AGREEMENTS
Article 66 – The agreement shall be duly performed by the parties, pursuant to agreed-upon clauses and to the rules set forth in this Law, and each party shall be held liable for consequences resulting from total or partial default.
Article 66-A – The companies meeting the criteria in Article 3 herein, item V, §2 and item II, §5 must comply with, for the duration of the performance of the agreement, the quota of job positions provided in law for people with disabilities or who have been rehabilitated by Social Security, as well as with all the statutory accessibility rules.
Sole Paragraph - The Administration shall ensure the compliance with all the accessibility criteria in the services and work premises.
Article 67 – The performance of the agreement shall be supervised by a duly appointed representative of the Administration, and the hiring of third parties to assist the representative and provide him with the pertinent information related to his activities is hereby authorized.
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§ 1 – The representative of the Administration shall keep his own records on all events related to the performance of this agreement and shall determine the necessary measures to eliminate any eventual flaws or defects.
§ 2 – Decisions and solutions that are beyond the representative’s authority shall be timely submitted to the representative’s superiors, who shall then take the appropriate measures.
Article 68 – The contractor shall maintain an employee, approved by the Administration, at the work or service site, to represent him during the performance of the agreement.
Article 69 – The contractor shall repair, fix, remove, rebuild or replace, at his own expense, all or part of the object of the agreement, in case it has been verified that flaws, defects or inaccuracies have resulted from the performance or use of materials employed.
Article 70 – The contractor shall be liable for any direct damages caused to the Administration or to third parties, resulting from fault or malicious intent in regard to the performance of the agreement, and such liability is not exclusive of nor limited to supervision or follow-up conducted by the interested entity.
Article 71 – The contractor shall be responsible for the payment of labor, social, tax and commercial charges resulting from the performance of the agreement.
§ 1 – Lack of payment, by the contractor, of the labor, tax and commercial charges established herein, does not transfer to the Administration the responsibility for such payment, nor shall it burden the object of the contract or restrict the regularization or use of the works and buildings, including registration with the real estate registry.
§ 2 – The Administration is joint responsible with the contracted party for the social welfare charges resulting from the performance of the agreement, provided article 31 of Law No. 8,212 of July 24, 1991.
§ 3 - [repealed].
Article 72 – The contractor, during the performance of the agreement, and without prejudice to the contractual and legal terms thereof, may subcontract part of the works, services or supply, up to the limit allowed by the Administration in each case.
Article 73 – Once the contract has been performed, the object shall be received:
I – as regards works and services: a) temporarily, by the person responsible for its follow-up and supervision, by means of an evidentiary document, signed by the parties, after the lapse of term for observation or inspection evidencing that the object of the contract has complied with the terms thereof, pursuant to article 69 of this Law. b) definitely, by the civil servant or Committee assigned for this purpose by the proper authority, by means of an evidentiary document, signed by the parties, after the lapse of term for observation or inspection evidencing that the scope of the agreement has complied with the terms thereof, pursuant to article 69 of this Law.
II – as regards purchase or leasing of equipment:
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a) temporarily, for subsequent verification whether material conforms to the specified items; b) definitely, after verification of the material’s quality and quantity and resulting acceptance.
§ 1 – In case of acquisition or leasing of major equipment, the object shall be received by means of an evidentiary document and in other cases, by means of a receipt.
§ 2 – Temporary or definite receipt does not preclude civil liability for the solidity or safety of the work or service, nor ethical and professional commitment to the perfect performance of the agreement, within the limits set forth by law or by the contract.
§ 3 – The term referred to in sub-item b of item I above cannot be longer than ninety (90) days, except in specific cases, duly justified and provided for in the invitation to bid.
§ 4 – In the event that the evidentiary document or the verification referred to in this article are not respectively recorded or conducted within the established period, it shall be considered that such actions have been carried out, provided that the Administration has been notified of the occurrences fifteen (15) days before the pertinent term to do so has elapsed.
Article 74 – The following cases shall be exempt from temporary receipt:
I – Perishable goods and processed food; II – Professional services; III – Works and services up to the amounts determined in article 23, item II, sub-item a of this Law, provided that such works and services are not composed of appliances, equipment and installations subject to work and performance verification.
Sole Paragraph – In the cases set forth in this article, a receipt shall be provided.
Article 75 – Except as otherwise provided for in the invitation to bid, invitation or in the ruling act, the trials, tests and other evidences required by official technical norms for the good performance of the scope of the agreement shall be borne by the contractor.
Article 76 – The Administration shall reject, in whole or in part, any work, service or supply which does not comply with the terms of the agreement.
SECTION V – NONPERFORMANCE AND TERMINATION OF THE AGREEMENT
Article 77 – Total or partial nonperformance of the agreement shall result in its termination, in the consequences set forth in the agreement and consequences provided for by law or regulations.
Article 78 – The agreement shall be terminated for the following reasons:
I – Nonperformance of contractual clauses, specifications, designs or terms; II – Irregular performance of contractual clauses, specifications, designs and terms; III – Slow performance of the terms of the agreement, leading the Administration to evidence the impossibility of completing the work, service or supply within the established time period. 70
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IV – Unjustified delay to begin the work, service or supply; V – Interruption of the work, service or supply without a just cause and without prior notification to the Administration; VI – Total or partial subcontracting of the scope of the agreement, an association of the contractor with another party, total or partial assignment or transfer, as well as merger, split-up or incorporation not provided for in the invitation to bid or in the agreement. VII – Non-compliance with standard regulations established by the authority assigned to follow up on and supervise the performance of the agreement and those established by the authority’s superior. VIII – Repeated commitment to flaws in the performance, recorded as established in paragraph 1, article 67 of this Law; IX – Bankruptcy ruling or initial procedures for civil insolvency; X – Company liquidation or demise of the contractor; XI – Amendment to the articles of association or modification of corporate objectives or company structure that may impair the performance of the agreement; XII – Highly relevant and widely acknowledged reasons of public interest, justified and established by the highest administrative authority to whom the contracting authority is subordinated, and awarded in the administrative proceeding to which the agreement refers; XIII – Decrease, by the Administration, of works, services or purchases, resulting in modification of the initial amount of the agreement beyond the limit set forth in paragraph 1, article 65 of this Law; XIV – Suspension of the performance of the agreement, by means of a written order from the Administration, for a period of more than one hundred and twenty (120) days, except in the event of disaster, social unrest, or war, or even in the event of repeated suspensions for the same amount of time, irrespective of obligatory indemnification for consecutive demobilization and mobilization not contemplated in the agreement and for other such unforeseen circumstances, whereby in such cases the contractor shall have the right to elect suspension of the performance of the terms and obligations of the contractual obligations until the situation is back to normal. XV – Delay for more than ninety (90) days in the payments due by the Administration, for works, services or supply performed by the contractor, or for partial performance of such works, services or supply, except in the event of disasters, social unrest, or war, whereby the contractor shall be ensured the right to elect suspension of the performance of the terms of the agreement until the situation is back to normal. XVI – Refusal, by the Administration, of the authorization for the contractor to use the area, place or object of the agreement to perform the work, service or supply within the term specified in the agreement, as well as the Administration’s refusal to allow the use of the raw material sources specified in the design. XVII – Legally evidenced occurrence of acts of God or force majeure, which hinder performance of the agreement;
Sole Paragraph – Reasons for termination of the agreement shall be formally set forth in the records of the proceedings, and contesting and legal defense shall be ensured. XVIII – noncompliance with the provisions in item V, Article 27, without prejudice to the applicable penalties.
Article 79 – The termination of the agreement may be:
I – Determined by a written, unilateral act from the Administration, in the cases listed in Items I to XII and Item XVII of the preceding article; II – Amicable, upon agreement between the parties to be expressed in writing in the bidding proceedings, provided that this is convenient to the Administration; 71
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III – Judicial, pursuant to the legislation; IV – [repealed];
§ 1 – Administrative or amicable termination shall be preceded by a written, evidenced authorization from the proper authority;
§ 2 – If termination is based on items XII and XVII of the article above, through no fault of the contractor, the contractor shall be compensated for legally evidenced losses incurred in, and shall have the right to:
I – Refund of the guarantee; II – Payment of amounts due for the performance of the agreement up to the termination date; III – Payment of demobilization costs;
§ 3 –[repealed];
§ 4 – [repealed];
§ 5 – In the event of impediment, suspension or interruption of the agreement, the performance schedule shall be automatically extended for the same period of time.
Article 80 – Termination of the agreement, as provided for in Item I of the previous article, shall have the following consequences, without prejudice to the penalties set forth in this Law:
I – Immediate assumption of the scope of the agreement, on the site and in the status it is found in, by means of an act of the Administration; II – Occupation and use of the site, facilities, equipment, material and personnel hired to perform the agreement and needed to provide continuity, pursuant to Item V, article 58, of this Law; III – Execution of the performance bond as provided for in the agreement, to compensate the Administration, and payment of the fines and indemnification to which it is entitled; IV – Withholding of credits resulting from the agreement, up to the limit of the damages caused to the Administration;
§ 1 – The measures set forth in Items I and II of this article shall be enforced at the sole discretion of the Administration, that may continue the work or service by direct or indirect performance;
§ 2 – In the event of the contractor’s composition with creditors, the Administration shall be allowed to maintain the agreement, and shall take on the control of specific activities related to essential services;
§ 3 – In case the event described in Item II hereof occurs, the act shall be preceded by express authorization from the relevant Ministry, the State Secretariat, or the Municipal Secretariat, as the case may be;
§ 4 – Termination, as provided for in Item IV of the article above, allows the Administration to, at its sole discretion, enforce the measure contained in Item I hereof;
CHAPTER IV – ADMINISTRATIVE PENALTIES AND JUDICIAL PROTECTION SECTION I – GENERAL PROVISIONS 72
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Article 81 – Unjustified refusal by the grantee to sign the agreement, accept or take the corresponding instrument within the period established by the Administration shall be regarded as non-compliance with the commitment, and the grantee shall be subject to the applicable legal penalties.
Sole Paragraph – Provisions set forth in this article are not applicable to bidders summoned pursuant to Article 64, paragraph 2 of this Law, in case such bidders do not agree to be contracted under the same conditions proposed by the first bid winner, such conditions including price and term;
Article 82 – Administrative agents who do not comply with the provisions set forth in this Law or whose purpose is to frustrate the objectives of the bid, are subject to the penalties provided for in this Law and in specific regulations, without prejudice to criminal and civil liabilities that their acts may cause.
Article 83 – The crimes defined by this Law, even when merely attempted, shall subject the plaintiffs, if they are civil servants, to the legal penalties and to losing their position, job, function or elective office.
Article 84 – For the purposes of this Law, civil servant is the person who holds a public position, function or job, even if such position, function or job is temporary or not remunerated.
§ 1 – For the purposes of this Law, the person who holds a position, job or function at a quasi-public corporation has the same status as the civil servant. Quasi-public corporations include government foundations, state-owned companies and other entities that are directly or indirectly controlled by the government.
§ 2 – The penalty imposed shall be increased by one-third, if the one who commits the criminal act contemplated in this Law holds a transitory government positions or appointed positions in governmental entities, government agencies, state-owned companies, government foundations, or any other entities directly or indirectly controlled by the State.
Article 85 – Criminal violations contemplated in this Law refer to bids and agreements entered into by the Federal, State and Municipal Governments, by the Federal District and the pertinent government agencies, state- owned companies, government foundations and any other entities directly or indirectly controlled by the Government. SECTION II – ADMINISTRATIVE PENALTIES
Article 86 – Unjustified delay in the performance of the agreement shall subject the contractor to payment of delinquent fine, as provided for in the summoning instrument or in the contract.
§ 1 – The fine referred to in this article shall not prevent the Administration from unilaterally terminating the agreement or from enforcing the other penalties established by this Law.
§ 2 – The fine, enforced after regular administrative proceeding, shall be subtracted from the guarantee provided by the respective contractor;
§ 3 – In case the pertinent fine is higher than the amount of the guarantee provided, the contractor shall give up the guarantee and shall be held liable for the any eventual difference, and such difference shall be subtracted
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from any eventual payments owed by the Administration, or further, such fine may be judicially charged, if applicable.
Article 87 – In the event of total or partial nonperformance of the agreement, the Administration may, provided that prior defense is guaranteed, impose the following penalties on the contractor:
I – Warning; II – Fine, as provided for in the summoning instrument or in the agreement; III – Temporary suspension from participation in bidding and impediment from entering into contracts with the Administration for a period of no more than two (2) years; IV – Public declaration as unfit to bid or to enter into agreements with the Administration while the reasons that determined the penalties persist or until the time when rehabilitation is provided for by the pertinent authority that enforced the penalty, and such rehabilitation shall be granted whenever the contractor compensates the Administration for the resulting losses and after lapse of term of the sanction established in the above item.
§ 1 – In case the pertinent fine is higher than the amount of the guarantee provided, the contractor shall give up the guarantee and shall be held liable for the difference in the amount, such difference to be subtracted from eventual payments owed by the Administration, or judicially charged.
§ 2 – The sanctions provided for in Items I, III and IV of this article may be imposed together with the penalties provided for in Item II, and the interested party shall be granted the right to defense in the respective proceedings, such defense to take place within five (5) business days.
§ 3 – The sanction provided for in Item IV of this article is under the exclusive authority of the Minister, State Secretary or Municipal Secretary, as the case may be, and the interested party shall have the right to defend himself in the respective proceeding, within ten (10) days of the opening for examination, and rehabilitation may be requested two (2)years after the penalty is imposed.
Article 88 – The sanctions provided for in Items III and IV of the article above may also be imposed on companies or professionals which, because of agreements governed by this Law, have:
I – been sentence for having committed tax fraud by felonious means in the payment of any taxes; II – engaged in illicit acts with the purpose of frustrating the objectives of the bidding; III – prove to be unfit to enter into contract with the Administration by reason of illicit acts performed by them.
SECTION III – CRIMES AND PENALTIES
Article 89 – To exempt from bidding process or failure to require bidding process, except in cases provided for by law, or refusal to comply with the pertinent formalities in regards to such release or non-requirement: Penalty: Three (3) to five (5) years detention and fine.
Sole Paragraph – The same penalty is applicable to whoever has provably contributed to the illegal act, benefited from illegal exemption from bidding process or failed to require bidding process, with the purpose of entering into an agreement with the Public Administration.
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Article 90 – The act of frustrating or defrauding, by means of an arrangement, combination or by any other means, the competitive nature of bidding procedures, with the objective of benefiting oneself or any other party with the results of award of the purpose of the bidding: Penalty: Two (2) to four (4) years detention and a fine.
Article 91 – The act of directly or indirectly favoring private interests in the presence of the Administration, such act resulting in establishing a bidding or an agreement entered into with the Administration, which is subsequently declared null and void by the Judiciary Branch Penalty: Six (6) months to two (2) years detention and a fine.
Article 92 – The act of admitting, allowing or giving cause to any changes, or advantages, including the extension of the term of the agreement, in favor of the grantee, during the performance of the agreements entered into with the Public Administration, without authorization by law, in the invitation to bid or in the respective contractual instruments, or furthermore, the act of paying an invoice without following the chronological order in regard to its liability, pursuant to the provisions contained in article 121 of this Law: Penalty: Two (2) to four (4) years detention and a fine.
Sole Paragraph – The same penalty shall be imposed on the contractor who, having evidently taken part in illegal acts, obtains undue advantages or improper benefits, from changes in or extensions of the terms of the agreement.
Article 93 – Any act that prevents, disturbs or defrauds any bidding procedures: Penalty: Six (6) months to two (2) years detention and a fine.
Article 94 – Any act that discloses confidential proposal submitted at bidding procedures or that allows a third party the possibility to do so: Penalty: Two (2) to three (3) years detention and a fine.
Article 95 – The act of keeping a bidder away, or any attempt to do so, by violent means, serious threat, fraud or bribing of any kind: Penalty: Two (2) to four (4) years detention and a fine, as well as the penalty imposed on acts of violence.
Sole Paragraph – The same penalty is applicable to whosoever refrains from or decides not to participate in the bidding procedures by reason of bribes.
Article 96 – The act of defrauding, with losses to the Public Treasury, a bid established for the purchase or sale of goods or merchandise, or the ensuing contract, by:
I – Raising prices arbitrarily; II – Selling counterfeit or spoiled goods as genuine or perfect goods; III – Delivering one kind of merchandise in lieu of another; IV – Changing the substance, quality, or quantity of the merchandise supplied; V – Overpricing the proposal or the performance of the agreement in any way and unfairly: Penalty – Three (3) to six (6 ) years detention and a fine.
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Article 97 – The act of allowing an unfit company or individual to participate in the bidding or to enter into an agreement with the Administration: Penalty: Six (6) months to two (2) years detention and a fine.
Sole Paragraph – The same penalty is applicable to whosoever, having been declared unfit, takes part in bidding or enters into agreements with the Administration.
Article 98 – The act of unfairly hindering, preventing or hampering the registration of any interested party in reference files, or the act of unduly tampering with or fostering the suspension or cancellation of the enrolled party’s registration: Penalty – Six (6) months to two (2) years detention and a fine.
Article 99 – The fine provided for in articles 89 to 98 in this Law consists of the payment of an amount established at the time of the decision, such amount to be calculated in percentage indexes, corresponding to the value of the effectively received, or to be potentially received, benefits.
§ 1 – The rates referred to in this article cannot be lower than two percent (2%), nor higher than five percent (5%), of the amount of the agreement or the one executed with exemption of or not requiring bidding.
§ 2 The proceeds from the fine shall revert to the Federal, District, State or Municipal Public Treasury, as the case may be.
SECTION IV – JUDICIAL PROCEEDINGS AND PROCEDURES
Article 100 – The criminal acts defined in this Law are subject to unconditional public criminal proceedings and the Public Prosecution Service shall commence them.
Article 101 – For effects of this Law, anyone may request that the Public Prosecution Service commence criminal proceedings, by providing information in writing on the occurrence, on the authorship and the circumstances in which such occurrence took place.
Sole Paragraph – In the event of verbal communication, the pertinent authority shall express it in writing, and this document shall be undersigned by the presenter and two witnesses.
Article 102 – When the judges, the members of the Audit Courts or Audit Committees, or heads of internal control departments of the Executive, Legislative and Judicial Branches, having examined the pertinent records, verify the existence of criminal acts, pursuant to this Law, they shall forward the necessary copies and documents to the Public Prosecution Service for purposes of proposing the accusation.
Article 103 – Private criminal proceedings shall be accepted in addition to the unconditional public criminal proceedings, if the latter is not filed within the legal term, and provisions set forth in articles 29 and 30 of the Code of Criminal Procedure shall be enforced, as the case may be.
Article 104 – After the accusation has been accepted and the defendant has been served process, the defendant shall have ten (10) days to submit his written defense, starting on the date of his examination. The defendant
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shall be allowed to attach documents, list no more than five (5) witnesses and indicate any other evidence he intends to submit.
Article 105 – After witnesses for the prosecution and for the defense have been heard, and the documents have been submitted as allowed or ordered by the judge, the term of five (5) subsequent days shall commence for each party to submit the final arguments.
Article 106 – Once the afore-mentioned five-day term expires, and provided that the records are ready for examination within twenty-four (24) hours, the judge shall have ten (10) days to award the decision.
Article 107 – The decision may be appealed from, and such appeal shall be filed no later than five (5) days.
Article 108 – The Code of Criminal Procedure and the Law of Criminal Execution shall be applicable, subsidiarily, to the process and decision on the misdemeanors defined by this Law, as well as to the pertinent appeals and executions.
CHAPTER V – ADMINISTRATIVE APPEALS
Article 109 – From the following Administrative acts resulting from enforcement of this Law shall be admissible:
I – appeal within five (5) business days starting on the date of the legal notice of the act or drawing up of minutes, in the following cases: a) qualification or non-qualification of the bidder; b) awarding of the proposals; c) annulment or cancellation of the bidding; d) rejection of the application to enroll in the reference files, modification or cancellation of such application; e) termination of the agreement, as referred to in Item I, article 79 of this Law; f) imposition of warning penalty, temporary suspension or fine.
II – representation within five (5) business days, starting on the date when legal notice of the decision related to the object of the bidding or of the agreement has been given, and for which there is no possibility of administrative appeal to the higher authority; III – claim for reconsideration of the decision handed down by the Minister, State Secretary or Municipal Secretary, as the case may be, in the event of paragraph 4, article 87 of this Law, within ten (10) business days of legal notice of the act.
§ 1 – Legal notice of the acts referred to in Item I, sub-items a, b, c, and e, with the exception of those sub-items referring to warning and delinquent fine; and of the acts referred to in Item III, shall take place by means of notice published in the Official Press, except in the cases set forth in sub-items a and b, if employees of the bidders are present on the occasion when such decision was made; in this case, the legal notice can be communicated directly to the interested party and recorded in the minutes.
§ 2 – The appeal provided for in sub-items a and b of this article shall have suspension effects, and the proper authority may – provided that there are grounds for such and reasons of public interest are stated – bestow suspension efficacy on the other filed appeals. 77
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§ 3 – Once the appeal is filed, such action shall be notified to the other bidders, who may challenge it within five (5) business days.
§ 4 – The appeal shall be submitted to a higher authority by the authority that performed the act from which appeal was filed, and such higher authority may reconsider the first decision within five (5) business days or, in the same period, submit it to another higher authority who has been duly informed of the previous decision. In this case, the subsequent decision shall be handed down within five (5) business days, starting on the date when the appeal was received, under penalty of liability.
§ 5 – No term for appeal, representation or claim for reconsideration shall commence or proceed until the records of the proceedings are opened to the interested party.
§ 6 – In the case of bids by invitation/letter, the terms set forth in Items I and II and in paragraph 3 of this article shall correspond to two (2) business days.
CHAPTER VI – TEMPORARY AND FINAL PROVISIONS
Article 110 – When counting the terms established in this Law, the initial date shall be excluded and the end date shall be included. Days shall be counted consecutively, unless otherwise established.
Sole Paragraph – The terms referred to in this article shall begin or end during the working hours of the agency or entity.
Article 111 – The Administration shall only be able to hire, pay, grant awards or receive projects and authorized technical services after the author transfers the pertinent legal rights and the Administration can use such projects or services according to the provisions set forth in the bidding regulations or in the adjustments for performance thereof.
Sole Paragraph – If the project refers to incorporeal work of technical nature, not susceptible to privileges, the transfer of rights shall include that all pertinent data be provided, along with the documents and other informative elements on the concept’s technology, development, physical support of any nature and the work’s applicability.
Article 112 – If the purpose of the agreement is of the interest of more than one government entity, then the contracting agency shall answer to the interested entity for its good performance, supervision and payment.
§ 1 – The public consortia may initiate bidding processing from which, according to the terms of the notice to bid, result administrative agreements entered into bodies or entities that belong to the Union’s entities that are members of the consortium.
§ 2 – The interested entity may monitor the bidding process and the performance of the agreement.
Article 113 – Control of expenses resulting from agreements and other instruments governed by this Law shall be made by the competent Audit Court, pursuant to the pertinent legislation, and the Administration’s
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
interested entities shall be responsible for the legality and regularity of expenses and performance, pursuant to the Constitution, and without prejudice to the internal control system provided for by the Constitution.
§ 1 – Any bidder, contractor, individual or corporate entity may submit representation to the Audit Court or to the entities that integrate the internal control system regarding any irregularities in the enforcement of this Law, for purposes of the provisions set forth in this article.
§ 2 – Audit Courts and entities that integrate the internal control system may request copies of the invitation to bid which has already been published, for purposes of examining such document, up to the day immediately preceding the date on which proposals are to be submitted. The interested Administration’s agencies or entities hereby agree to adopt the pertinent corrective measures, which, as a result of such examination, will have been determined to them.
Article 114 – The system established by this Law does not prevent the pre-qualification of bidders in bidding, and such pre-qualification shall take place every time the object of the bidding recommends that a more detailed analysis be made of the interested parties’ technical abilities.
§ 1 – The adoption of pre-qualification procedures shall be made by a proposal from the competent authority and approved by the immediate higher one.
§ 2 – The provisions set forth by this Law, in regard to the bidding, summons of the interested parties, procedures, and analysis of documents, shall be complied with, during the pre-qualification period.
Article 115 – The Administration’s agencies may announce rules relative to the operating procedures to be complied with during the performance of the bidding, and within the scope of their authority, pursuant to the provisions of this Law.
Sole Paragraph – The rules referred to in this article shall be published in the Official Press, after their approval by the competent authority.
Article 116 – The provisions set forth in this Law shall apply to agreements [convênio], contracts, covenants and other similar instruments entered into by the Administration’s agencies and entities.
§ 1 An agreement [convênio], contract or covenant entered into by the Administration’s agencies or entities depends on prior approval of the pertinent work schedule proposed by the interested organization, and which shall contain, at least, the following information:
I – Identification of the purpose to be performed; II – Objectives to be achieved; III – Steps or phases of the performance; IV – Financial investment plan; V – Disbursement schedule; VI – Estimated beginning and completion date of the performance of the scope, as well as of the conclusion of the scheduled steps and phases.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
VII – If the agreement [convênio] includes engineering works or services, then evidence that own resources to complement the performance of the project are available must be duly provided, unless the total cost of the project falls on the decentralizing agency or entity.
§ 2 – Once the agreement [convênio] is signed, the on-lending entity or agency shall communicate such event to the respective State Legislature or City Council.
§ 3 – The funds provided for by the agreement [convênio] shall be repassed in strict compliance with the approved investment plan, except in the following cases, in which such funds shall be retained until reparation of the occurring improprieties:
I – Where there is no evidence that the prior funding installment was properly invested, pursuant to the applicable legislation, and subject to local inspection, undertaken periodically by the on-lending decentralizing agency or entity or by the competent agency of the Administration’s internal control system; II – Upon verification that the funding was not allotted to the proper investment, upon evidence of unjustified delay in achieving the objectives set for the planned steps or phases, occurrence of acts that go against the Administration’s basic principles in regard to the performance of the agreement [convênio], or the performer’s non-compliance with the contract’s basic terms and obligations. III – When the performer does not carry out the reparations indicated by the on-lending entity or by members of the respective internal control system.
§ 4 – While the fund balance is not being utilized, such funds shall be placed in a savings account managed by an official financial institution if the plan is to use these resources after one month or more. If such funds are to be used in less than one month, then they shall be invested in a short-term financial investment fund or on the open market and such operations shall be backed by government bonds.
§ 5 – The financial return resulting from the investments mentioned above shall be credited to the agreement [convênio] and used exclusively for its object, and shall be included in the specific account statement.
§ 6 Upon conclusion, notice for termination, termination or expiration of the agreement [convênio], contract or covenant, the remaining financial balance, including the financial return resulting from the afore-mentioned financial investments, shall be returned to the on-lending agency or entity within thirty (30) days of the occurrence, under penalty of immediate rendering of accounts by the responsible party, and such rendering of accounts to be conducted by the competent authority from the fund-providing agency or entity.
Article 117 – The works, services, purchases and sales carried out by agencies of the Legislative and Judicial Branches and the Audit Court shall be governed by the relevant rules set forth in this Law.
Article 118 – The States, the Federal District, the Municipalities and agencies belonging to the indirect Administration shall adapt their norms regarding bids and agreements to the provisions set forth by this Law.
Article 119 – state-owned companies [empresas públicas e sociedades de economia mista] and foundations and other entities directly or indirectly controlled by the Federal Public Administration and by the entities referred to in article 118 above shall issue their own regulations which shall be duly published and subject to the provisions contained in this Law.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Sole Paragraph – The regulations referred to in this article, in regards to Public Administration, shall be published in the Official Press, after their approval by a higher authority to which the respective agencies, companies and entities report to.
Article 120 – The prices established by this Law shall be revised yearly by the Federal Executive Branch, which shall publish it in the Federal Official Gazette, observing as maximum limit the general market price variation within that period.
Article 121 – The provisions set forth in this Law are not applicable to bids which have already been initiated, nor to contracts entered into prior to its enactment, except for the provisions contained in article 57, in paragraphs 1, 2 and 8 of article 65, in Item XV of article 78, as well as the provisions set forth in the heading in article 5, in regard to payment of the obligations according to chronological order. Obligations contained in contracts governed by legislation prior to the enactment of Law No. 8.666 of June 21, 1993, may follow such chronological order separately, during a period of ninety (90) days starting on the date when the Law herein goes into effect.
Sole Paragraph – Agreements referring to property owned by the Federal Government are governed by the provisions set forth in Decree Law No. 9.760, of September 5, 1946 and its modifications, and agreements referring to internal or foreign credit operations, entered into by the Federal Government, or guarantees granted by the National Treasury are governed by the pertinent legislation, and this Law shall be enforced whenever applicable.
Article 122 – Concessions to operate airline routes shall follow specific bidding procedures to be established by the Brazilian Aeronautics Code.
Article 123 – Government offices located abroad shall comply with local specifications and with the basic principles contained in this Law when carrying out bids or public procurement.
Article 124 – The provisions contained in this Law and that do not conflict with specific legislation on the matter, shall apply to bids and agreements for the permission or concession of public services.
Sole Paragraph – The requirements contained in Items II to IV of paragraph 2, article 7, shall be waived in bids for the concession of services that include previous performance of works in which disbursement by the Public Administration granting authority was not provided for.
Article 125 – This Law shall go onto effect on the date of its publication.
Article 126 – Any contrary revisions are hereby revoked, especially Decree-Law No. 2,300, of November 21, 1986; Decree-Law No. 2,348, of July 24, 1987; Decree-Law No. 2,360, of September 16, 1987; Law No. 8,220, of September 4, 1991 and Article 83, Law No. 5,194, of December 24, 1966.
ITAMAR FRANCO - President of the Republic Rubens Rícupero Romildo Canhim
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
DIFFERENTIATED PUBLIC PROCUREMENT LAW - LAW No. 12.462/11
Establishes the Differentiated Regime of Public procurement [Regime Diferenciado de Contratações Públicas] RDC; amends Law No. 10.683, of May 28, 2003, which addresses the organization of the Presidency of the Republic and of the Ministries, the legislation pertaining to the Agência Nacional de Aviação Civil [National Agency of Civil Aviation] (Anac), and the legislation pertaining to the Companhia Brasileira de Infraestrutura Aeroportuária [Brazilian Company of Airport Infrastructure] (Infraero); creates the Secretaria de Aviação Civil [Civil Aviation Secretariat], offices of State Minister, offices in commission and offices of Air Traffic Controller; authorizes the procurement of temporary air traffic controllers; amends Laws No. 11.182, of September 27, 2005, No. 5.862, of December 12, 1972, No. 8.399, of January 7, 1992, No. 11.526, of October 4, 2007, No. 11.458, of March 19, and No. 12.350, of December 20, 2010, and Provisional Measure No. 2.185-35, of August 24, 2001; and revokes provisions of Law No. 9.649, of May 27, 1998.
THE PRESIDENT OF THE REPUBLIC – I hereby state that the National Congress has enacted and I sanction the following Law:
CHAPTER I – DIFFERENTIATED REGIME OF PUBLIC PROCUREMENT – RDC [DO REGIME DIFERENCIADO DE CONTRATAÇÕES PÚBLICAS] SECTION I – GENERAL ASPECTS
Article 1 – The Differentiated Regime of Public Procurement (Regime Diferenciado de Contratações Públicas – RDC) is hereby established, applicable exclusively to bidding procedures and contracts necessary for the realization:
I – of the Olympic and Para-Olympic Games of 2016, as read in the Agenda of Olympic Projects to be defined by the Autoridade Pública Olímpica [Olympic Public Authority] (APO); and II – of the 2013 FIFA Confederations Cup and of the 2014 FIFA World Cup, defined by the Executive Group – 2014 Gecopa of the Managing Committee established to define, approve, and supervise the actions set forth in the Strategic Plan of the Actions of the Brazilian Government for the realization of the 2014 FIFA World Cup – CGCOPA 2014, being restricted, in the case of public civil works, to those included in the matrix of responsibilities executed between the Union, the States, the Federal District, and the Municipalities; III – of infrastructure civil works and of procurement of services for the airports of the capitals of the States that are located up to 350 km (three hundred fifty kilometers) away from the host cities of the world tournaments mentioned in items I and II; IV – of the actions part of the Programa de Aceleração do Crescimento [Program of Growth Acceleration] (PAC); V – of the engineering works and services of in the realm of the Sistema Único de Saúde [Universal Healthcare System] – SUS. VI – of the engineering works and services for the construction, addition and management of penal institutions and units to offer social and education programs; VII – public security measures;
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
VIII – engineering works and services related to urban mobility improvement or the expansion of logistic infrastructure; IX – the agreements referred to in Article 47-A; and X – actions in bodies and entities dedicated to sciences, technology and innovation. § 1 - RDC’s purposes are: I – increasing the efficiency in the public procurements and the competitiveness among the bidding parties; II – promoting exchange of experience and technology for a better cost-benefit ratio for the public sector; III – encouraging technological innovation; and IV – ensuring equal treatment among the bidding parties and the selection of the most advantageous proposal to the public administration.
§ 2 - The call option must expressly contain provision in which the option for RDC is made, so that the provisions in Law No. 8.666, of June 21, 1993 will not be applicable, except in the cases expressly set forth herein.
§ 3 - Apart from the cases set forth in the head of this article, the RDC is also applicable to bidding procedures and contracts necessary for the realization of engineering works and services in the public education system, and public research, sciences and technology.
Article 2 – The following definitions must be observed when applying RDC:
I – turnkey contract: when a development project is hired in its totality, with all stages of the works, services, and installations necessary, under sole responsibility of the contractor until it is delivered to the contracting party in full operational conditions, with all technical and legal requirements met with respect to its structural and operational safety, and with the adequate features to the purposes for which it had been procured; II – fixed-price contract: when the execution of the work or of the service is hired for an agreed upon total price; III – unitary price contract: when the execution of the work or of the service is hired for a fixed price per unit; IV – basic project: set of necessary and sufficient elements, with an adequate precision level, and in compliance with the provisions in the sole paragraph of this article, that: a) characterize the engineering work or service, or group of works or services object of the bidding procedures, based on the indications of the preliminary technical studies; b) ensure technical feasibility and adequate treatment of the environmental impact of the endeavor; and c) make it possible to assess costs of the work or service and to define methods and timeframe for the execution;
V – executive project: set of elements necessary and sufficient for the complete execution of the work, in accordance with the pertinent technical standards; and VI – task: when labor is hired for small projects under a fixed price, whether or not materials are supplied.
Sole Paragraph - Without jeopardizing the competitive nature of the bidding procedure, the basic project mentioned in item IV of the head of this article must contain, at least, the following elements:
I – development of the chosen solution so that it clearly provides a global view of the work and identification of its essential elements; II – global and local technical solutions in enough detail, so that it limits the need for reformulation or adaptations – during the stages when the executive project is being made, and the works are being performed and during assembly – to situations duly verified in a motivated act of the public administration; 83
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
III – identification of the types of services to be executed and of materials and equipment to be incorporated to the work, as well as specifications that ensure the best results for the endeavor; IV – information that makes it possible for the study and the deduction of constructive methods, provisional installations, and organizational conditions for the work; V – subsidies to assemble bidding procedures and work management plan, including its scheduling, supply strategy, inspection regulations, and other necessary data in each case, except with regards to the respective bidding processes, in the case of integrated procurement; VI – detailed budget of the global cost of the work, based on duly assessed quantitative reports of services and supplies.
Article 3 – The bidding procedures and procurements performed in conformity with the RDC must observe the principles of legality, impersonality, morality, equality, publicity, efficiency, administrative probity, cost efficiency, national sustainable development, binding to the call notice, and of the objective evaluation of bids.
Article 4 – In the bidding procedures and contracts addressed by this Law the following directives will be observed:
I – standardization of the object of the procurement with respect to technical and performance specifications and, should it be the case, to the maintenance, technical support, and guarantee conditions offered; II – standardization of call notices and drafted contracts, previously approved by the competent legal agency; III – pursuit of the greatest advantage for the public administration, considering indirect and direct costs and benefits of economic, social or environmental nature, including those which are pertinent to the maintenance, disposal of assets and residue, economic depreciation rate, and other equally relevant factors; IV - purchase, insurance, and payment conditions compatible with those in the private sector, including through payment remuneration that varies with the performance, as set forth in Article 10 herein; V – whenever possible, use of spreadsheets provided by the bidding parties with their proposals, describing costs with labor, materials, technologies, and raw materials that exist in the place of the execution, conservation, and operation of the asset, service or work, provided that no losses are produced to the efficiency in the execution of the respective object and that the limit of the budget estimated for the procurement be respected; and VI – division of the object, aiming at having more bidders taking part in the process, with no loss of scale economy. VII – broad publicity, on a website, to all of the bidding process stages and procedures, as well as agreements, subject to the provisions in article 6 herein.
§ 1 - The procurements performed based on the RDC must especially respect the rules pertinent to the:
I – environmentally adequate final disposal of the solid waste generated by the procured works; II – mitigation by conditioning agents and environmental compensation, which will be defined in the procedure of environmental licensing; III – use of products, equipment, and services that are proven to reduce consumption of energy and natural resources; IV – assessment of impact on neighbors, pursuant to urban legislation; V – protection of the cultural, historic, archeological, and immaterial estate, including by means of the assessment of the direct or indirect impact caused by the procured works; and VI – use accessibility for people with special needs or with reduced mobility.
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§ 2 – The negative impact on assets of cultural, historic, archeological, and immaterial heritage must be compensated by means of measures determined by the authority in charge, in accordance with the applicable legislation.
SECTION II - RULES APPLICABLE TO RDC PUBLIC BIDDINGS ITEM I – OBJECT OF THE PUBLIC BIDDINGS
Article 5 – The scope of the bidding procedures must be defined in a clear and precise fashion in the call notice; excessive, irrelevant or unnecessary specifications are prohibited.
Article 6 – Pursuant to the provisions in § 3, the budget previously estimated for the procurement will be made public only and immediately after the bidding process end, without prejudice to disclosing the detailed quantitative reports and additional information necessary to prepare the proposals.
§ 1 - In cases which the largest discount is the judgment criteria, the information in the head of this article will be included in the call notice.
§ 2 - In cases which the best technique is the judgment criteria, the amount of the prize or of the remuneration will be included in the call notice.
§ 3 - If the information referred to in the head of this article is not included in the call notice, it will have a secret nature and will be made available in a strict and permanent fashion to the agencies of internal and external control.
Article 7 – In the case of public procurement of goods, the public administration may:
I – indicate brand or model, provided that formally justified, in the following cases: a) as a result of the need for standardization of the object; b) when a certain brand or model marketed by more than one supplier is the only one that can fulfill the needs of the contracting entity; or c) when the description of the object to be procured can be better understood through the identification of a certain brand or model that can serve as a reference, in which case the inclusion of the expression "or similar or of a better quality" will be mandatory;
II – require sample of the good in the pre-qualification stage, in the evaluation of the proposals or bidding stage, provided that the need for its presentation is justified; III – request quality certification of the product or manufacturing process, including under the environmental aspect, issued by any relevant official institution or by a certified agency; and IV - request, within reason, letter of joint and several liability issued by the manufacturer, which ensures the performance of the contract, in cases the bidder is a reseller or distributer.
Article 8 – In the indirect execution of engineering works and services, the following regimes are admitted:
I – unitary price contract; II – global price contract; 85
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
III – procurement per task; IV – fixed price contract; or V – integrated procurement.
§ 1 - For the bidding procedures and procurements of works and services of engineering, the regimes in items II, IV, and V of the head of this article will preferably be adopted.
§ 2 - In case the provisions in § 1 of this article cannot be applied, another regime provided in the head of this article can be adopted, in which case the reasons to justify the exception will be included in the procedure records.
§ 3 - The global cost of engineering works and services must be obtained from unit costs of supplies or services that are smaller or equal to the average of their correspondent to the Sistema Nacional de Pesquisa de Custos e Índices da Construção Civil [National System of Research of Costs and Indexes of the Civil Construction] (Sinapi), for civil construction in general, or from the table of the Sistema de Custos de Obras Rodoviárias [Road Works Cost System] (Sicro), in the case of road works and services.
§ 4 - In case it is not possible to define the costs pursuant to the provisions in § 3 of this article, the global cost estimate may be calculated by using data contained in reference table formally approved by agencies or entities of the federal public administration, in specialized technical publications, in specific system for the sector or in market research.
§ 5 - In the bidding procedures for the procurement of works and services, except for those that adopt the regime provided in item V of the head of this article, there must be a basic project approved by the competent authority, available for examination by those who are interested in taking part in the bidding process.
§ 6 - In the case of procurements carried out by the governments of the municipality, the state, and of the Federal District, provided they do not involve resources of the Union, the global cost of engineering works and services referred to in § 3 of this article may also be obtained from other cost systems already used by the respective entities and accepted by the respective accounting courts.
§ 7 - Engineering works and services for which RDC has been used, regardless of the regime used, shall not be performed or provided without an executive project.
Article 9 – In the bidding procedures for engineering works and services, within RDC, the integrated procurement may be used, as long as it is technically and economically justified and has at least one of the following conditions in its object:
I – technological or technical innovation; II – works or services may be made or provided by using different methodologies; III – works or services may be made or provided with technologies that are of restricted domain in the market.
§ 1 - The integrated procurement involves making and developing the basic and executive projects, the execution and provision of engineering works and services, the assembly, the realization of tests, the pre-operation, and all of the other operations necessary and sufficient for the final delivery of the object.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
§ 2 - In the case of integrated procurement:
I – the call notice must contain preliminary engineering project contemplating the technical documents that will be necessary for the characterization of the work or service, including:
a) the demonstration and the justification of the program of needs, the global view of the investments and the definitions as to the level of service desired; b) solidity, safety, durability and delivery deadline conditions, pursuant to the provisions in the head of this article and in § 1, Article 6 of this Law; c) the aesthetics of the architectural project; and d) the parameters of adequacy to public interest, economy in the use, ease of execution, environmental impacts and accessibility;
II – the estimated amount of the procurement will be calculated based on values practiced by the market, on values paid by the public administration for services and similar works or in the assessment of the global cost of the work, gauged through synthetic budget or expedite or parametric methodology.
III – [repealed]
§ 3 - Should the presentation of projects with differentiated methodologies of execution be permitted in the preliminary engineering project, the call notice will establish objective criteria for the assessment and judgment of the proposals.
§ 4 - In those cases in which the integrated procurement is adopted, the execution of amendments to the signed agreement is forbidden, except in the following cases:
I – for re-composition of the financial and economic balance arising from an act of God or force majeure; and II – because of a need to change the project or the specifications to better technically adequate to the objectives of the procurement, upon request by the public administration, provided that they are not resulting from error or omission on the part of the contractor, observed the limits provided in the § 1, Article 65 of Law No. 8.666, of June 21, 1993.
§ 5 - If the preliminary engineering project includes matrix to distribute risks between the public administration and the hired party, the estimate hiring amount may consider a risk index compatible with the bidding project object and the contingencies attributed to the hired party, according to a methodology that had been previously defined by the hiring party.
Article 10 - In the procurement of the works and services, including engineering ones, variable remuneration may be established, connected to the performance of the contractor, based on goals, standards of quality, environmental sustainability criteria, and delivery term defined in the call notice and in the contract.
Sole Paragraph - The use of the variable remuneration will be motivated and will respect the budgetary limit fixed by the public administration for the procurement.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Article 11 - The public administration may, upon express justification, hire more than one company or institution for the same service to be provided, as long as it does not imply loss of scale economy, when:
I – the object of the procurement can be executed in a concurrent and simultaneous fashion by more than one contractor; or II – multiple execution is convenient to serve the public administration.
§ 1 - In the cases provided in the head of this article, the public administration must keep individualized control of the execution of the agreement’s purpose pertinent to each of the contractors.
§ 2 - The provisions set forth in the head of this article do not apply to the services of engineering.
ITEM II - BIDDING PROCEDURE
Article 12 - The bidding procedure set forth in this Law will observe the following stages, in this order:
I – preparatory; II – publication of the call notice; III – presentation of proposals or bids; IV – awarding; V – qualification; VI – appealing stage; and VII – completion.
Sole Paragraph - The stage addressed in item V of the head of this article may, upon motivated act, precede those mentioned in items III and IV of the head of this article, as long as expressly provided in the call notice.
Article 13 - The bidding procedures must preferably be performed electronically; in-person biddings are also permitted.
Sole Paragraph - In the procedures carried out by electronic means, the public administration may determine, as a condition for validity and efficacy, that the bidding parties perform their acts in electronic format.
Article 14 - In the qualification stage of the bidding procedures carried out in conformity with this Law, as convenient, the provisions set forth in arts. 27 to 33 of Law No. 8.666, of June, 21 1993 will be applicable, and in compliance with the following:
I – the bidding parties may be required to present a statement informing that they are in compliance with the requirements of the qualification; II – the submission of the qualification documents will only be required from the winning bidding party, except in the case of inversion of phases; III – in the case there is an inversion of stages, only the proposals of the previously qualified bidding parties will be received; and IV – in any case, the documents which are pertinent to the fiscal good standing may be required after the judgment of the proposals, only with respect to the better classified bidder.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Sole Paragraph - In the bidding procedures ruled by the RDC:
I – bidding parties may participate as a consortium, as set forth in regulation; and II – environmental sustainability requirements may be mandatory, pursuant to the applicable legislation.
Article 15 - The bidding and pre-qualification regulated herein, except for information that must be kept confidential for the safety of the society and of the State, will be broadly made public, and the following deadlines below (minimum) must be adopted for the presentation of proposals, as of the publication date of the call notice: I – for the purchase of goods: a) 5 (five) business days, when the criteria of judgment by the lower price or by the greatest discount is adopted; and b) 10 (ten) business days, for cases not covered by the provisions in letter a in this item I;
II – for the procurement of services and works: a) 15 (fifteen) business days, when the criteria of judgment by the lower price or by the greatest discount is adopted; and b) 30 (thirty) business days, for cases not covered by the provisions in letter a of this item II;
III – for bidding procedures that adopt the judgment by the best offer criteria: 10 (ten) business days; and IV – for bidding procedures in which judgment is based on the best combination of technique and price, best technique or by reason of artistic content: 30 (thirty) business days.
§ 1 - The publicity mentioned in the head of this article, without prejudice to the possibility of direct disclosure to the suppliers, whether they are registered or not, will be performed by means of:
I – publication of summary of the public notice in the Federal Register, State Register or Municipal Register, or in the case of a public consortium, of the entity with the highest level among them, without prejudice to the possibility of publication of summary in a widely circulated newspaper; and II – publication on official website for the purpose of making information on bidding procedures public or on website maintained by the entity in charge of the bidding procedure in the world wide web.
§ 2 - In the case of bidding procedures whose amount does not exceed BRL$ 150,000.00 (one hundred and fifty thousand reals) for works, or BRL$ 80,000.00 (eighty thousand reals) for goods and services, including engineering ones, the publication provided in item I of the § 1 of this article is not necessary.
§ 3 - In cases when the object is divided, the total amount of the procurement must be considered for the purposes of provisions set forth in § 2 of this article.
§ 4 - Possible changes to the call notice will be disclosed within the same time periods applicable to the original actions and procedures, except when the change does not affect the preparation of the proposals.
Article 16 - In the bidding procedures, open and close competition modalities may be adopted, or a combination of both according to the provisions of the regulation.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Article 17 - The regulation will establish rules and procedures for the presentation of proposals or bids, and the following will be applicable:
I – in the open competition modality, the bidding parties will present their offers by means of public and successive bids, higher or lower, in accordance with the judgment criteria adopted; II – in the closed competition modality, the proposals presented by the bidding parties will be confidential until the date and time designated for them to be disclosed; and III – in the bidding procedures of engineering works or services, after the proposals are awarded, the winning bidding party must adjust and present to the public administration, by electronic means, the spreadsheets containing quantitative reports and the unit costs, as well as detailed information on Bonificações e Despesas Indiretas [Bonuses and Indirect Overhead] (BDI) and the Social Charges (Encargos Sociais – ES), with the respective values altered to the winning bid.
§ 1 - The following may be admitted, in the conditions set forth in the regulation:
I – presenting intermediate bids, during the open competition; and II – resuming the open competition, after the best proposal has been defined for the definition of the placing of the other proposals, whenever there is a difference of at least 10% (ten percent) between the best bid and that of the subsequent bidding party.
§ 2 - The following bids are considered to be intermediate bids:
I – equal to or lower than the highest bid already offered, when judgment by the greatest offer is adopted; or II – equal to or greater than the lowest bid already offered, when other criteria of awarding is adopted.
Article 18 - The following criteria of awarding may be used:
I – lowest price or greatest discount; II – technique and price; III – best technique or artistic content; IV – highest price offer; or V – greatest economic return.
§ 1 - The awarding criteria will be described in the call notice, pursuant to the provisions herein.
§ 2 - The awarding of the proposals will be made effective by the use of objective parameters defined in the call notice.
§ 3 - Those advantages not provided in the call notice will not be considered, including subsidized funding or non-repayable financing.
Article 19 - The awarding by lower price or greatest discount will consider the lowest expenditure for the public administration, provided the minimum parameters of quality defined in the call notice are fulfilled.
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§ 1 - The indirect costs related to the expenses with maintenance, use, replacement, depreciation and environmental impact, among other factors, may be considered for the definition of the lowest expense, whenever objectively measurable, as set forth by the regulation.
§ 2 - The judgment by greatest discount will have the global price set forth in the call notice as reference, the discount being extended to possible additional terms.
§ 3 - In the case of engineering works or services, the discount percentage presented by the bidding parties must be applicable to the prices of all items in the estimated budget in the call notice.
Article 20 - When judging by the best combination of technique and price, the technical proposals and the economic proposals presented by the bidders must be evaluated and weighed using objective parameters mandatorily included in the call notice.
§ 1 - The awarding criteria referred to in the head of this article will be used when the assessment and the analysis of the technical quality of the proposals that go beyond the minimum requirements set forth in the call notice are relevant to the ends sought by the public administration, and it will be exclusively used with respect to objects:
I – of a mainly intellectual nature and of technological or technical innovation; or II – that may be executed by using different methodologies or technologies of a restricted domain in the market, pointing out the advantages and qualities that may be offered for each product or solution.
§ 2 - Attributing different weighing factors to determine the technical proposals and the price proposals, being the most relevant weighing percentage limited to 70% (seventy percent).
Article 21 - In awarding using either the best technique criteria or the best artistic content criteria, only technical or artistic proposals presented by the bidding parties based on objective criteria previously set forth in the call notice (in which the award or remuneration to the winners there will be defined) will be considered.
Sole Paragraph - The judgment criteria referred to in the head of this article may be used for the procurement of projects, including architectural, and works of technical, scientific, or artistic nature, except engineering projects.
Article 22 - The judgment criteria referred to in the head of this article will be used for contracts that result in revenue for the public administration.
§ 1 - When awarding by using the highest price offer criteria, the requirements of technical and financial economical qualification may be dismissed, as set forth in the regulation.
§ 2 - In the evaluation by the greatest offer of price, a proof of the payment of an amount as a guarantee may be asked for, as requirement of qualification, limited to 5% (five percent) of the offered price.
§ 3 - In the case referred to in § 2 of this article, the winning bidding party will forfeit the down payment amount to the public administration, in case the payment is not made within the agreed upon time.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Article 23 - In awarding using the greatest economic return criteria, used exclusively for the execution of efficiency contracts, the proposals will be considered so as to select the one which will provide the greatest savings for the public administration as a result of the execution of the agreement.
§ 1 - Efficiency agreements will have rendering of services as its purpose, which may include performance of works and provision of goods, with the purpose of providing savings to the contracting party, by reducing current expenses – the contractor being remunerated based on a percentage of the savings generated.
§ 2 - In the case set forth in the head of this article, the bidding parties will present proposals of work and of price, as set forth by the regulation.
§ 3 - In the cases in which the savings are not generated as provided in the efficiency agreement:
I – the difference between the savings provided for in the agreement and the one effectively obtained will be deducted from the contractor’s remuneration;
II –if the difference between the savings provided for in the agreement and the one effectively obtained is larger than the remuneration of the contractor, a penalty will be charged for noncompliance with the agreement in the amount of the difference; and
III – the contractor will still be subject to other applicable penalties should the difference between the savings provided in the agreement and the one effectively obtained is in excess of the higher threshold set forth in the agreement.
Article 24 - The following proposals will be rejected:
I – those that contain defects beyond remedy; II – those that do not comply with the technical specifications detailed in the call notice; III – those in which prices are manifestly unattainable or that remain over the budget estimated for the procurement, including in the cases set forth in Article 6 herein; IV – those that cannot demonstrate their enforceability when required by the public administration; or V – those that do not meet any of the other requirements in the call notice, as long as beyond remedy.
§ 1 - Only the better qualified proposal will suffer analysis to determine whether it meets the requirements.
§ 2 - The public administration may perform investigations to assess the feasibility of the proposals or request the bidding parties to demonstrate it, as set forth in item IV of the head of this article.
§ 3 - In the case of engineering works and services, for the purposes of assessment of the feasibility and of overpricing, there will be considered the global price, the quantitative, and the unit prices deemed relevant, as set forth by the regulation.
Article 25 - In case of a tie between two (2) or more proposals, the following tiebreak criteria will be used, in this order:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – final competition, in which the tied bidding parties may present a new closed proposal subsequently to the classification; II – assessment of the bidding parties’ performance in previous agreements, as long as there is an objective analysis system in place; III – criteria set forth in Article 3, Law No. 8,248, of October 23, 1991, and in § 2 of Article 3, Law No. 8.666, of June 21, 1993; and IV – picking through drawing lots.
Sole Paragraph - The rules provided in the head of this article do not conflict with the provisions set forth in Article 44 of Complimentary Law No. 123, of December 14, 2006.
Article 26 - Once the result of the awarding is defined, the public administration may negotiate more advantageous conditions with the first runner-up. Sole Paragraph - The negotiation may be carried out with the other bidding parties, in the order of classification established initially, when the price of the first runner up, even after the negotiation, is rejected due to the bidder’s proposal remaining above the estimated budget.
Article 27 - Except in cases of phase inversions, the bidding procedure will have one single appeal phase, after the qualification of the winner.
Sole Paragraph - In the appeal phase, the appeals pertinent to the awarding of the proposals or bids and to the qualification of the winner will be analyzed.
Article 28 - Once the administrative appeals are concluded, the bidding procedure will be finished and forwarded to the higher authority, that may:
I – determine the records be returned to have any irregularity corrected, if they can be remedied; II – have the procedure annulled, as a whole or in part, due to a defect that cannot be remedied; III – have the procedure revoked based on convenience and opportunity; or IV – have the object awarded and ratify the bidding process.
ITEM III – AUXILIARY PROCEDURES IN THE RDC BIDDING PROCESS
Article 29 - The following are auxiliary procedures to the bidding processes governed by the provisions herein:
I – permanent pre-qualification; II – registration; III – price recording system; and IV – electronic standardization register.
Sole Paragraph - The procedures referred to in the head of this article will be subject to clear and objective criteria defined in the regulation.
Article 30 - Permanent pre-qualification is the procedure that happens prior to the bidding procedures whose purpose is to identify:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – suppliers that meet qualification conditions required to supply goods or perform services or execute work in accordance with the terms, locations and conditions previously established; and II – goods that meet the public administration’s technical and quality requirements.
§ 1 - The pre-qualification procedure will be permanently open for the enrollment of any interested parties.
§ 2 - The public administration may carry out bidding procedures restricted to pre-qualified parties, in the conditions set forth in the regulation.
§ 3 - Pre-qualification may be carried out within the groups or segments, according to what area the suppliers specialized in.
§ 4 - Pre-qualification may be partial or total, containing some or all of the qualification or technical requirements necessary for the procurement; it is ensured that there will be equal conditions between the competitors in any event.
§ 5 - Pre-qualification will be valid for 1 (one) year at the most, and it may be updated at any time.
Article 31 - The records information (registros cadastrais) may be kept for qualification of those registered in bidding procedures and will be valid for 1 (one) year at the most, and may be updated at any time.
§ 1 - The records information will be widely publicized and will be permanently open for the enrollment of interested parties.
§ 2 - Those registered will be admitted pursuant to the requirements provided in the regulation.
§ 3 - The performance of the bidding party in the fulfillment of obligations taken on will be recorded in the respective records information.
§ 4 - The records of the registered party that fails to fulfill the qualification requirements or those established for the initial registration may be altered, suspended or cancelled at any time.
Article 32 - The price recording system, specifically created for the purposes of being used for bidding procedures governed by the provisions herein, will be subject to the provisions set forth in the regulation.
§ 1 - Any agency or entity responsible for the execution of the activities in Article 1 herein may join the system mentioned in the head of this article.
§ 2 - Price recording will be subject to the following conditions:
I – prior ample market research; II – selection in accordance with the procedures provided in the regulation; III – mandatory development of a control routine and updates to the prices recorded done periodically; IV – definition of record expiration; and
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
V – to include, in the respective minutes, the record of the bidding parties that accept to give price estimates for goods or services with prices equal to those of the winning bidding party in the order of the competition ranking, as well as of the bidding parties that maintain their original proposals.
§ 3 - The fact that there are prices recorded does not put the public administration under the obligation to execute the agreements that may arise from them; carrying out a specific bidding process is optional, and the registered bidding party will have preferred treatment all conditions being equal.
Article 33 - The electronic standardization catalogue for purchases, services and works consists of a computerized system, centrally managed, and meant to allow the standardization of items to be purchased by the public administration that will be available for the bidding procedures to be carried out.
Sole Paragraph - The catalogue mentioned in the head of this article may be used in bidding procedures for which the criterion of judgment is the lowest price offer or the greatest discount, and will contain all of the documentation and procedures of the bidding procedures internal stage, as well as the specifications of the respective objects, pursuant to the provisions set forth in the regulation.
ITEM IV – BIDDING PROCEDURES’ COMMITTEE
Article 34 - The bidding procedures carried out in accordance with the RDC will be processed and awarded by a permanent or special bidding procedure committees, mainly composed by officials or civil servants who belong to the permanent staff of the agencies or entities of the public administration in charge of the bidding procedures.
§ 1 - The rules regarding the operation of the bidding procedure committee and of the registration committee provided herein will be set forth in the regulation.
§ 2 - The bidding procedure committee members will be jointly and severally liable for all acts performed by the committee, unless an individual’s position that is not in agreement with the decision taken is recorded in the meeting minutes in which the respective decision has been decided on.
ITEM V – EXEMPTION AND NON-REQUIREMENT OF PUBLIC BIDDINGS
Article 35 - The cases of exemption and non-requirement of bidding procedures set forth in articles 24 and 25, Law No. 8.666, of June 21, 1993, apply, in what it is compatible, to the RDC procurements.
Sole Paragraph - The contracting process based on exemption or non-requirement of bidding procedure must follow the procedure provided in Article 26 of Law No. 8.666, of June 21, 1993.
ITEM VI – SPECIFIC CONDITIONS TO TAKE PART IN THE PUBLIC BIDDINGS AND FOR CONTRACTINT WITHIN RDC
Article 36 - The following may not directly or indirectly take part in the bidding procedures addressed herein:
I – individuals or legal entities that had prepared the respective basic or executive project; II – legal entity member in a consortium responsible for preparing the respective basic or executive project; 95
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
III – legal entity managed by the author of the basic or executive project, partner with more than 5% (five percent) of the voting stock, controller, manager, technical representative in charge or subcontractor; or IV – public servant, employee, or person in office in the committee of the agency or entity that is hiring or responsible for the bidding procedures.
§ 1 - The provisions set forth in items I, II and III of the head of this article do not apply to integrated procurements.
§ 2 - The provisions set forth in the head of this article do not prevent, in bidding proceedings for the procurement of works or services, that there is a provision setting forth that a hired party must prepare the executive project, pursuant to a price previously determined by the public administration.
§ 3 - Individuals or legal entities referred to in items II and III of the head of this article may participate in bidding procedures or in the performance of the agreement, as consultants or technicians, to perform inspection, supervision or management, exclusively at the service of the interested government agency or entity.
§ 4 - For the purposes of the provisions in this article, there is indirect participation when there is a technical, commercial, economic, financial or professional relationship between the author of the project – whether an individual or a legal entity – and the bidding party or those responsible for the services, supply, and works, including supplying goods and services necessary to them.
§ 5 - The provisions in § 4 of this article apply to the members of the bidding procedure committee.
Article 37 - It is not allowed to directly hire, outside of a bidding process, a corporate entity in which there is manager or partner with management powers who has a family relationship, including by affinity, within up to the third grade of kinship and who:
I – holds commission office or position of trust and works in the area responsible for the request or hiring; and II – is in a position of hierarchically superior authority within each agency or entity of the public administration.
Article 38 - In the processes for agreements governed by this law, the preferences for suppliers or types of goods, services and works provided in the legislation are applicable, especially those mentioned: I – in Article 3, Law No. 8,248, of October 23, 1991; II – in Article 3, Law No. 8,666, of June 21, 1993; and III – in articles 42 to 49 of Complimentary Law No. 123, of December 14, 2006.
SECTION III - SPECIFIC RULES APPLICABLE TO THE RDC AGREEMENTS
Article 39 - The administrative agreements executed based on the RDC will be governed by the provisions of Law No. 8,666, of June 21, 1993, except for the specific rules provided herein.
Article 40 - The public administration may, when the party called does not execute the term of contract or does not accept or withdraws the equivalent instrument within timeframe and according to the conditions established:
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
I – revoke the public proceedings, without prejudice to the application of the penalties provided in the Law No. 8,666, of June 21, 1993, and in this Law; or II – to call the remaining bidding parties, in the order they were ranked, to execute the agreement in the conditions offered by the winning bidding party.
Sole Paragraph - In case none of the bidders accepts the agreement as provided in item II of the head of this article, the public administration may call the remaining bidding parties, in the order of ranking, to execute the contract in the conditions offered by them, as long as the respective amount is equal to or lower than the estimate budget for the procurement, including in connection with the prices updated in the terms of the call notice.
Article 41 - In the case provided in item XI of Article 24 of Law No. 8,666, of June 21, 1993, contracting partial work, service or supply of goods as a result of a contract termination will follow the ranking order of the remaining bidding parties and the conditions offered by these, as long as it is not in excess of the estimate budget for the procurement.
Article 42 - The contracts for the execution of the works provided in the Multiannual Plan [Plano Plurianual] may be executed for the duration it provides, in compliance with the provisions of the head of Article 57 of Law No. 8,666, of June 21, 1993.
Article 43 - In the case of item II of Article 57 of Law No. 8,666, of June 21, 1993, the agreements executed by the public entities responsible for the activities described in items I to III of Article 1 herein may have their validity established up to the APO extinction date.
Article 44 - The rules regarding the annulment and revoking of the public procedures provided in Article 49 of Law No. 8,666, of June 21, 1993, will be applied to the agreements executed based on the provisions herein.
Article 44-A - In the agreements governed by this law, the use of private means to resolve disputes is allowed, including arbitration, to take place in Brazil and in Portuguese, pursuant to the terms of Law No. 9,307, of September 23, 1996, and mediation, to solve conflicts arising out of the execution or related to it.
SECTION IV - REQUESTS FOR CLARIFICATION, OBJECTIONS, AND APPEALS
Article 45 - Public administration acts arising from the application of the RDC may be challenged by:
I – requests for clarification and objections to the call notice filed within at least: a) 2 (two) business days prior to the date of opening of the proposals, in the case of bidding procedures for the purchase or disposal of assets; or b) 5 (five) business days prior to the date of opening of the proposals, in the case of bidding procedures for the procurement of works or services;
II – appeals filed within 5 (five) business days as of the date of the notice (intimação) or of the execution of the minutes, in face of: a) act granting or denying a request for pre-qualification of interested parties; 97
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
b) act qualifying or disqualifying bidding party; c) judgment of the proposals; d) annulment or revocation of bidding procedures; e) denial of request for registration, its alteration or cancellation; f) termination of the agreement, in the cases provided in item I, Article 79 of Law No. 8,666, of June 21, 1993; g) application of penalties – warning, fine, lack of good standing certificate, temporary suspension from participating in bidding procedures and impediment to enter into agreements with the public administration; and
III – complaints, within 5 (five) business days as of the date of the notice (intimação), relative to acts against which no hierarchical appeal is admissible.
§ 1 - The bidding parties that wish to present the motions referred to in items a, b, and c of item II, of the head of this article must immediately manifest their intention to appeal, subject to preclusion.
§ 2 - Appellee’s brief must be filed within the same deadline applicable to appeals and it will commence immediately after the appeal’s deadline.
§ 3 - Examination of the elements that are material for the defense of the bidding parties’ interests is ensured.
§ 4 - When counting days of a period of time within which there must be a filing as provided in this Law, the starting date will be excluded from the calculation and the end date will be included in it.
§ 5 - The terms provided in this Law start and end exclusively on working days as applicable to the agency or entity.
§ 6 - The appeal will be addressed to an authority hierarchically superior to the authority that has performed the appealed act through the latter; the authority that performed the act may, within 5 (five) business days, either reconsider their decision or send it to the authority above it duly informed – in which case the decision regarding the appeal must be produced within 5 (five) business days, as of its being received, under penalty of determination of civil liability.
Article 46 - The provisions of Article 113, Law No. 8,666, of June 21, 1993 apply to the RDC.
SECTION V - ADMINISTRATIVE PENALTIES
Article 47. The following bidding parties will be prevented from participating in bidding processes and executing agreements with the Union, States, Federal District or Municipalities, for up to 5 (five) years, without prejudice to the penalties provided in the call notice and in the contract, as well as other legal penalties:
I – party called within the expiration term of their proposal and that does not execute the agreement, including the cases provided in the sole paragraph of Article 40, and in Article 41 herein; II – party that fails to deliver the documentation required for the bidding procedure or presents a forged document; III – party that gives cause to a delay in the execution or in the delivery of the object of the bidding procedure with no justified cause; 98
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IV – party that does not uphold the proposal, except if resulting from a subsequent event that is duly justified; V – party that defrauds the bidding procedure or commits fraud in the execution of the agreement; VI – party that behaves in a disreputable manner or commits fiscal fraud; or VII – party that gives rise to total or partial nonperformance of the agreement.
§ 1 - The application of the penalty referred to in the head of this article will also cause the disqualification of the bidding party, for the term set forth in the head of this article, from the registration systems of the entities that are part of the Federation and that are part of the Olympic Public Authority [Autoridade Pública Olímpica].
§ 2 - The administrative and criminal sanctions, and the other rules provided in Chapter IV of Law No. 8,666, of June 21, 1993, apply to the bidding procedures and to the agreements governed by this Law.
Article 47-A - The public administration may execute lease agreements of goods or real estate, in which the lessor perform the previous acquisition, construction or substantial reform, with or without the installation of equipment, direct or indirectly, of the asset specified by the administration.
§ 1 - The procurement referred to in the head of this article is subject to the same ruling of exemption and non- requirement of bidding applicable to the real estate leases.
§ 2 - The procurement referred in the head of this article may consider the reversion of the leased assets to the public administration at the end of the lease agreement, provided that it is establishes in the agreement.
§ 3 - The amount of the lease fee referred in the head of this article may not exceed, in the monthly payments, the amount equivalent to 1% (one percent) of leased asset’s price.
CHAPTER II – OTHER PROVISIONS SECTION I – CHANGES TO THE ORGANIZATION OF THE PRESIDENCY OF BRAZIL AND OF THE MINISTRIES
Article 48 - Law No. 10,683, of May 28, 2003, shall be in effect with the following amendments: "Article 1 - The Presidency of the Republic is essentially composed by the:
I – Office of the President’s Chief of Staff; II – General Office; III – Institutional Relations Office; IV – Social Communications Office; V – Personal Cabinet; VI – Institutional Safety Cabinet; VII – Strategic Affairs Office; VIII – Office of Women’s Policies; IX – Human Rights Office; X – Office for Policies for Racial Equality Promotion; XI – Ports Office; and XII – Civil Aviation Office.
§ 1 – ......
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X – Civil Aviation Council...... " (NR)
"Article 2 – The Office of the President’s Chief of Staff is competent to:
I – directly and immediately assist the President in the performance of his/her attributions, especially: a) in the coordination and integration of the actions of the Government; b) by previously analyzing the constitutionality and legality of the presidential actions; c) in the analysis of proposals including that of subjects under legislative process in the Congress with regards to merit, opportunity and compatibility with the government directives; d) in the assessment and monitoring of the government action and of the management of the agencies and entities of the federal public administration;
II – to promote the publication and the preservation of the official actions.
Sole Paragraph - The President’s Chief of Staff’s basic structures are:
I – the Deliberative Council of the Amazon Protection System; II – the National Printing Office; III – the Cabinet; IV – the Executive Office; and V – up to 3 (three) Subchief Offices." (NR)
Article 3 – ......
§ 1 - The General Office of the Presidency is also competent to:
I – supervise and execute the administrative activities of the Presidency and the Vice-Presidency of the Republic; and II – assess the government action and of the result of the management of the administrators, in the realm of the agencies that form the Presidency of the Republic and the Vice-Presidency of the Republic, apart from others set forth in specific legislation, through the accounting, financial, budgetary, operational, and property inspection.
§ 2 - The General Office of the Presidency of the Republic’s basic structure is:
I – the National Youth Council; II – the Cabinet; III – the Executive Office; IV – the National Youth Office; V – up to 5 (five) Offices; and VI – 1 (one) Internal Control agency.
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§ 3 - The Executive Secretary of the General Office of the Presidency of the Republic is competent to perform, apart from supervising and coordinating Offices that are part of the structure of the General Office of the Presidency of the Republic subordinated to the State Minister, the duties assigned by the Minister." (NR)
"Article 6 - The Presidency’s Institutional Safety Cabinet’s is competent:
I – to assist directly and immediately the President of the Republic in the performance of his/her attributions; II – to prevent the occurrence and articulate the management of crises, in the case serious and imminent threats to the institutional stability; III – to personally advise in military and security affairs; IV – to coordinate the activities of federal intelligence and of information security; V – ensured the exercise of police power, to take care of the personal safety of the Head of State, of the Vice- President of the Republic and their family members, of the heads of the main agencies of the Presidency and other authorities or personalities when so determined by the President, as well as the security of the presidential palaces and of the President’s and Vice President’s residences.
§ 1 - [repealed]
§ 2 - [repealed] ......
§ 4 – The basic structure of the Institutional Security Office of the Presidency is as follows:
I – the Brazilian Intelligence Agency (Abin); II – the Cabinet; III – the Executive Office; and IV – up to 3 (three) Offices." (NR)
"Article 11-A - The Civil Aviation Council, presided by the Chief State Minister of the Civil Aviation Office of the Presidency, whose organization and operation is established by the Executive Branch, establishes the directives for the policy pertinent to the civil aviation sector."
"Article 24-D - The Civil Aviation Office is competent to:
I – formulate, coordinate and supervise the policies for the development of the civil aviation sector the airport and civil aeronautics infrastructures, together with, as appropriate, the Ministry of Defense; II – prepare studies and projections pertinent to subjects related to civil aviation and airport and civil aeronautics infrastructures and on the logistics of the air transport and intermodal and multimodal transport, along the axis and flows of production in conjunction with other relevant government agencies, with attention to the requirements of urban mobility and accessibility; III – formulate and implement strategic planning for the sector, defining investment program priorities; IV – make and approve the plans for granting the exploitation of the airport infrastructure, once the National Agency of Civil Aviation [Agência Nacional de Aviação Civil (Anac)] is heard; V – propose to the President of the Republic the declaration of public utility, for the purposes of expropriation or establishment of administrative easement, of the assets necessary for the construction, maintenance, and expansion of the airport and aeronautic infrastructure; 101
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VI – manage resources and civil aviation infrastructure development programs; VII – coordinate the agencies and entities of the civil aviation system, together with the Ministry of Defense, as appropriate; and VIII – transfer to the States, Federal District and Municipalities the arrangement, administration, operation, maintenance, and exploitation of public airfields, directly or indirectly. Sole paragraph. The basic structure of the Civil Aviation Office is the Cabinet, the Executive Office, and up to 3 (three) Secretariats."
"Article 25 - ......
Sole Paragraph - The State Ministers are the following:
I – the heads of the Ministries; II – the heads of the Offices of the Presidency; III – the Attorney General of the Union; IV – the Office of the President’s Chief of Staff Office; V – the Presidency’s Institutional Safety Cabinet’s; VI – the Chief of the Office of the Federal Controller General; VII – the President of the Brazilian Central Bank." (NR)
"Article 27 - ...... VII – Ministry of Defense: ...... y) airspace and aeronautic infrastructure; z) operationalize the Amazon Protection System (Sipam); ...... XII – ...... i) ......
6 - [repealed]; ...... m) planning, coordinating, supervising, integrating and proposing the Government’s the National System of Policies on Drugs National System’s actions in connection with prevention, repression of illegal trafficking and unauthorized production of drugs, as well as treatment, rehabilitation, and social reintroduction of users and addicts, and to Integrated Plan to Combat Crack and other Drugs; n) national policy of records/files; and o) assistance to the President of the Republic on subjects which do not relate with other Ministries; ...... " (NR)
"Article 29 - ......
VI – of the Ministry of Culture: the Superior Council of Cinema, the National Council of Cultural Policy, the National Commission of Incentive to Culture, and up to 6 (six) Secretariats; VII –of the Ministry of Defense: the Military Council of Defense, the Navy Command, the Army Command, Air Force Command, the Joint Staff of the Armed Forces, Superior School of War, the Managing and Operational 102
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Center of the Amazon System Protection (Censipam), the Armed Forces Hospital, the Brazilian Representatives in the Inter-American Defense Board, up to 3 (three) Secretariats, and one Internal Control agency; ...... ; XIV – of the Ministry of Justice: the Criminal and Correctional Policy National Council [Conselho Nacional de Política Criminal e Penitenciária], the National Council of Public Security, the Managing Federal Council of the Fund for the Defense of Diffuse Rights, the National Council of Piracy Combat and Crimes against Intellectual Property, the National Council of Records/Files, the National Council of Policies on Drugs, the Federal Police Department, the Federal Highway Police Department, the Federal Railroad Police Department, the Public Defender’s Office of the Union, the National Records and up to 6 (six) Secretariats; ......
§ 3 – [repealed] ......
§ 8 – The professionals of the Railroad Public Security from Rede group, Rede Ferroviária Federal [Federal Railroad Network] (RFFSA), Companhia Brasileira de Trens Urbanos [Brazilian Company of Urban Trains] (CBTU), and Companhia de Trens Urbanos de Porto Alegre (Trensurb) [Company of Urban Trains of Porto Alegre] which were in office on December 11, 1990, are now part of the Department of Federal Railroad Police of the Ministry of Justice [Departamento de Polícia Ferroviária Federal do Ministério da Justiça]." (NR)
Article 49 - The competencies pertinent to the civil aviation of the Ministry of Defense are hereby transferred to the Civil Aviation Office.
Article 50 - The assets belonging to the agencies hereby transferred, incorporated or dismembered will be transferred to the Ministries, agencies, and entities that will have absorbed the corresponding competencies.
Sole Paragraph - The permanent personnel of the agencies referred to in this article will be transferred to the Ministries and agencies that will have absorbed the corresponding competencies.
Article 51 - The Ministry of Defense and the Ministry of Planning, Budget, and Management will take, until June 1st, 2011, the measures necessary to make the transfers set forth herein, including moving appropriations destined to the agencies transferred.
Sole Paragraph - Within the term provided for in the head of this article, the Ministry of Defense will provide the legal and administrative support necessary to ensure the continuity of the activities of the Civil Aviation Office.
Article 52 - The servants and military personnel required by the Presidency in office, on December 31, 2010, in the Amazon Protection System Managing and Operational Center [Centro Gestor e Operacional do Sistema de Proteção da Amazônia], in the National Archive and in the National Secretariat of Policies on Drugs, may remain at the disposal of the Ministry of Defense and of the Ministry of Justice, respectively, to work in those units, as well as be again requested to rejoin in the event of their having returned to the original agencies or entities prior March 18, 2011.
§ 1 - The servants and the military personnel referred to in the head of the article may be appointed for the exercise of Representation Gratuities of the Presidency or of Exercise Gratuity in Position of Trust in the Agencies 103
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of the Presidency – payable to the military personnel as they remain in the agencies to which they have been required.
§ 2 - [repealed]
§ 3 - The provisions in the sole paragraph of article 2, Law No. 9,007, of March 17, 1995, to the servants mentioned in this article.
SECTION II – ADAPTATIONS TO ANAC LEGISLATION
Article 53 - Law No. 11,182, of September 27, 2005, is now in force with the following amendments:
"Article 3 – Anac, in the exercise of its competencies, shall abide by and implement the guidelines, directives, and policies set forth by the federal government, especially in that which is pertinent to: ...... " (NR)
"Article 8 - ......
XXII – to approve the airport directive plans; XXIII – [repealed]; ...... XXVII – [repealed]; XXVIII – to inspect the compliance with the technical requirements in the construction, renovation, and expansion of airfields and to have their opening to traffic approved; ...... XXXIX – to present a budget proposal to the State Minister Chief of the Civil Aviation Office of the Presidency of the Republic; XL – to prepare and send the annual report on its activities to the Civil Aviation Office of the Presidency and, through the Presidency, the Congress; ...... XLVII – [repealed]; ...... " (NR)
"Article 11 -......
I – propose, through the Chief State Minister of the Secretariat of Civil Aviation of the Presidency, to the President, changes to Anac regulations; ...... " (NR) Article 14 - ......
§ 2 – The Chief State Minister of the Secretariat of Civil Aviation of the Presidency shall initiate disciplinary administrative processes, to be conducted by a special commission formed by federal civil servants, and the President of the Republic shall determine the temporary removal, should it be the case, and to deliver judgment." (NR)
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SECTION III – ADAPTATIONS TO INFRAERO LEGISLATION
Article 54 - Article 2, Law No. 5,862, of December 12, 1972, is now in force with the following wording:
"Article 2 – aInfraero will have the purpose of implementing, managing, operating, and both industrially and commercially exploring the airport infrastructure which is attributed to Infraero by the Secretariat of Civil Aviation of the Presidency of the Republic...... " (NR)
SECTION IV – ADAPTATION TO THE FEDERAL PROGRAM OF AID TO AIRPORTS
Article 55 - Article 1st, Law No. 8,399, of January 7, 1992, will come into effect with the following amendments:
"Article 1 – ......
§ 2 - The 20% (twenty percent) share referred to in this article will comprise the financial support of the Federal Program of Aid to Airports to be proposed and established in accordance with the Aviation Plans of the State and established by means of covenants executed between the State Governments and the Secretariat of Civil Aviation of the Presidency of the Republic.
§ 3 - The state airports in the Aviation Plans and that are objects of specific covenants executed between the State Government interested and the Secretariat of Civil Aviation of the Presidency of the Republic will receive with the resources set forth in § 2...... " (NR)
SECTION V – OFFICES RESULTING FROM THE RESTRUCTURING OF THE SECRETARIAT OF CIVIL AVIATION
Article 56 - The office of Chief State Minister of the Secretariat of Civil Aviation of the Presidency of the Republic is hereby created.
Article 57 - The office in commission, of special nature, of the Executive Secretary of the Secretariat of Civil Aviation of the Presidency of the Republic is hereby created.
Article 58 - The following offices (commission positions) are hereby created in the federal public administration, in the Higher Management and Advisory Group [Grupo-Direção e Assessoramento Superiores] for the Secretariat of Civil Aviation of the Presidency:
I – 2 (two) DAS -6; II – 9 (nine) DAS -5; III – 23 (twenty-three) DAS -4; IV – 39 (thirty-nine) DAS -3; V – 35 (thirty-five) DAS -2; VI – 19 (nineteen) DAS -1.
Article 59 - The special position of National Secretary of Policies on Drugs is hereby transformed into the special position of Chief Advisor of the Special Advisory to the President. 105
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Article 60 - Table “a” of Annex I of Law No. 11526, of October 4, 2007, is now in effect with the following line added:
Chief Advisor of the Special Advisory to the President 11.179,36
SECTION VI – AIR TRAFFIC CONTROL PERSONNEL
Article 61 - Article 2 of Law No. 11,458, of March 19, 2007, is now in effect with the following writing:
"Article 2 – The hiring referred to in this Law will be of 160 (one hundred sixty) people at the most, with a term of up to 2 (two) years, that may be extended for successive periods until March 18, 2013.
§ 1 - Extensions for periods after the date provided in the head of this article may be authorized, by joint action of the Ministers of State of Defense and of Planning, Budget, and Management, by justification describing the reasons that have prevented totally replacing the temporary servants by permanent ones hired under item II, Article 37 of the Federal Constitution.
§ 2 - In the case of § 1 of this article, a regulation will establish criteria for a gradual replacement of the temporary servants.
§ 3 - No contract addressed by this Law may go beyond December 1, 2016." (NR)
Article 62 - 100 (one hundred) effective positions of intermediate-level Air Traffic Controller in the Body of Staff of the Command of the Air Force are hereby created, part of the Air Defense and Air Traffic Control [Group- Defesa Aérea e Controle de Tráfego Aéreo], code Dacta-1303.
SECTION VII – CREATION OF THE FUNDO NACIONAL DE AVIAÇÃO CIVIL [NATIONAL CIVIL AVIATION FUND] (FNAC)
Article 63 - The National Fund of Civil Aviation [Fundo Nacional de Aviação Civil] (FNAC) is hereby established, with an accounting and financial nature, connected to the Secretariat of Civil Aviation of the Presidency, for the destination of the resources of the civil aviation system.
§ 1 - FNAC’s funds are:
I – those pertinent to the additional tariff as provided in Article 1st, Law No. 7,920, of December 12, 1989; II – the ones mentioned in Article 1st, Law No. 9,825, of August 23, 1999; III – the amounts owed as a counterpart to the Union by virtue of the airport infrastructure grants; IV – the returns of their financial investments; V – those attributed to it for the purposes of the provisions in Article 63-A; and VI – others that may be attributed.
§ 2 - FNAC’s funds will be used to develop and promote the civil aviation sector and airport and civil aeronautics infrastructures.
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§ 3 - FNAC’s expenses will take place under an appropriation allocated in the general federal budget, in compliance with the annual limits applicable to transactions and spending authorization and payment.
§ 4 - The Secretariat of Civil Aviation of the Presidency must make available, annually, on its website, financial and accounting information, in addition to a description of the financial and social results attained by FNAC.
§ 5 - FNAC’s funds may also be used in the development, expansion, and restructuring of airports granted, as long as such actions are not an obligation of the concessionaire, as set forth in the concession contract, per the provisions in the regulation issued by the National Agency of Civil Aviation [Agência Nacional de Aviação Civil] – ANAC and by the Secretariat of Civil Aviation of the Presidency, according to their respective competencies.
§ 6 - FNAC’s funds, while not used for the purposes provided in Article 63-A, will be deposited in the Single Account of the National Treasure.
Article 63-A - FNAC’s funds will be managed and administered by the Secretariat of Civil Aviation of the Presidency or, at its discretion, by government-owned financial institution, when destined to be used in modernization, construction, expansion or renovation of government-owned airfields.
§ 1 - For the attainment of the objectives provided in the caput, Secretariat of Civil Aviation of the Presidency will, directly or at its discretion, through a federal state-owned financial institution, perform a bidding procedure, with powers to, in its own name or in the name of third parties, purchase assets and procure engineering works and services, and make use of RDC.
§ 2 - A joint act issued by the Ministry of Finance and the Civil Aviation of the Presidency will establish the compensation to the financial institution providing services, in accordance with this article.
CHAPTER III – FINAL PROVISIONS
Article 64 - The Federal Executive Branch will issue regulation with respect to the provisions in Chapter I of this Law.
Article 65 - Until the Olympic Public Authority [Autoridade Pública Olímpica] defines the Olympic Projects Portfolio, the provisions herein are exceptionally applicable to the procurements arising from item I, Article 1st herein, as long as they are indispensable for the fulfillment of obligations undertaken with the International Olympic Committee and International Para-Olympic Committee, and its need is substantiated by the contracting party of the work or service.
Article 66 - For the projects set forth in items I to III of Article 1st herein, the deadline set forth in item II, § 1, Article 8 of Provisional Measure No. 2,185-35, of August 24, 2001, is, from herein on, the December 31, 2013.
Article 67 - Law No. 12,350, of December 20, 2010, is now in force with the addition of Article 62-A, as follows:
"Article 62-A - To the effects of the analysis of the credit transactions to fund the projects for the Olympic and Para-Olympic Games, Confederations Cup of the International Federation of Football Association – Fifa 2013 and for the 2014 Fifa World Cup, the verification of compliance will be carried out through the main Corporate 107
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Taxpayer Identification Number (CNPJ) representing the legal entity of the borrower or beneficiary of the credit transaction."
Article 68 - Item II, § 1 of Article 8 of Provisional Measure No. 2,185-35, of August 24, 2001, is now in force with the following language:
"Article 8 - ......
§ 1 – ......
II – the loans or financing taken with multi-lateral development and cooperation financial organisms and institutions related to foreign governments, the National Bank of Economic and Social Development National Bank [Banco Nacional de Desenvolvimento Econômico e Social] (BNDES) and Caixa Econômica Federal, that have a positive assessment of the funding agency, and as long as contracted within the 2-year term, as of the publication of the Law converting Provisional Measure No. 527, of March 18, 2011, into law and exclusively destined to supplement ongoing programs; ...... " (NR)
CHAPTER IV – REVOCATIONS
Article 69 - The following provisions are hereby revoked:
I – §§ 1 and 2 of Article 6, item 6 of letter i of item XII of Article 27, and § 3 of the Article 29, all of Law No. 10,683, of May 28, 2003; II - §§ 4 and 5 of Article 16 of Law No. 9,649, of May 27, 1998; and III - items XXIII, XXVII, and XLVII of Article 8 and § 2 of Article 10 of Law No. 11,182, of September 27, 2005.
Article 70 - This Law enters into effect on the date of its publication, producing financial effects with respect to Article 52 herein, as of the transfer of the agencies mentioned therein.
Brasília, August 4, 2011; the 190th year of the Independence and 123rd of the Republic.
DILMA ROUSSEFF Jose Eduardo Cardozo Nelson Henrique Barbosa Filho Iraneth Rodrigues Monteiro Orlando Silva de Jesus Júnior Luís Inácio Lucena Adams Wagner Bittencourt de Oliveira
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
FISCAL RESPONSIBILITY LAW – COMPLEMENTARY LAW No. 101
Establishes public finance rules enforcing responsibility in fiscal management, and other provisions.
THE PRESIDENT OF THE REPUBLIC – I hereby state that the National Congress has enacted and I have sanctioned the following Law:
CHAPTER I - PRELIMINARY PROVISIONS
Article 1 - This Complementary Law establishes public finance rules enforcing responsibility in fiscal management, under Title IV, Chapter II of the Brazilian Constitution.
§ 1 - Responsibility in fiscal management presupposes well-planned and transparent actions to prevent risks and correct deviations that may affect the equilibrium of public accounts, by compliance with revenue and expenditure results targets, observing limits and satisfying conditions regarding tax breaks, generation of personnel and social security expenditures, among others, consolidated and security debt, credit operations, including those involving revenue anticipation, guarantees issued and outstanding liabilities.
§ 2 - The provisions of this Complementary Law apply to the Federal government, the States, the Federal District, and the Municipalities.
§3 - When referring to:
I – the Federal Government, the States, the Federal District, and the Municipalities, the following is included: a) the Executive, Legislative (including the Audit Courts) and Judiciary Branches, and the Attorney General’s Office; b) their respective direct administrations, funds, government agencies, foundations, and state-owned enterprises;
II – the States, the Federal District is included; III – Audit Courts: the Federal Audit Court, State Audit Courts and, if applicable, Municipal Audit Courts are included
Article 2 - For the purposes of this Supplementary Law, the following definitions are used:
I – Member of the Federation: the Federal Government, each State, the Federal District, and each Municipality; II – controlled company: a company controlled by a member of the Federation directly or indirectly, holding the majority of its voting shares; III – state-owned depending enterprise: a controlled company receiving funds from the controlling entity to cover personnel, overhead, or capital expenditures, excluding from capital expenditures, those resulting from increase in shareholder´s equity; IV – net current revenue: sum of revenues from taxes and contributions, on assets, on industrial and agricultural activities, on services, on current transfers and on other current revenues, subtracted:
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a) in the Federal Government, the amounts transferred to States and Municipalities pursuant to the Law or Brazilian Constitution, and the contributions mentioned in Article 195, item I, a, and item II, and Article 239 of the Brazilian Constitution; b) in the States, the amounts transferred to the Municipalities pursuant to the Brazilian Constitution; c) in the Federal Government, States, and Municipalities, public employee contributions towards their social security and assistance system, and revenues from the financial compensation mentioned in Article 201, § 9 of the Brazilian Constitution.
§ 1 - Net current revenue must be calculated including amounts paid and received pursuant to Complementary Law No. 87, of September 13, 1996, and including the fund provided for in Article 60 of the Transitional Brazilian Constitutional Provisions Act.
§ 2 - Net current revenue of the Federal District and the States of Amapá and Roraima must not include the funds received from the Federal Government to cover the expenditures mentioned in Article 19, § 1, item V.
§ 3 - Net current revenue must be calculated by adding revenues collected in the reference month and in the 11 previous months, excluding any duplicate inputs.
CHAPTER II - THE PLANNING PROCESS SECTION I – THE MULTIYEAR PLAN (PPA)
Article 3 - [repealed]
SECTION II – THE BUDGETARY DIRECTIVES LAW
Article 4 - The Budgetary Directives Law must comply with the provisions of Article 165, § 2 of the Brazilian Constitution, and:
I – it must provide for: a) the balance between revenues and expenditures; b) commitment criteria and restrictions, to be implemented in the hypotheses mentioned in item II, b of this article, in Article 9, and in Article 31, § 1, item II. c) [repealed] d) [repealed] e) rules on cost control and evaluation of results of programs financed with budgetary resources; f) all other conditions and requirements for the transfer of funds to public and private entities;
II – [repealed] III – [repealed]
§ 1 - The Budgetary Directives Law must enclose a Fiscal Target Appendix, which will set annual targets, in current and constant amounts, for revenues and expenditures, nominal and primary results, and the public debt, for the current and for the two subsequent years.
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§ 2 - The Appendix must also contain:
I – evaluation of compliance with the previous year´s targets; II – statement of annual targets, accompanied by the methodology and the historical records of calculation that support the intended results, comparing these targets with those for the three previous years, and evidencing their consistency with the national economic policy premises and objectives; III – evolution of net worth, also in the last three years, with emphasis on the source and use of funds derived from asset transfers; IV – evaluation of the financial and actuarial position: a) of the general and public social security systems, as well as of the Workers’ Aid Fund – (Fundo de Amparo ao Trabalhador – FAT); b) of all other public funds and actuarial state programs;
V – statement of estimate and offsetting of tax breaks and growth margin of permanent mandatory expenditures.
§ 3 - The Budgetary Guidelines Law must enclose a Fiscal Risk Appendix, evaluating contingent liabilities and other risks that may affect public accounts, and detailing the measures to be taken, should such occur.
§ 4 - The message submitting the Federal Government’s draft proposal must contain, in a specific appendix, the objectives of the monetary, credit, and foreign exchange policies, as well as the parameters and projections for major aggregates and variables, and inflation targets for the subsequent year.
SECTION III – THE ANNUAL BUDGETARY LAW
Article 5 - The Annual Draft Budgetary Law, which must be consistent with the Multiannual Plan (PPA), the Budgetary Directives Law, and the provisions of this Complementary Law:
I – must contain, attached thereto, a statement of consistency between the budget programming and the objectives and targets included in the document mentioned in Article 4, § 1; II – must be accompanied by the document mentioned in Article 165, § 6 of the Brazilian Constitution, as well as the measures to offset tax breaks and tax increases in continuing mandatory expenditures; III – must contain a contingency reserve, the use and amount of which must be defined in the Budgetary Directives Law based on net current revenue, aimed at: a) [repealed] b) meeting contingent liabilities and other fiscal risks and unforeseen events.
§ 1 - All expenditures involving public securities or contractual debt and corresponding revenues must be consigned in the Annual Budgetary Law.
§ 2 - The refinancing of public debt must be stated separately in the Budgetary Law and in legislation on additional credits.
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§ 3 - The monetary updating of the principal of the refinanced securities debt must not exceed the change in the price index provided for in the Budgetary Directives Law or in specific legislation.
§ 4 - Setting aside credits with imprecise objectives or unlimited allocations in the Annual Budgetary Law is prohibited.
§ 5 - The Annual Budgetary Law must not allocate funds for investments spanning more than one fiscal year – which are not included in the Multiannual Plan (PPA) or in the form of a legal text authorizing its inclusion therein, as provided for in Article 167, § 1 of the Brazilian Constitution.
§ 6 - Brazilian Central Bank expenditures on personnel and social charges, administrative current expenditures – – including civil servants’ benefits and assistance to the institution´s employees –– and investments, must be part of the Federal government’s expenditures and be included in the Annual Budgetary Law.
§ 7 - [repealed]
Article 6 - [repealed]
Article 7 - Brazilian Central Bank results, which are determined after the computation or its reversal, are classified as National Treasury revenue and must be transferred within ten business days after the approval of the half- year balance sheets.
§ 1 - The negative results must be classified as a Treasury liability to the Brazilian Central Bank, and it must be stated in a specific budget allocation account.
§ 2 - The impact and the fiscal cost of the Central Bank´s operations must be stated quarterly, as provided for in the Federal Government’s Budgetary Directives Law.
§ 3 - The quarterly balance sheets of Brazilian Central Bank must consign explanatory notes on the costs of earnings on the National Treasury available resources and the maintenance of foreign exchange reserves, as well as the profitability of its securities portfolio, particularly those securities issued by the Federal government.
SECTION IV - THE BUDGETARY EXECUTION AND THE COMPLIANCE WITH FISCAL TARGETS
Article 8 - Based on the term of the Budgetary Directives Law and in due compliance with the provisions in letter c, item I of article 4, the Executive Branch must define, up to 30 (thirty) days after the publication of the budgets, the financial programming and the monthly disbursement schedule.
Sole Paragraph - The financial resources legally earmarked for a specific purpose must be used solely to meet the intended purpose, even if not in the same year as the respective inflow.
Article 9 - If, by the end of two months, it is concluded that the revenue inflow may not be enough to ensure the compliance with the primary or nominal result targets set in the Fiscal Target Appendix, the Branches and the General Attorney’s Office must, at their own initiative and in the required amounts, within the next 30 days, take measures to restrict commitments and financial operations, according to the criteria set in the Budgetary Directives Law. 112
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§ 1 - Should the forecasted revenue be reestablished, even partially, the appropriations for which funding commitments were restricted must be replenished in proportion to the reductions previously made.
§ 2 - The restriction must not be extended to legal or constitutional expenditures of the member of the Federation, including those reserved to payment of debt servicing, and those not consigned in the Budgetary Directives Law.
§ 3 - Should the Legislative and Judiciary Branches, as well as the Office of the Federal Prosecutor not adopt measures to introduce such limitations within the mentioned period in the head of this article, the Executive Branch is authorized to limit the financial resources pursuant to criteria established in the Budgetary Directives Law.
§ 4 - By the end of May, September, and February, the Executive Branch must present and evaluate the compliance with fiscal targets for each 4-month period, in a public hearing held at the committee referred to in Article 166, § 1 of the Brazilian Constitution, or an equivalent body in the state and municipal legislatures.
§ 5 - Within 90 days from the end of each half-year period, the Brazilian Central Bank must present, in a joint meeting with the relevant National Congress thematic commissions, the evaluation of the compliance with the objectives and targets of the monetary, credit, and foreign exchange policies, detailing the impact and the fiscal cost of its operations and the results shown in the balance sheets.
Article 10 - The budget and financial execution must identify, through the use of an accounting and financial administration system, the beneficiaries of the payments of court decisions, in order to comply with the chronological order established in Article 100 of the Brazilian Constitution.
CHAPTER III - PUBLIC REVENUES SECTION I - THE FORECAST AND THE COLLECTION OF PUBLIC REVENUES
Article 11 - The creation, forecast, and effective collection of all taxes levied by the member of the Federation pursuant to the Brazilian Constitution are basic requirements for responsibility in fiscal management.
Sole Paragraph - No voluntary transfers that fail to comply with the provisions mentioned in the caput can be made to the member of the Federation.
Article 12 - Revenue forecasts must comply with technical and legal standards, taking into account the effects of changes in the legislation, in the price index variations, economic growth or any other relevant factor, and must be accompanied by a statement of its evolution in the last three years, a projection for the next two years, and the calculation methodology and premises adopted.
§ 1 - Revenue forecast revisions by the Legislative Branch will only be permitted with proof of technical or legal error or omission.
§ 2 - The estimated revenue for credit operations must not exceed the capital expenditures included in the draft Annual Budgetary Law.
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§ 3 - At least 30 days before the deadline for submission of their budget proposals, the Executive Branch of each member of the Federation must place at the disposal of the other Branches and the Attorney General’s Office, the studies and revenue estimates for the following year, including the net current revenue, and the respective memorandum items.
Article 13 - Within the term set in Article 8, estimated revenues must be broken down by the Executive Branch into bimonthly collection targets, including, if applicable, a separate description of measures to combat tax fraud and evasion, the number and amounts of judicial suits for the collection of outstanding tax debts, as well as the evolution of tax credits that may be subject to legal collection procedures.
SECTION II - TAX BREAKS
Article 14 - The granting or broadening of tax incentives or benefits resulting in tax breaks must be accompanied by an estimate of its budgetary/financial impact in the year it becomes effective and in the two subsequent years; it must also comply with the provisions of the Budgetary Directives Law and meet at least one of the following conditions:
I – proof, by the proposing party, that the tax breaks have been considered in the revenue estimate of the Annual Budgetary Law, under Article 12, and that it will not affect the tax result targets included in the appendix to the Budgetary Directives Law; II – be accompanied by countervailing measures, during the period mentioned in the caput, through revenue increase measures such as tax rate raises, expansion of the tax base, increase in or creation of taxes or contributions.
§ 1 - The tax break comprises amnesty, remission, subsidy, presumed credit, exemptions granted on an exceptional basis, changes in tax rate or calculation base which implies in a discriminating reduction in taxes or contributions, and other benefits that result from a differentiated treatment.
§ 2 - If the granting or broadening of the incentive or benefit mentioned in the caput stems from the condition described in item II, the benefit will become effective only when the measures in the above mentioned item are implemented.
§ 3 - The provisions of this article must not apply to:
I – changes in the rates of the taxes mentioned in Article 153, § 1, items I, II, IV and V of the Brazilian Constitution; II – debt cancellation in an amount lower than the respective collection costs.
CHAPTER IV - PUBLIC EXPENDITURES SECTION I - THE EXPENDITURE GENERATION
Article 15 - Any expenditure generated or any liability assumed that fail to comply with the provisions of Articles 16 and 17 will be considered unauthorized, irregular, and harmful to the public finances.
Article 16 - The creation, expansion of or improvement in government action which results in an expenditure increase must be accompanied by:
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I – an estimate of the budgetary/financial impact in the year it becomes effective and in the two subsequent years; II – a statement by the expenditure requestor reporting that the increase is consistent with the budgetary and financial aspects of the Annual Budgetary Law, and compatible with the Multiannual Plan (PPA) and the Budgetary Directives Law.
§ 1 - For the purposes of this Complimentary Law, the following is considered:
I – adequately covered by the Annual Budgetary Law, when the expenditure covered by specific and adequate budget allocation, or that is included in a generic credit, so that the sum of all effected and to be effected expenditures of the same kind, as estimated in the work program, does not exceed the limits set for the year; II – compatible with the Multiannual Plan (PPA) and the Budgetary Directives Law, the expenditure which complies with the guidelines, objectives, priorities, and targets established in those instruments, and do not violate any of their provisions.
§ 2 - The estimate mentioned in item I of the head of this article must be accompanied by the premises and calculation methodology utilized.
§ 3 - The provision of this article must not apply to expenditures deemed immaterial, as defined in the Budgetary Directives Law.
§ 4 - The rules set in the caput are a precondition for:
I – funding commitments and tenders involving services, supply or goods, or execution of works; II – expropriation of urban real estate as referred in Article 182, § 3 of the Brazilian Constitution.
SUBSECTION I - THE MANDATORY CONTINUING EXPENDITURES
Article 17 - Current expenditures are considered to be mandatory and of a continuous nature when deriving from the law, provisional measure or normative administrative act, which determines that the member of the Federation must execute such outlays for a period of more than two years.
§ 1 - The acts creating or increasing the expenditures referred to in the caput must be accompanied by the estimate mentioned in Article 16, item I, and show the origin of funds for its financing.
§ 2 - In order to comply with § 1, the act must be accompanied by proof that the expenditure thus created or increased will not affect the fiscal result targets set in the appendix mentioned in Article 4, § 1, and its financial effects must be offset, in the subsequent years, by a permanent revenue increase or permanent expenditure decrease.
§ 3 - For the purposes of § 2, a permanent revenue increase is that arising from the increase in tax rates, the broadening of calculation base, or the increase or creation of tax or contribution.
§ 4 - The proof referred to in § 2, presented by the expenditure requestor, must contain the calculation premises and also the methodology adopted, without restricting the evaluation consistency of the revenue with all other rules of the Multiannual Plan (PPA) and the Budgetary Directives Law. 115
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§ 5 - The expenditure referred to in this article must not be executed before the implementation of the measures mentioned in § 2, which must be an integral part of the instrument creating or increasing it.
§ 6 - The provisions of § 1 must not apply to expenditures relating to the debt service or personnel wage increases mentioned in Article 37, item X of the Brazilian Constitution.
§ 7 - The extension of an expenditure created for a limited period must be considered as an expenditure increase.
SECTION II - PERSONNEL EXPENDITURES SUBSECTION I - DEFINITIONS AND LIMITS
Article 18 - For the purposes of this Supplementary Law, total personnel expenditure is defined as: the sum of expenditures incurred by the member of the Federation with active and inactive workers, and retirees, in connection with elective mandates, positions, functions or jobs; civil and military personnel and members of the Branches of the government, with any kind of remuneration, such as wages and fixed and variable benefits, subsidies, pensions, including any additional payments, bonuses, overtime and fringe benefits of any kind, as well as social security charges and contributions withheld by the member of the Federation on behalf of the social security agencies.
§ 1 - The amounts of outsourcing contracts relating to the substitution of public servants and employees must be registered as “Other Personnel Expenditures”.
§ 2 - Total personnel expenditures must be determined on an accrual basis, by adding expenditures incurred in the base month with those incurred in the eleven preceding months.
Article 19 - For the purposes mentioned in the body of Article 169 of the Brazilian Constitution, total personnel expenditures incurred in each determination period by each Federal member of the Federation must not exceed the following net current revenue percentages:
I – Federal government: 50 percent; II – States: 60 percent; III – Municipalities: 60 percent.
§ 1 - The following expenditures must not be considered when evaluating the compliance with the limits set in this article:
I – severance pay for dismissal of servants or employees; II – voluntary separation incentives; III – those derived from the application of the provisions of Article 57, § 6, item II of the Brazilian Constitution; IV – those resulting from judicial decision and relating to a period prior to the determination one, as referred to in Article 18, § 2; V – personnel expenditures of the Federal District and the states of Amapá and Roraima, covered by funds transferred by the Federal government under Article 21, items XIII and XIV of the Brazilian Constitution, and Article 31 of Brazilian Constitutional Amendment No. 19;
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VI – expenditures with inactive workers, even if effected through a specific fund, when financed by original resources such as: a) receipts from taxpayer contributions; b) the financial compensation mentioned in Article 201, § 9 of the Brazilian Constitution; c) all other receipts collected directly by earmarked funds, including the proceeds resulting from the transfer of property, rights and assets, as well as its financial surplus.
§ 2 - Personnel expenditures resulting from judicial decisions must be included in the limit of the respective Branch or organ referred to in Article 20, in compliance with the provisions of § 1, item IV.
Article 20 - The distribution of the overall limits set in Article 19 must not exceed the following percentages:
I – at the Federal level: a) 2.5 percent for the Legislative Branch, including the Federal Audit Court; b) 6 percent for the Judiciary Branch; c) 40.9 percent for the Executive Branch, of which 3 percent must be allocated to personnel expenditures related to the provisions of Article 21, items XIII and XIV of the Brazilian Constitution, and Article 31 of Brazilian Constitutional Amendment No. 19, distributed in proportion to the average expenditures related to each of these provisions––expressed as a percentage of net current revenue––incurred in the three fiscal years preceding the publication of this Supplementary Law; d) 0.6 percent for the Office of the Federal Prosecutor;
II – at the State level: a) 3 percent for the Legislative Branch, including the State Audit Court; b) 6 percent for the Judiciary Branch; c) 49 percent for the Executive Branch; d) 2 percent for the Office of the State Prosecutor;
III – at the Municipal level: a) 6 percent for the Legislative Branch, including the Municipal Audit Court, if applicable; b) 54 percent for the Executive Branch.
§ 1 - The limits for the Legislative and Judiciary Branches of each government level must be distributed among their bodies, in proportion to average personnel expenditures, expressed as a percentage of net current revenue, incurred in the three fiscal years preceding the publication of this Supplementary Law.
§ 2 - For the purposes of this article, the term “body” encompasses:
I – the Office of the Federal Prosecutor; II – in the Legislative Branch: a) at the Federal level, the respective Houses and the Federal Audit Court; 117
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b) at the State level, the Legislative Assembly and the Audit Courts; c) in the Federal District, the Legislative Chamber and the Federal District Audit Court; d) at the Municipal level, the City Council and the Municipal Audit Court, if applicable;
III – in the Judiciary Branch: a) at the Federal level, the courts referred to in Article 92 of the Brazilian Constitution; b) at the State level, the State Courts and others, if applicable.
§ 3 - The limits for personnel expenditures of the Judiciary Branch, covered by the Federal government pursuant to Article 21, item XIII of the Brazilian Constitution, must be set by applying the rule stated in § 1.
§ 4 - In the States in which there are Municipal Audit Courts, the percentages defined in the caput, item II, a and c, must be increased and reduced by 0.4 percent, respectively.
§ 5 - For the purposes of Article 168 of the Brazilian Constitution, the transfer of financial resources corresponding to total personnel expenditures by Branch and organ must result from the application of the percentages defined in this article, or those established in the Budgetary Directives Law.
§ 6 - [repealed]
SUBSECTION II - CONTROL OVER TOTAL PERSONNEL EXPENDITURES
Article 21 - It will be null and void any act resulting in increase in personnel expenditures and also that fails to comply with:
I – the requirements of Articles 16 and 17 of this Complementary Law, and the provisions of Article 37, item XIII and Article 169, § 1 of the Brazilian Constitution; II – the legal commitment limit applied to inactive personnel expenditures;
Sole Paragraph - It will also be null and void the act resulting in an increase in personnel expenditures when issued within 180 days before the end of the term of the Head of the respective Branch or organ referred to in Article 20.
Article 22 - The compliance with the limits established in Articles 19 and 20 must be evaluated at the end of each 4-month period.
Sole Paragraph - If total personnel expenditures exceed 95 percent of the limit, the Branch or body referred to in Article 20 which has exceeded the limit must be prohibited from:
I – granting any advantage, increase, adjustment or correction of remuneration for any reason, other than those arising from judicial decision, legal or contractual order, except for the review provided for in Article 37, item X of the Brazilian Constitution; II – creating a position, job, or function; III – changing the career path if this implies in an increase in expenditures;
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IV – offering public employment positions, admitting or hiring personnel for any reason, except when the replacement results from retirement or death of public servants in the education, health, and security areas; V – contracting overtime work, except in the case mentioned in Article 57, § 6, item II of the Brazilian Constitution and in those provided for in the Budgetary Directives Law.
Article 23 - If total personnel expenditures of the Branch or organ referred to in Article 20 exceeds the limits set in that article, without prejudice to the measures described in Article 22, the excess percentage must be eliminated in the two subsequent 4-month periods ––with at least 1/3 of such excess being eliminated in the first 4-month period––and also the measures provided for in Article 169, §§ 3 and 4 of the Brazilian Constitution, among others, must be adopted.
§ 1 - In the case mentioned in Article 169, § 3, item I of the Brazilian Constitution, the objective may be attained either by abolishing positions and functions or by reducing the values attributed to them.
§ 2 - The temporary reduction in working hours must be allowed, and wages must be adapted to the new work schedule.
§ 3 - If the reduction is not completed in the prescribed period, as long the excess continues, the member of the Federation will be prohibited from:
I – receiving voluntary transfers; II – obtaining direct or indirect guarantee from other member of the Federation; III – contracting into credit operations, except for those aimed at refinancing securities debt and those aimed at reducing personnel expenditures.
§ 4 - The restrictions stated in § 3 must be immediately applied when total personnel expenditures exceed the limit during the first 4-month period of the final year of the term in office of the Heads of the Branch or organ referred to in Article 20.
SECTION III - SOCIAL SECURITY EXPENDITURES
Article 24 - No social security benefit or service may be created, increased or extended without indication of the total financing source, according to Article 195, § 5 of the Brazilian Constitution, and in compliance with Article 17.
§ 1 - The offsetting referred to in Article 17 must not apply to increase in expenditures resulting from:
I – benefit granted to those meeting the eligibility criteria established in the relevant legislation; II – quantitative expansion of operations and services rendered; III – adjustment in the amount of benefits or services with the purpose of preserving its true amount.
§ 2 - The provisions of this article applies to health, social security and social assistance services or benefits, including those granted to public and military personnel, active and inactive servants, and pensioners.
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CHAPTER V - VOLUNTARY TRANSFERS
Article 25 - For the purposes of this Complementary Law, voluntary transfer is defined as the transfer of current or capital resources to other Member of the Federation, in the form of cooperation, aid or financial assistance, which does not arise from Brazilian Constitutional or legal determination nor is determined by the Single Health System (SUS).
§ 1 - Requirements for voluntary transfers, in addition to those established in the Budgetary Directives Law, include:
I – the existence of a specific budget allocation; II – [repealed] III – the compliance with the provisions of Article 167, item X of the Brazilian Constitution; IV – the proof, by the beneficiary that: a) there are no outstanding taxes, loans and financing due to the transferor, and that previously received funds have been duly accounted for; b) it is in compliance with Brazilian Constitutional limits regarding education and health; c) it is in compliance with the limits set for consolidated and securities debt, as well as those for credit operations, including revenue anticipation, recorded in outstanding commitments and total personnel expenditures; d) budgetary estimate of counterpart funds.
§ 2 - Transferred utilization of resources for any purpose other than the agreed one is prohibited.
§ 3 - Voluntary transfers relating to education, health, and social assistance actions will not be used with the purpose of applying the sanctions of suspension of voluntary transfers in this Complementary Law.
CHAPTER VI - ALLOCATION OF PUBLIC FUNDS TO THE PRIVATE SECTOR
Article 26 - The direct or indirect allocation of funds to meet the needs of individuals or to cover corporate losses must be authorized by a specific law, must satisfy the conditions established in the Budgetary Directives Law and must be consigned in the budget or in the additional credits.
§ 1 - The provisions of the head of this article must apply to all indirect administrations, including public foundations and state enterprises, except for the financial institutions and the Brazilian Central Bank, in the performance of their core activities.
§ 2 - Those provisions also apply to the granting of loans, financing and refinancing operations, including the respective debt postponement or composition, the granting of subsidies and the participation in capital structure or in capital increase.
Article 27 - Financial charges, fees or similar expenditures related to credits granted by a Member of the Federation to an individual or corporation not directly or indirectly controlled by it, must not be lower than those set by law or lower than the fund raising costs.
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Sole Paragraph - Debt postponement and debt composition arising from credit operations, as well as loans or financing granted in disagreement with the provisions of the caput, will be subject to a specific legal authorization, and the corresponding subsidy must be consigned in the Annual Budgetary Law.
Article 28 - Unless stated in specific legislation, public funds, including those arising from credit operations, must not be used to rescue member institutions of the National Financial System, not even through recovery loans or financing aimed at enabling the transfer of the shareholders control.
§ 1 - The prevention of insolvency and other risks will be exercised through funds and other mechanisms, constituted by member institutions of the National Financial System, according to the current legislation.
§ 2 - The provisions of the caput do not prohibit Brazilian Central Bank from granting discount window operations and loans with maturities with less than 360 days to financial institutions.
CHAPTER VII - DEBT AND INDEBTEDNESS SECTION I - BASIC DEFINITIONS
Article 29 - For the purposes of this Complementary Law, the following definitions will be adopted:
I – consolidated long-term public debt: total amount, determined without double accounting, of financial liabilities assumed by the Member of the Federation, according to the terms of legal contracts, agreements or treaties, generated by credit operations and scheduled for total amortization over a 12-month period; II – public securities debt: public debt represented by securities issued by the federal government, including those of Brazilian Central Bank, the States and Municipalities; III – credit operation: financial obligation assumed resulting from a mutual loan, credit granting, issuance and acceptance of security, financing for the acquisition of goods, anticipated revenue from the term, sale of goods and services, leasing and similar operations, including the use of financial derivatives; IV – granting of guarantee: commitment to fully honor a financial or contractual obligation assumed by a member of the Federation or its related organs; V – refinancing of securities debt: issuance of securities to repay the principal plus monetary updating.
§ 1 - Debt assumption or acknowledgement, as well as the confession of indebtedness by the member of the Federation will be equivalent to a credit operation, without prejudice of the compliance with the provisions of Articles 15 and 16.
§ 2 - The Federal government’s public consolidated debt must also consign the debt relating to the issuance of securities under the responsibility of Brazilian Central Bank.
§ 3 - Credit operations of less than 12 months are also included in public consolidated debt, when its corresponding revenues are stated in the budget.
§ 4 - At the end of each fiscal year, the refinancing of the principal of securities debt must not exceed the amount registered at the end of the previous year, added to the amount of credit operations authorized in the budget for that purpose and effectively realized, plus monetary updating.
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SECTION II - LIMITS ON PUBLIC DEBT AND CREDIT OPERATIONS
Article 30 - Within 90 days from the publication of this Complementary Law, the President of the Republic must submit to the:
I – Federal Senate: the proposal of overall limits for the amount of consolidated debt of the Federal government, the States and Municipalities, pursuant to Article 52, item VI of the Brazilian Constitution, as well as the limits and conditions referred to in items VII, VIII and IX of the same article; II – National Congress: a bill establishing limits for the amount of federal securities debt, as mentioned in Article 48, item XIV of the Brazilian Constitution, accompanied by a statement of its consistency with the limits set for the Federal government’s consolidated debt, pursuant to the provisions of item I, § 1 of this article.
§ 1 - The proposals referred to in items I and II of the head of this article and their amendments must contain:
I – the demonstration that the limits and conditions are consistent with the rules set in this Complementary Law and with the fiscal policy objectives; II – the estimated impact of the application of the limits on each of the three levels of government; III – the reasons for any proposal of differentiated limits for each level of government; IV – the calculation methodology for determining the primary and nominal results.
§ 2 - The proposals mentioned in items I and II of the head of this article may also be submitted in terms of net debt, with a description of its calculation methodology.
§ 3 - The limits mentioned in items I and II of the head of this article must be set as a percentage of net current revenue for each government level, and must also apply to all Federation entities of each level, and must constitute the cap applicable to them.
§ 4 - The amount of the consolidated debt must be determined at the end of each 4-month period, for the purpose of verifying the compliance with the cap.
§ 5 - Within the period mentioned in Article 5, the President of the Republic must submit to the Federal Senate or to the National Congress, depending on each case, a proposal to maintain or alter the limits and conditions established in items I and II of the caput.
§ 6 - Whenever the fundamentals of the proposals referred to in this article are changed, due to economic instability or changes in the monetary or exchange policies, the President of the Republic may submit to the Federal Senate or National Congress a request for a review of the current limits.
§ 7 - Judicial payments not made during the execution of the budget in which they were included must be considered part of the consolidated debt for the purpose of application of the respective limits.
SECTION III - RESTRUCTURING DEBT ACCORDING TO THE ESTABLISHED LIMITS
Article 31 - Should the consolidated debt of a Member of the Federation exceed the respective limit at the end of a 4-month period, it must be brought within the limit by the end of the three subsequent periods, with a minimum of 25 percent reduction in the first period. 122
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§ 1 - As long as the excess is verified, violators of the limit:
I – will be prohibited from contracting internal or external credit operations, including revenue anticipations, except for the refinancing of the updated principal of securities debt; II – must obtain the primary result required to bring the debt within the established limit, and, among other measures, must restrict funding commitments, pursuant to Article 9.
§ 2 - Once the period for bringing the debt within the limit has expired, and as long as the excess persists, the member of the Federation will also be prohibited from receiving voluntary transfers from the Federal government or the States.
§ 3 - The restrictions of § 1 must apply immediately if the amount of debt exceeds the limit during the first 4- month period of the last year in office of the Chief of the Executive Branch.
§ 4 - The Ministry of Finance must disclose in a monthly basis the list of members of the Federation that have exceeded the limits of consolidated and securities debt.
§ 5 - The rules contained in this article must be observed in case of noncompliance with the limits set for securities debt and internal and external credit operations.
SECTION IV - CREDIT OPERATIONS SUBSECTION I - CONTRACTING CREDIT OPERATIONS
Article 32 - The Ministry of Finance must verify the compliance with the limits and conditions for the contracting of credit operations by each Member of the Federation as well as by any enterprise directly or indirectly controlled by them.
§ 1 - The interested member of the Federation must formalize its request based on opinion issued by its technical and legal agencies, presenting a cost-benefit analysis, economic and social interest of the intended operation and the compliance with the following conditions:
I – existence of prior written authorization, in the Annual Budgetary Law text, for contracting the operation, as additional credit or through specific law; II – inclusion of funds arising from the operation in the budget or in additional credits, except in case of anticipated revenues operations; III – compliance with the limits and conditions established by the Senate; IV – specific authorization by the Senate for external credit operations; V – compliance with the provision of Article 167, item III of the Brazilian Constitution; VI – compliance with all other limitations enforced by this Complementary Law.
§ 2 - Federal securities debt operations, authorized in the text of the Annual Budgetary Law or additional credits, must be subject to a simplified mechanism that meets their requirements, according to their characteristics.
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I – capital expenditures must not include those carried out as loan or financing to taxpayer for the purpose of providing fiscal incentive, based on a tax levied by the Member of the Federation, if such operations result in direct or indirect decrease in the liabilities of the member of the Federation; II – if the loan or financing referred to in item I is granted by a financial institution controlled by the Member of the Federation, the value of the operation must be deducted from capital expenditures; III – [repealed]
§ 4 - Without prejudice to the specific responsibilities of the Federal Senate and of Brazilian Central Bank, the Ministry of Finance must maintain a centralized and updated electronic record of the internal and external public debts, ensuring public access to the information, which must include:
I – charges and contracting conditions; II – updated balances and limits for the consolidated and securities debt, credit operations and guarantees.
§ 5 - External credit operations agreements must not include a clause that results in the automatic compensation of debits and credits.
Article 33 - The financial institution which contracts a credit operation with a member of the Federation, except for securities and external debt, must request a proof that the operation complies with the established conditions and limits.
§ 1 - Operations contracted in disagreement with the provisions of this Complementary Law will be considered null and void, and must be cancelled through the refund of the principal, without payment of interests and other financial charges.
§ 2 - If the refund is not effected during the same fiscal year in which the inflow occurred, a specific reserve must be set aside in the Annual Budgetary Law for the subsequent year.
§ 3 Until the operation is cancelled or the reserve is set aside, the sanctions determined in the items of Article 23, § 3 must be applied.
§ 4 - A reserve must also be set aside, in an amount equivalent to the excess, if not in compliance with the provisions of Article 167, item III of the Brazilian Constitution, according to the provisions of Article 32, § 3.
SUBSECTION II – PROHIBITIONS
Article 34 - The Brazilian Central Bank must not issue government securities within two years after the publication of this Complementary Law.
Article 35 - Federation entities are forbidden from contracting credit operations, directly or through a fund, through an autarchy, government body, foundation, state-owned enterprise, or any Federation organ, including its indirect administration entities, even in the form of novation, refinancing or postponement of previously contracted debt.
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§ 1 - The prohibition referred to in the caput does not apply to operations between a state financial institution and another Member of the Federation, including its indirect administration bodies, when such are not to be used for:
I – financing current expenditures, either directly or indirectly; II – refinancing debt not due to the same grantor;
§ 2 - The provisions of the caput do not prohibit the States and Municipalities from purchasing government securities from the Federal government as for increasing their available resources.
Article 36 - Credit operations between a state financial institution and the member of the Federation who controls it, when the latter is the beneficiary of the loan, are prohibited.
Sole Paragraph - The prohibition mentioned in the caput does not prohibit a controlled financial institution from acquiring, in the market, government securities to meet its clients’ investment needs, or from acquiring government securities issued by the Federal government to invest their own capital resources.
Article 37 - The following are considered equivalent to credit operations and are therefore prohibited:
I – raising of funds though revenue anticipation from taxes or contributions, when the respective taxable event has not occurred yet, without prejudice of the provisions of Article 150, § 7 of the Brazilian Constitution; II – early receipt of amounts from enterprises when the government holds, directly or indirectly, the majority of voting shares of the mentioned enterprise, except for profits and dividends, according to the respective legislation. III – direct assumption of commitment, confession of indebtedness or similar operation, with a supplier of goods, merchandise or services, by issuing, accepting or endorsing credit instruments––this prohibition does not apply to state-owned enterprises; IV – assumption of liabilities with suppliers, without budgetary authorization for future payment of goods and services.
SUBSECTION III - CREDIT OPERATIONS BASED ON BUDGETARY REVENUE ANTICIPATION
Article 38 - Credit operations based on revenue anticipation must be offset to meet cash shortfalls during the fiscal year, and must comply with the requirements mentioned in Article 32, in addition to the following:
I – they must be offset only up to the tenth day after the beginning of the year; II – they must be settled, including the payment of interest and other charges, until the 10th of December of each year; III – they must not be authorized in case any charges are levied other than interest, mandatory fixed or indexed to the basic financial rate or any replacement rate; IV – the operations mentioned in the caput will be prohibited: a) until a previous operation of the same nature is fully repaid; b) in the last year in office of the President, Governor, or Mayor.
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§ 1 - The operations referred in this article must not be computed for the purpose of Article 167, item III of the Brazilian Constitution, provided that they will be settled within the period set in item II of the caput.
§ 2 - Credit operations through revenue anticipation by the States or Municipalities must be offset by opening a credit line with the financial institution which is victorious in an electronic bid organized by Brazilian Central Bank.
§ 3 - The Central Bank will maintain a monitoring and control system over the outstanding credits and, in case of noncompliance with the limits, the Central Bank will apply the suitable sanction to the creditor institution.
SUBSECTION IV - OPERATIONS WITH BRAZILIAN CENTRAL BANK
Article 39 - In its relations with the Federation entities, Brazilian Central Bank must be subject to the prohibitions mentioned in Article 35, in addition to the following:
I – purchasing government securities on the date of its placement in the market, except for the provisions of § 2 of this article; II – exchanging, even on a temporary basis, of debt securities of a member of the Federation for federal public debt securities, as well as forward purchase or sale of such securities when the final result is similar to an exchange; III – granting guarantees.
§ 1 - The provisions of item II, in fine, do not apply to the stock of Brazilian Central Bank special series bonds, consigned in the portfolio of financial institutions, which may be refinanced through new forward sale operations.
§ 2 - The Brazilian Central Bank may only directly purchase securities issued by the Federal government to refinance upcoming federal securities debt maturing in its portfolio.
§ 3 - The operation mentioned in § 2 must be offset through a public auction, at the average rate and at the prevailing market conditions.
§ 4 - The National Treasury must not acquire federal debt instruments existing in the portfolio of the Central Bank, even with repurchase clause, unless the operation aims at reducing securities debt.
SECTION V - GUARANTEE AND COUNTER-GUARANTEE
Article 40 - The entities may grant guarantees in internal or external credit operations, pursuant to the provisions of this article, the rules set in Article 32 and also, concerning the Federal government, the limits and conditions set by the Senate.
§ 1 - The guarantee must be conditioned to the provision of counter-guarantee, in an amount equal to or higher than the guarantee provided, and to the absence of overdue obligations from the requesting member of the Federation to the guarantor and its controlled companies, and also in compliance with the following:
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II – the counter-guarantee required by the Federal government from States or Municipalities, or by States from Municipalities, may consist in the earmarking of tax revenue directly collected and resulting from Brazilian Constitutional transfers, and the guarantor will be authorized to retain such revenue and use the respective amount to repay overdue debt.
§ 2 - In the case of credit operations with international financial organs, or with federal credit and development institutions for the transfer of foreign funds, the Federal government can only provide guarantee to a member of the Federation that meets the legal requirements for receiving voluntary transfers, in addition to the provisions of § 1.
§ 3 - [repealed]
§ 4 - [repealed]
§ 5 - Any guarantee provided in excess of the limits set by the Senate will be null and void.
§ 6 - Indirect administration entities, including their controlled companies and subsidiaries, are prohibited from providing guarantee, even through fund resources.
§ 7 - The provision in § 6 does not apply to guarantee granted by:
I – controlled companies to its subsidiaries or controlled companies, nor to the provision of counter-guarantee under the same conditions; II – financial institution to domestic companies, according to the provision of the law.
§ 8 - The provisions of this article must not apply to guarantees provided:
I – by state financial institutions, which must comply with the rules applicable to private financial institutions, pursuant to the relevant legislation; II – by the Federal government, under federal law, to financial corporations directly an indirectly controlled by the Federal government, relating to export credit insurance operations.
§ 9 - When paying the debt of other member of the Federation as a result of guarantee provided, the Federal government and the States are allowed to condition constitutional transfers to the reimbursement of the stated amount paid.
§ 10 - The member of the Federation whose debt has been paid by the Federal government or a State as a result of guarantee provided in a credit operation, must not have access to new credit or financing until the mentioned debt has been fully liquidated.
SECTION VI - OUTSTANDING COMMITMENTS
Article 41 - [repealed]
Article 42 - In the last two 4-month periods of his term in office, the Head of the Power or organ referred to in Article 20 is prohibited from assuming any expenditure commitment that may not be fully liquidated in his own 127
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term in office, or those resulting in installments to be paid in the subsequent year without leaving sufficient available financial resources for that purpose.
Sole Paragraph - The available financial resources must be computed considering charges and expenditure commitments payable until the end of the year.
CHAPTER VIII - ASSET MANAGEMENT SECTION I - AVAILABLE FINANCIAL RESOURCES (CASH)
Article 43 - The available financial resources of the members of the Federation must be deposited pursuant to Article 164, § 3 of the Brazilian Constitution.
§ 1 - Available financial resources of the general and public social security systems, even when earmarked for the specific funds referred to in Articles 249 and 250 of the Brazilian Constitution, must be deposited in a separate account from all other available financial resources of each member of the Federation and invested on market conditions, observing the limits and conditions imposed by safety and prudential considerations.
§ 2 - The available financial resources mentioned in § 1 must not be invested in:
I – state and municipal government securities, nor in stocks or other bonds relating to companies controlled by the respective member of the Federation; II – loans of any nature, to taxpayers or to the government, including its controlled companies.
SECTION II - PRESERVATION OF PUBLIC ASSETS
Article 44 - Capital revenue derived from the transfer of properties and rights integrating the public assets must not be used to finance current expenditures, unless destined by law for the general and public social security systems.
Article 45 - Pursuant to the provisions of Article 5, § 5, the Annual Budgetary Law and the additional credit law must only include new projects once the needs of projects in progress have been duly provided and the expenditures required for the conservation of public assets have been set aside, to the provisions of the Budgetary Directives Law.
Sole Paragraph - The Executive Branch of each member of the Federation must submit to the Legislative Branch, until the date of submission of the draft Budgetary Directives Law, a report containing the required information for the compliance with this article, which must be widely disseminated.
Article 46 - Any act involving the expropriation of urban real estate issued without complying with the provision in Article 182, § 3 of the Brazilian Constitution, or without prior judicial deposit of the amount of indemnity is considered null and void.
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SECTION III - COMPANIES CONTROLLED BY THE PUBLIC SECTOR
Article 47 - The controlled companies that formalized a management agreement containing performance objectives and targets, under the law, must have managerial, budgetary and financial autonomy, without prejudice to the application of the provisions of Article 165, § 5, item II of the Brazilian Constitution.
Sole Paragraph - The controlled company must include in its quarterly balance sheets an explanatory note on the:
I – the provision of goods and services to the controlling company, with the respective prices and conditions, as well as a comparison with those in the market; II – funds received from the controlling company for any reason, specifying amount, source and use of funds; III – sale of goods, rendering of services or granting of loans and financing at prices, rates, terms or conditions different from those prevailing in the market.
CHAPTER IX - TRANSPARENCY, CONTROL AND OVERSIGHT SECTION I - TRANSPARENCY IN FISCAL MANAGEMENT
Article 48 - The instruments of fiscal management transparency, which must be widely disclosed, even in electronic public media, include: plans, budgets, and Budgetary Directives Laws; rendering of accounts and respective prior statement of opinion; Summary Budget Execution Report and Fiscal Management Report; and the simplified versions of these documents.
Sole Paragraph - Transparency must also be ensured by:
I – encouraging public participation and organizing public hearings during the preparation and discussion of the plans, Budgetary Directives Laws, and budgets; II – public disclosure, in real time, of detailed information regarding budgetary and financial execution, through electronic means accessible to the public, so that the civil society may be fully aware of the referred information. III – adoption of integrated system for financial management and control, that complies with the minimum quality standard established by the Executive Branch and the provisions of article 48-A herein.
Article 48-A - For the purposes of the provisions in item II, sole paragraph of article 48, the Union’s entities have the following information available to any natural person or entity:
I – relating to expenditures: all acts performed by the managing units throughout the execution of the spending, at the time they are made, making minimally accessible the data regarding the corresponding procedure, or to the asset or service provided, to the natural person or entity receiving payment and, when applicable, to the bidding process that took place; II – relating to revenues: entry and receipt of all the income from managing units, including those regarding extraordinary funds.
Article 49 - The accounts submitted by the Chief of the Executive Branch must be available throughout the year in the respective Legislative Branch and in the technical organ responsible for its preparation, to be consulted and evaluated by the citizens and institutions.
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Sole Paragraph - The rendering of accounts by the Federal government must contain statements by the National Treasury and official financial development agencies, including the National Bank for Economic and Social Development (BNDES), detailing loans and financing granted with funds from the fiscal and social security budgets, and, for financing agencies, a summary evaluation of the fiscal impact of their activities during the year.
SECTION II – RECORDKEEPING AND CONSOLIDATION OF ACCOUNTS
Article 50 - In addition to other public accounting standards, public recordkeeping must comply with the following:
I – available financial resources must be recorded in a separate book, so that funds earmarked for an organ, fund or mandatory expenditure may be individually identified and recorded; II – expenditures and commitments must be recorded on an accrual basis; in addition, the results of financial flows must also be determined on a cash basis; III – the financial statements must comprise the joint and individual transactions and operations of each body, fund or direct administration, government organ or foundation, including state-owned enterprises; IV – social security revenue and expenditures must be presented in specific financial and budgetary statements; V – credit operations, outstanding commitments and other types of financing or assumption of obligations with third parties must be recorded so as to evidence the amount of and change in public debt in the period, broken down by nature and type of creditor, as a minimum; VI – the statement of changes in public assets must emphasize the source and use of funds arising from the sale of assets.
§ 1 - Intergovernmental operations must be excluded from joint statements.
§ 2 - The publication of general standards for the consolidation of public accounts must be the responsibility of the Federal government’s central accounting body, until the council mentioned in Article 67 is established.
§ 3 - The Public Administration must maintain a cost system that enables the evaluation and monitoring of the budgetary, financial, and asset management.
Article 51 - By June 30, the Federal government’s Executive Branch must consolidate the accounts of the Federation entities for the previous year, at the national level and by sphere of government, and disclose them, including the use of publicly accessible electronic media.
§ 1 - The States and Municipalities must submit their accounts to the Federal government’s Executive Branch on the following dates:
I – Municipalities, by April 30, with a copy to the Executive Branch of the respective State; II – States, by May 31.
§ 2 - Failure to comply with the deadlines set in this article will impede the member of the Federation, until the situation is normalized, from receiving voluntary transfers and entering into credit operations, except for those aimed at refinancing the indexed principal of securities debt.
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SECTION III - SUMMARIZED BUDGET EXECUTION REPORT
Article 52 - The report mentioned in Article 165, § 3 of the Brazilian Constitution must cover all Branches and the Attorney General’s Office, and must also be published within 30 days from the end of each two-month period, comprising:
I – the budgetary balance sheets, specifying, for each economic category: a) revenues by source, including received and receivable revenue, as well as an updated forecast; b) the expenditures by group of nature, detailing the allocation for the year, the expenditures paid and the balance;
II – statement of execution of: a) the revenues, by economic category and source, specifying initial forecast, updated forecast for the year, received revenue in the two-month period and in the year, and forecast of receivable revenue; b) the expenditures, by economic category and expenditure nature group, specifying initial forecast, allocation for the period, expenditures committed and paid in the two-month period and in the year; c) expenditures, by function and subfunction;
§ 1 - Revenues from credit operations and expenditures with debt repayment must highlight the amounts relating to securities debt refinancing.
§ 2 - Failure to comply with the deadlines set in this article will subject the member of the Federation to the sanctions provided for in Article 51, § 2.
Article 53 - The Summary Report must be accompanied by statements on:
I – determination of net current revenue, as defined in Article 2, item IV, its evolution, and a forecast of its performance until the end of the year; II – social security revenue and expenditures mentioned in Article 50, item IV; III – nominal and primary results; IV – interest expenditures, as provided for in Article 4, item II; V – outstanding commitments, detailing the amounts stated in accounting records, payments effected and amounts payable, by Branch and organ referred to in Article 20.
§ 1 - The report for the last two-month period of the year must be accompanied by statements on: I – compliance with the provisions of Article 167, item III of the Brazilian Constitution, pursuant to Article 32, § 3; II – actuarial projections for the general and public social security systems; III – changes in public assets, showing sale of assets and use of respective funds.
§ 2 - When applicable, justifications must be presented for: I – funding commitments limitations; II – unfulfilled revenue forecasts, specifying measures taken and planned against tax fraud and tax evasion, as well as oversight and collection actions. 131
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SECTION IV - FISCAL MANAGEMENT REPORT
Article 54 - At the end of each four-month period, the Heads of the Branches and agencies mentioned in Article 20 must issue a Fiscal Management Report, to be signed by:
I – the Head of the Executive Branch; II – the President and other members of the Board or equivalent decision-making body, pursuant to the internal bylaws of the Legislative Branch organs; III – Presidents of Courts and other members of the Board or equivalent decision-making body, pursuant to the internal bylaws of the Judiciary Branch organs; IV – Head of the Office of the Public Prosecutor of the Federal government and of the States.
Sole Paragraph - The report must also be signed by the authorities responsible for the financial administration and internal control, as well as by others as may be defined by a decision made by each Branch or body mentioned in Article 20.
Article 55 - The report must contain:
I – a comparison between the limits set in this Supplementary Law and the following amounts: a) total personnel expenditures, specifying those with inactive personnel and pensioners; b) consolidated and securities debt; c) guarantees granted; d) credit operations, including those based on revenue anticipation; e) expenditures mentioned in Article 4, item II;
II – indication of corrective measures taken or to be taken in case any of the limits is exceeded; III – statements, in the last four-month period: a) of the amount of available financial resources on December 31; b) of the amounts recorded in outstanding commitments of expenditures:
1) liquidated; 2) committed but not liquidated, recorded therein because they meet one of the conditions set in Article 41, item II; 3) committed but not liquidated, recorded up to the limit of the cash balance; 4) not recorded therein due to lack of available financial resources, for which the respective commitments have been cancelled; c) of the compliance with the provision of Article 38, item II, and item IV, b.
§ 1. The report issued by the Heads of the organs mentioned in Article 54, items II, III and IV, must contain only the information relating to item I, a, and the documents listed in items II and III.
§ 2. The report must be published within 30 days after the end of the base period, and widely disclosed to the public, including by electronic media. 132
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§ 3. Failure to comply with the deadline set in § 2 will subject the member of the Federation to the sanction provided for in Article 51, § 2.
§ 4. The reports mentioned in Articles 52 and 54 must be standardized, based on models that may be updated by the council referred to in Article 67.
SECTION V - SUBMISSION OF ACCOUNTS
Article 56 - The accounts rendered by the Head of the Executive Branch must include, in addition to those of their own organs, those of the Heads of the Legislative and Judiciary Branches and the Head of the Office of Public Prosecutor, as mentioned in Article 20, subject to previous separate evaluation by the respective Audit Court.
§ 1. The accounts of the Judiciary Branch must be presented within the scope of:
I – the Federal government, by the Presidents of the Federal Supreme Court and of the Courts of Appeals, consolidating the accounts of the respective courts; II – of the States, by the Presidents of the Courts of Justice, consolidating the accounts of all other courts.
§ 2 - The opinion on the accounts of the Audit Courts must be issued within the periods provided for in Article 57 by the intergovernmental permanent committee mentioned in Article 66, § 1 of the Brazilian Constitution, or equivalent committee of the state and municipal Legislative Houses.
§ 3 - Once the results of the examination of accounts, have been judged and completed, they must be fully disclosed.
Article 57 - The Audit Courts must issue a prior conclusive opinion on the accounts within 60 days of their receipt, unless otherwise stated in the state Brazilian Constitutions or municipal organic laws.
§ 1 - For Municipalities that are not state capitals and have a population of less than 200 thousand inhabitants, the term must be 180 days.
§ 2 - The Audit Courts must not go into recess as long as a prior opinion on the accounts of a Branch or organ referred to in Article 20 is pending.
Article 58 - The submission of accounts must evidence the collection performance against the forecasts, with emphasis on measures taken regarding revenue inspection and combat to tax fraud and evasion, credit recovery actions in the administrative and judicial spheres, as well as other measures aimed at increasing the revenues from taxes and contributions.
SECTION VI - FISCAL MANAGEMENT OVERSIGHT
Article 59 - The Legislative Branch must, directly or assisted by the Audit Courts and the internal control system of each Branch and the Head of the Office of Public Prosecutor, inspect the compliance with the rules of this Complementary Law, with emphasis on the following aspects: 133
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I – compliance with the targets set in the Budgetary Directives Law; II – limits and conditions for credit operations and recording in outstanding commitments; III – measures taken to bring the total personnel expenditures within the respective limit, pursuant to Articles 22 and 23; IV – measures taken, pursuant to Article 31, to bring the amounts of consolidated and securities debt within the respective limits; V – use of funds resulting from the sale of assets, in light of the Brazilian Constitutional restrictions and those imposed by this Complementary Law; VI – compliance with the total expenditure limits set for municipal legislatures, if applicable.
§ 1 - The Audit Courts must notify the Branches or agencies referred to in Article 20, in case they observe any of the following:
I – the possibility of occurrence of any of the situations mentioned in Article 4, item II, and Article 9; II – that total personnel expenditures exceeded the limit by 90 percent; III – that the amounts of consolidated and securities debt, credit operations and guarantees granted exceed the limit by 90 percent; IV – that expenditures with inactive workers and pensioners exceed the legally defined limit; V – any developments that may negatively affect the costs or results of the programs, or any evidence of irregularity in the budgetary management.
§ 2 - The Audit Courts must further evaluate the calculation of the limits applicable to total personnel expenditures of each Branch and organ referred to in Article 20.
§ 3 - The Federal Audit Court must monitor the compliance with the provisions of Article 39, §§ 2, 3, and 4.
CHAPTER X - FINAL AND TRANSITIONAL PROVISIONS
Article 60 - A state or municipal law may set a limit for consolidated and securities debt, credit operations and granting of guarantees lower than the one provided for in this Supplementary Law.
Article 61 - Government securities, provided that they are duly registered with a centralized settlement and custody system, can be offered as collateral to guarantee loans or other transactions under the law, for their economic value, as defined by the Ministry of Finance.
Article 62 - The Municipalities must only contribute to cover the costs of expenditures incurred by other Federation entities if:
I – authorized in the Budgetary Directives Law and in the Annual Budgetary Law; II – authorized in covenant, agreement, accord, or any similar arrangement, pursuant to the law. Article 63 - Municipalities with a population of less than 50 thousand people may opt for: I – applying the provisions of Article 22 and Article 30, § 4, at the end of the half-year; II – disclosing on a semi-annual basis: a) [repealed] 134
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b) the Fiscal Management Report; c) the statements mentioned in Article 53;
III – preparing the Fiscal Policy Appendix of the Multiannual Plan (PPA), the Fiscal Target Appendix, and Fiscal Risk Appendix of the Budgetary Directives Law, as well as the appendix mentioned in Article 5, item I, starting from the 5th year after publication of this Supplementary Law.
§ 1 - The disclosure of reports and statements must be made within 30 days from the half-year end.
§ 2 - In case the limits relating to total personnel expenditures or consolidated debt are exceeded, and for as long as this situation persists, the Municipality must be subject to the same verification periods and limits set for all other entities.
Article 64 - The Federal government must provide technical and financial assistance to Municipalities for the modernization of the respective tax, financial, asset and social security administrations, for the purpose of complying with the rules set in this Complementary Law.
§ 1 - The technical assistance must consist in training and development of human resources and transfer of technology, as well as support in the disclosure of the instruments mentioned in Article 48 in widely accessible electronic media.
§ 2 - The financial assistance must comprise the granting of goods and resources, financing through federal financial institutions, and the transfer of funds from external operations.
Article 65 - In the event of a public calamity acknowledged by the National Congress, in the case of the Federal government; or by the Legislative Assemblies, in the case of States and Municipalities; and for as long as the situation persists:
I – the deadlines and the provisions of Articles 23, 31 and 70 must be suspended; II – the achievement of fiscal results and the commitment limits set in Article 9 must be waived.
Sole Paragraph - The provisions of the head of this article must apply in case of state of defense or state of siege decreed under the Brazilian Constitution.
Article 66 - The terms set in Articles 23, 31, and 70 must be doubled in case of low or negative real growth of the national, regional, or state Gross Domestic Product (GDP) for a period equal to or higher than 4 quarters.
§ 1 - Low growth must be defined as the accumulated change in real GDP lower than 1 percent during the period corresponding to the 4 last quarters.
§ 2 - The change rate must be the one determined by the IBGE or other organ that may replace it, and the same methodology must be used to determine the national, state, and regional GDP.
§ 3 - In the hypothesis mentioned in the caput, the measures referred to in Article 22 will continue to be adopted.
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§ 4 - In case there are drastic changes in the conduct of monetary and exchange rate policies, acknowledged by the Federal Senate, the term mentioned in the body of Article 31 may be extended for up to four 4-month periods.
Article 67 - The ongoing monitoring and evaluation of the policies and workability of the fiscal management must be performed by a fiscal management council, composed of representatives of all Branches and levels of government, the Office of the Public Prosecutor and technical entities representing the society as a whole, for the purpose of promoting:
I – harmonization and cooperation among the members of the Federation; II – dissemination of practices resulting in greater efficiency in the allocation and execution of public expenditure, revenue collection, indebtedness control and transparency in fiscal management; III – adoption of rules for the consolidation of public accounts, standardization of rendering of accounts and fiscal management reports and statements provided under this Supplementary Law, streamlined rules and standards for small Municipalities, as well as other standards required for social control; IV – disclosure of analyses, studies and diagnoses.
§ 1 - The council referred to in the caput must institute means of rewarding and publicly recognizing the Heads of a Branch who succeed in achieving praiseworthy results in their social development policies, coupled with the pursuit of a fiscal management based on the rules set in this Supplementary Law.
§ 2 - A law must provide for the composition and working of the council.
Article 68 - Pursuant to Article 250 of the Brazilian Constitution, the General Social Security System Fund is hereby created, under the Ministry of Social Security and Assistance, with the purpose of providing funds to pay for the benefits of the general social security system.
§ 1. The Fund will be constituted by:
I – real estate and movable assets, securities and earnings of the National Social Security Institute (INSS) not used in connection with its operations; II – properties and rights awarded to INSS for any reason, or that may be transferred to INSS by virtue of the law; III – revenues from social security contributions provided for in Article 195, item I, a, and item II of the Brazilian Constitution; IV – proceeds from the transfer of goods and assets of individuals or corporations in debt with the Social Security; V – income from the investment of its assets; VI – funds from the Federal government budget.
§ 2 - The Fund must be managed by the INSS, under the law.
Article 69 - The Member of the Federation which presently has or eventually creates its own social security system for its employees must establish it as a contributions-based system, organized based on accounting and actuarial standards ensuring its financial and actuarial balance.
Article 70 - The Branch or organ referred to in Article 20 which has exceeded the limits set in Articles 19 and 20 for total personnel expenditures in the year preceding the publication of this Complementary Law, must comply 136
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with the limit in up to two years, gradually eliminating the excess at the rate of at least 50 percent per year, by adopting the measures described in Articles 22 and 23, among others.
Sole Paragraph - The noncompliance with the provisions of the caput in the period prescribed will subject the member of the Federation to the sanctions provided for in Article 23, § 3.
Article 71 - Except for the hypothesis mentioned in Article 37, item X of the Brazilian Constitution, until the end of the third fiscal year after this Complementary Law enters into force, total personnel expenditures of the Branches and organs mentioned in Article 20, expressed as a percentage of net current revenue, must not exceed the expenditures incurred in the preceding year, plus up to 10 percent if such expenditures are below the limit defined in Article 20.
Article 72 - The expenditures incurred by the Branches and organs referred to in Article 20 relating to services provided by third parties, expressed as a percentage of net current revenue, must not exceed those incurred the year before this Complementary Law goes into effect, until the end of the third year thereafter.
Article 73 - Violation of the provisions of this Complementary Law must be punishable pursuant to Decree-Law No. 2,848 of December 7, 1940 (Penal Code); Law No. 1,079 of April 10, 1950; Decree-Law No. 201 of February 27, 1967; Law No. 8,429 of June 2, 1992; and all other rules set forth in relevant legislation.
Article 73-A - Any citizen, political party, association or trade union has legal standing to make complaints to the respective Accounting Court and competent Public Prosecutor’s Office’s body regarding the noncompliance with the provisions herein.
Article 73-B - The following are the deadlines within which the provisions in items II and II, sole paragraph, article 48 and in article 48-A must be complied with:
I – 1 (one) year for the Union, States, Federal District and Municipalities with a population of over 100,000 (one hundred thousand) people; II – 2 (two) years for the Municipalities with a population between 50,000 and 100,000 people; III – 4 (four) years for the Municipalities with a population of less than 50,000 people.
Sole Paragraph - The deadlines established in this article are counted as of the date of publication of the complementary law that created the items referred to in the heading of this article.
Article 73-C - The entity that fails to comply with the provisions in item II and III, sole paragraph, article 48 and in article 48-A, within the deadlines set forth in article 73-B above, is subject to the penalty established in item I, § 3, article 23.
Article 74 - This Complementary Law goes into effect on the date of its publication.
Article 75 - Complementary Law No. 96, of May 31, 1999 is hereby revoked.
Brasília May 4th, 2000. FERNANDO HENRIQUE CARDOSO Pedro Malan Martus Tavares
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INVESTMENT PARTNERSHIP PROGRAM LAW (PPI) - LAW No. 13.334/16
Creates the Investment Partnership Program [Programa de Parcerias de Investimentos] – PPI; amends Law No. 10,683, dated May 28, 2003, and other provisions.
THE PRESIDENT OF THE REPUBLIC – I hereby state that the National Congress has enacted and I sanction the following Law
CHAPTER I – INVESTMENT PARTNERSHIP PROGRAM
Article 1 – The Investment Partnership Program is hereby created, within the Presidency of the Republic, aiming at increasing and strengthening the interaction between the government and the private sector by signing partnership agreements for execution of government infrastructure projects and other privatization measures.
§ 1 - The following may be part of the PPI:
I – government infrastructure ventures both ongoing or to be executed by means of partnership agreements executed by the federal direct and indirect public administration; II – infrastructure government ventures that, by delegation or by incentive by the federal government, are executed by partnerships executed by direct or indirect administrations of the States, Federal District or Municipalities; and III – all other measures in the National Privatization Program referred to in Law No. 9,491, of September 9, 1997.
§ 2 - For the purposes of this law, partnership agreements are those for ordinary concession, sponsored concession, administrative concession, concession regulated by sector legislation, public service permission, public asset leasing, concession of real estate right and other private-public ventures that, by force of the strategic nature and their complexity, specificity, investment amount, long term, risks and uncertainties involved, use a similar legal structure.
Article 2 – The following are PPI’s objectives:
I – expanding investment and employment opportunities and fostering technological and industrial development, in conformity with the social and economic goals of the country; II – ensuring public infrastructure expansion with quality and adequate fees; III – promoting ample and fair competition in the execution of partnerships and in the service performance; IV – ensuring legal stability and certainty, with minimum intervention in the businesses and investments; and V – strengthening State’s role as a regulator and the autonomy of the regulatory agencies. Article 3 – The following principles will be complied with the implementation of the PPI: I – stability of the public infrastructure policies; II – legality, quality, efficiency and transparency of the government acting; and III – to ensure legal certainty to public agents, government entities and private parties involved.
Article 4 – PPI will be regulated by means of decrees that, within the terms and limits provided in the sector and general laws will establish:
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I – long-term federal policies for investments made through partnerships in federal government infrastructure ventures and privatization; II – federal government infrastructure ventures qualified for the establishment of partnership; and III – federal policies promoting partnerships in public infrastructure ventures of the States, Federal District and Municipalities.
Article 5 – PPI ventures will be treated as a national priority by all public execution or control agents, of the federal, state, Federal District and municipality governments.
Article 6 – The federal government bodies, entities and agencies with competencies related to PPI ventures will create their own programs in order to adopt, within the administrative regulation, regardless of there being a legal requirement to do so, advanced practices recommended by the best national and international experiences, including:
I – publishing plans, regulations and acts to formalize government policies established by the Executive Branch for each regulated sector, thus making such policies stable, and making their execution effective and in compliance with the administrative regulation, in view of the competencies set forth in specific legislation and upon previous public inquiry; II – eliminating bureaucratic obstacles to the free organization of business activities; III – joining efforts with the Brazilian Antitrust Authority [Conselho Administrativo de Defesa Econômica] – CADE, and the Economic Supervision Office [Secretaria de Acompanhamento Econômico] – SEAE of the Ministry of Finance, for compliance purposes in assuring competition; and IV – joining efforts with bodies and authorities of control, to increase the transparency of administrative actions and to promote efficiency in receiving and analyzing contributions and recommendations.
CHAPTER II – PRESIDENCY’S PPI COUNCIL
Article 7 – The Presidency’s Council for the Investment Partnership Program – CPPI is hereby created with the following competencies:
I – to give opinions, prior to the President’s consideration, with respect to the proposals from the competent bodies or entities on subjects provided in Article 4 herein; II – to follow up on the execution of PPI; III – to create substantiated proposals and complaints to the Heads of the Executive Branch of the States, Federal District and Municipalities; IV – to prepare statutory recommendations and guidelines for the federal bodies, entities and authorities; V – to exercise the roles attributed to: a) the body managing federal public-private partnerships under Law No. 11,079 dated December 30, 2004; b) the National Council for Integration of Transport Policies under Law No. 10,233, dated June 5, 2001; and c) the National Privatization Council under Law No. 9,9491, dated September 9, 1997.
VI – publishing its internal by-laws.
§ 1 - The CPPI members with the right to vote will be: 139
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I – Minister Chief of the Presidency’s Gerenal-Office; II – Minister Chief of Staff; III – Minister of Treasure; IV – Minister of Planning, Development and Management; V – Minister of Mines and Energy; VI – Minister of Transportation, Ports and Civil Aviation; VII – Minister of Environment; VIII – President of the Brazilian Bank of Economic and Social Development [Banco Nacional de Desenvolvimento Econômico e Social] – BNDES; IX – President of Caixa Econômica Federal; and X – President of Banco do Brasil.
§ 2 - The following authorities will be invited to attend and take part in the Council’s meetings, with no right to vote, the ministers of the sectors responsible for the proposals or subjects under analysis and, when needed, the higher authorities of the competent regulatory entities.
§ 3 - The Presidency’s Council for the Investment Partnership Program constitution will be subject, when applicable, to the provisions of § 2, Article 5, Law No. 9,491, dated September 9, 1997.
§ 4 - The Council’s meetings will be presided by the President of the Republic, who will have the casting vote with respect to decision-making subjects.
CHAPTER III – INVESTMENT PARTNERSHIP PROGRAM OFFICE
Article 8 - The Special Officer of the PPI will be in charge of:
I – managing the SPPI, supervise and coordinate its activities and guide its actions; II – [repealed]; III – [repealed]; IV – exercise regulatory guidance and technical supervision with respect to subjects related to the SPPI authority; V – [repealed]; and VI – publish and practice the regulatory acts and other acts inherent to its authority.
Article 9 - The SPPI must make all documents and information regarding the ventures under PPI execution available to the Congress, providing them with the information requested within thirty days.
§ 1 - When complying with the provisions in the head of the article, SPPI may demand the information provided to be kept confidential.
§ 2 - By March 30 of the subsequent year, SPPI is responsible for sending to the Congress a detailed report with information on the status of the ventures and other actions within PPI’s authority that took place in the previous year.
Article 10 - [repealed].
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CHAPTER IV – PROJECT STRUCTURING
Article 11 - The ministry of the applicable sector or body with authority to create the sector policy will be responsible, with SPPI’s support, for adopting the measures needed to include the venture in the PPI.
Article 12 - To structure the projects part of PPI, the competent body or entity may, without prejudice to other statutory mechanisms:
I – make use of the government’s internal structure; II – hire specialized professional technical services; III – open a public call; IV – receive suggestions for projects (any compensation is prohibited); or V – directly enter into specialized professional technical service agreements with the Fund for Partnership Structuring Support [Fundo de Apoio à Estruturação de Parcerias] – FAEP.
Article 13 - Provisions of Article 3, Law No. 9,491, dated as of September 9, 1997, and § 3, of Article 10, Law No. 11,079, dated as of December 30, 2004 complied by, the bidding process and the execution of PPI government ventures partnerships are not dependent from a general or specific law for authorization.
CHAPTER V – FUND FOR PARTNERSHIP STRUCTURING SUPPORT
Article 14 - BNDES is hereby authorized to organize and be a member in the Fund for Partnership Structuring Support – FAEP, whose objective will be, upon execution of onerous contract, the provision of specialized technical professional services to have investment partnerships and privatization measures structured.
§ 1 - FAEP will be a private fund whose assets will be separate from that of the shareholders, having its own rights and obligations and legal capacity to enter into, in its own name, contracts or any agreement setting forth duties and obligations needed to fulfill its objectives.
§ 2 - FAEP’s initial term will be ten years, renewable for equal periods of time.
§ 3 - FAEP’s administrator and shareholders will not be liable for any of the Fund’s obligations, except for the payment of the shares they subscribe.
§ 4 - BNDES will administer, manage and legally represent (in and out of court) FAEP.
§ 5 - FAEP may act together with bodies or entities – of the federal, states, Federal District and Municipalities’ government – whose functional performance is connected to structuring, the authorization, executing contracts, financing ventures and activities, in order to exchange information and to follow up and cooperate in projects.
§ 6 - FAEP’s funds will be:
I – originated from the payment of shares, in national currency, by legal entities governed either by public or private law, international entities and natural persons or legal entities governed by private law, controlled or not by the government; II – compensation received by its services; 141
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III – payments received for disposing of assets and rights, or from publications, technical material, data and information; IV – returns from financial investments made; and V – funds from other sources listed in its bylaws.
§ 7 - FAEP will use part of the price received for its services to pay BNDES for the fund’s administration, management and representation, pursuant to its bylaws.
§ 8 - FAEP will not pay any returns to its shareholders, it being ensured to any of them the right to request to partially or totally redeem their shares, the liquidation of which will be based on the Fund’s weal, and it being prohibited to redeem shares in an amount larger than the amount of financial resources available and not yet earmarked for integrated structuring already contracted, pursuant to the bylaws.
§ 9 - FAEP’s bylaws will provide measures to ensure information safety, in order to contribute to the competition and avoid conflicts of interest in the bidding processes of the partnerships in government ventures.
Article 15 - FAEP may be directly hired by government bodies and entities to provide specialized professional technical services to structure partnership agreements and privatization measures.
Article 16 - For performance of technical services for which it has been hired, FAEP may hire, as provided for by law, technical support from specialized persons or legal entities; the public agents managing the Fund, with SPPI’s support, shall coordinate the tasks and work together with the other bodies and entities involved.
CHAPTER VI – AUTHORIZATION TO PPI POJECTS
Article 17 - The bodies, entities and government authorities (federal, state, Federal District and Municipalities), including autonomous and independent ones, with authority of which the feasibility of PPI ventures depends upon, must act jointly and efficiently so that all administrative procedures and acts necessary for the structuring, authorization and execution are concluded in a uniform and cost-effective manner, within a term compatible with the national priority nature of the enterprise.
§ 1 - Authorizations means obtaining any license, authorization, registration, permit, right of use or right to exploit, special regimes, and similar, of any of the following natures and that are necessary to establish and operate the venture, either regulatory, environmental, indigenous, urbanistic, transit, public assets, water, protection to cultural heritage, customs, mining, fiscal, among others.
§ 2 - The bodies, entities and authorities of the federal government with sector competencies related to PPI ventures will call all the bodies, entities and authorities of the federal, state, Federal District and Municipalities governments that are competent to authorize the participation in the structuring and execution of the project and fulfillment of the PPI objectives, including jointly defining the content of the terms of reference for the environmental licensing.
CHAPTER VII – FINAL PROVISIONS
Article 18 - Law No. 10,683, dated as of May 28, 2003, is amended as follows and will be in effect accordingly:
“Article 1 ......
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XIV – by the Investment Partnership Program Office.
§ 3 - The Foreign Trade Chamber [Câmara de Comércio Exterior] – CAMEX and the Council for the Investment Partnership Program [Conselho do Programa de Parcerias de Investimento] are also part of the Presidency of the Republic.” (NR)
“Article 24-F - The Investment Partnership Program Office of the Presidency – SPPI is in charge of:
I – coordinating, monitoring, assessing and overseeing the actions of the Investment Partnership Program and support the sector actions necessary for its execution, without prejudice to the legal competencies of the Ministries, bodies and entities of the applicable sectors; II – following up with and subsidize, within the exercise of its supervision and support functions, the actions of the Ministries, bodies and entities of the sectors, as well as the actions of the Fund for Partnership Structuring Support – FAEP; III – making public PPI projects so that the public may follow up with them; IV – entering into agreements with the Brazilian Antitrust Authority [Conselho Administrativo de Defesa Econômica] – CADE, and with Economic Supervision Office of the Ministry of Finance [Secretaria de Acompanhamento Econômico do Ministério da Fazenda] – SEAE, to receive technical contributions with the goal of adopting the best national and international practices to promote ample and fair competition in the execution of partnerships and service provision; and V – entering into agreements or cooperation agreements with bodies or entities part of the government (federal, State, Federal District, Municipalities) for a coordinated effort or to exercise decentralized functions.
§ 1 - SPPI shall have the same prerogatives a ministry does with respect to the use of systems, especially those regarding the flow of documents.
§ 2 - SPPI’s basic structure comprises the Cabinet, Executive Office and up to three Secretariats.”
Article 19 - The Special Position – CNE of Executive Secretary to SPPI is hereby created.
Article 20 - Planning and Logistic Company [Empresa de Planejamento e Logística] – EPL becomes attached to SPPI, to support CPPI.
Article 21 - Whenever applicable, the provisions herein apply to private corporate ventures that, under administrative authorization, compete or coexist – in a sector dominated by government or a public service sector – with government enterprises under the responsibility of government entities or of third parties hired through partnerships subject of this law.
Article 22 - This law is in effect as of the date of its publication.
Brasília, September 13, 2016; 195th year of the Independence and 128th year of the Republic.
MICHEL TEMER Henrique Meirelles Maurício Quintella Fernando Coelho Filho Dyogo Henrique de Oliveira José Sarney Filho 143
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PPI DECREE - DECREEE No. 8.791/16
Provisions on the Presidency’s Council for the Investment Partnership Program – CPPI and approves the Internal Structure and the Chart of the Politically-Appointed Positions in the Presidency’s Executive Office of the Investment Partnership Program.
THE VICE-PRESIDENT OF THE REPUBLIC, as Acting President, exercising the authority conferred upon him by Article 84, head of article, item VI, “a”, of the Federal Constitution, DECREES:
Article 1 - This Decree provides on the Presidency’s Executive Office of the Investment Partnership Program and approves the Internal Structure and the Chart of the Politically-Appointed Positions in the Presidency’s Executive Office of the Investment Partnership Program - PPI.
Article 2 - The PPI Council is an advisory body working closely with the President of the Republic to establish and follow up the PPI.
Article 3 - The PPI’s Council shall:
I – define priority services to be executed via a public-private partnership, coordinate, monitor, assess and control the PPI’s actions, and support the sector measures necessary to its execution, without prejudice to the legal authority of the applicable sector Ministries, bodies and entities; and II – exercise, when the subjects provided in Article 4, of Provisional Measure No. 727, dated May 12, 2016, are involved, the tasks attributed to: a) the body managing federal public-private partnerships pursuant to Law No. 11,079, of December 30, 2004; b) the National Council for Integration of Transportation Policies pursuant to Law No. 10,233, dated June 5, 2001; and c) the National Privatization Council pursuant to Law No. 9,491, dated September 9, 1997.
§ 1 - The PPI Executive Office will inform the competent bodies the subjects that will be submitted to the PPI Council for discussion.
§ 2 - Planning and Logistic Company [Empresa de Planejamento e Logística] – EPL is the body that supports the PPI Council for the purposes of item “b”, II, of the head of the article.
§ 3 - The Brazilian Bank of Economic and Social Development [Banco Nacional de Desenvolvimento Econômico e Social] – BNDES exercises the tasks attributed to the managing body of the National Privatization Fund, pursuant to Article 17, Law No. 9,491/1997, item “c”, II of the head of the article.
Article 4 - The PPI Council will be presided by the President of the Republic and its members will be:
I – Executive-Secretary of the PPI Executive Office, who will also be the Executive-Secretary of the PPI Council; II – the President’s Chief of Staff; III – Minister of Finance;
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
IV – Minister of Transports, Ports and Aviation; V – Minister of Planning, Development and Management; VI – Minister of Environment; and VII – the BNDES’s President.
§ 1 - The applicable sector ministers responsible for the proposals or subject under exam, and if the case may be, the highest competent authorities and the President of Caixa Econômica Federal will be invited to take part in the PPI Council meetings.
§ 2 - Those in charge of the bodies and entities referred to in the items of the head of this article may appoint delegates, if they are unable to attend.
§ 3 - The PPI Council’s bylaws will provide rules regarding its presidency in case the President of the Republic is absent.
§ 4 - The PPI Council will comply with the provision in § 2, Article 5, of Law No. 9,491/1997, if the case may be.
Article 5 - The PPI Council will only meet if the majority of the members is in attendance.
Article 6 - The PPI Council may organize technical committees to analyze and issue an opinion regarding specific matters under their appreciation, including the participation of the civil society.
Article 7 - The PPI Council’s activities, including those from the technical committees referred to in Article 6, will be considered to be gratuitous provision of relevant public service.
Article 8 - The Internal Structure and PPI’s Chart of the Politically-Appointed Positions in the Executive Office are approved hereby, pursuant to Annexes I and II.
Article 9 - The following politically-appointed positions in the Group-High Management and Advisement – DAS are relocated, pursuant to Annex III, from the Managing Office of the Ministry of Planning, Development and Management to the PPI Executive Office:
I – four DAS 101.6; II – nine DAS 101.5; III – one DAS 101.4; IV – one DAS 102.5; V – six DAS 102.4; and VI – three DAS 102.3.
Article 10 - The PPI Executive Office’s Executive Secretary will publish a list with the names of the people holding politically appointed positions as referred to in Annex II, including the name of vacant positions, their titles and levels in the Federal Official Journal, within thirty days as of the date when this decree enters into effect.
Article 11 - The PPI Executive Office’s Secretary will publish their bylaws detailing the bodies’ structure, authority and attributions of their managers, within three months as of the date this decree enters into effect.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
Article 12 - Decree No. 5,385, dated March 4, 2005, will be in effect with the following amendments:
“Article 1 - The Managing Committee of Public-Private Partnership – CGP hereby created will exercise the authority of the managing body referred to in items II to IV, of the head of art 14, Law No. 11, 079, dated December 30, 2004.” (NR)
“Article 3......
I – suggest to the Presidency’s Council for the Investment Partnership Program priority services to be performed under the public-private partnership model and the criteria to the applicable in analyzing whether a contract following this model would be convenient and opportune; ...... ” (NR)
“Article 14-A - The Ministry of Planning, Development and Management, exercising its authority, may carry out and assessment, modeling and following up with the status of projects that may come to be PPPs, without prejudice to the authority of the other bodies and entities, provided that such projects have been labeled as priority projects by the Council for the Investment Partnership Program.
§ 1 - For the purposes of the provisions in the head of this article, the federal government, through the Ministry of Planning, Development and Management, may enter into agreements, technical cooperation agreements, contracts or any other covenants with natural persons or legal entities, national or foreign, governed either by public or private law, in compliance with the provisions of Law No. 8,666, dated June 21, 1993...... ” (NR)
Article 13 - This Decree enters into effect on the date of its publication.
Article 14 - Item I, head of article 11, Decree No. 5,385, dated March 4, 2005 is hereby revoked.
Brasília, June 29, 2016; 195th year of Independence and 128th year of the Republic.
MICHEL TEMER Dyogo Henrique de Oliveira
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
ANNEX I INTERNAL STRUCTURE OF THE PRESIDENCY’S EXECUTIVE OFFICE OF THE INVESTMENT PARTNERSHIP PROGRAM
CHAPTER I – NATURE AND AUTHORITY
Article 1 - The following are under the authority of the PPI’s Executive Office, a body of the Presidency of the Republic:
I – coordinating, monitoring, assessing, supervising and supporting PPI’s measures and supporting the sector measures necessary to their execution, without prejudice to the legal authority of sector bodies and entities; II – publicizing PPI projects so that the public may follow up with them; and III – coordinating PPI’s operations and acting as a secretary.
CHAPTER II– INTERNAL STRUCTURE
Article 2 - PPI’s Executive Office is structurally organized as follows:
I – direct and immediate support body to PPI’s Executive Office: Cabinet; II – specific individual bodies: a) Office for the Organization of Public Policies; b) Office for Project Coordination; and c) Office for the Organization of Investments and Partnerships; and
III – connected entity: EPL.
CHAPTER III – BODIES’ AUTHORITY SECTION I – BODIES TO PROVIDE DIRECT AND IMMEDIATE ASSISTANCE TO THE EXECUTIVE SECRETARY
Article 3 - The Cabinet shall:
I – assist the Executive Secretary within the scope of its work, including its functional, personal, political and social representation; II – be responsible for the preparation and negotiate the Executive Secretary’s schedule and its meeting’s agenda; III – support the Executive Secretary’s events with national and foreign representatives and authorities; IV – cooperate with the Executive Secretary in the drafting of statements, speeches and documents pertaining to the PPI’s Executive Office interests; V – assist the Executive Secretary in defining and executing the communication policy of the PPI’s Executive Office; and VI – following up with the status of bills under discussion in the Congress and which are related to the PPI’s Executive Office’s interests.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
SECTION II - SPECIFIC INDIVIDUAL BODIES
Article 4 - The Office for the Organization of Public Policies has the authority to:
I – select the projects to the supported by PPI; II – follow up and cooperate with the development of public policies related to the expansion and strengthening of the interaction between government and private entities, established through the execution of partnership agreements to execute public infrastructure ventures and other privatization measures; III – contribute to the improvement of the coordination and strategic alignment of several government policies and administrative regulation (whether federal, state, of the Federal District or municipal); and IV – negotiate with EPL, regulatory agencies and other federal government bodies and entities, with respect to further studying and improving public policies related to the performance of the projects mentioned in item I of the head of the article.
Article 5 - The Office for Project Coordination has the authority to:
I – coordinate, monitor and assess the PPI execution, in cooperation with sector ministries, bodies and entities; II – supervise the PPI’s action agenda; and III – cooperate with the technical improvement of actions implemented and contribute to making them effective.
Article 6 - The Office for the Organization of Investments and Partnerships has the authority to:
I – promote dialogue and collect arguments with professionals, investors, lenders and the society about PPI and other subjects related to PPI’s Executive Office; II – follow the lenders, suppliers and professionals in the infrastructure government venture market; III – present and promote projects chosen by the other offices of the PPI’s Executive Office, that may be the scope of future partnerships, to financial institutions, lenders, professionals and domestic and foreign providers; and IV – support the Executive Office in entering into agreements with government entities – federal, states, Federal District and Municipalities – for a coordinated effort or for the exercise of decentralized functions.
CHAPTER IV – OFFICERS’ AUTHORITY
Article 7 - The Executive Secretary of the PPI’s Executive Office is in charge of:
I – coordinating PPI’s actions; II – preparing the PPI Council’s meeting agendas; III – supervising and evaluating the execution of the projects and activities of PPI’s Executive Office; IV – supervising, evaluating and coordinating the offices of PPI’s Executive Office; and V – assisting and advising the President of the Republic in his or her attributions within PPI’s scope.
Article 8 - The Secretaries are in charge of planning, directing, coordinating, directing, following up and evaluating the performance of its offices’ activities.
Article 9 - The Cabinet’s Head and other officers of PPI’s Executive Office do PPI is in charge of planning, coordinating and directing the execution of the respective units’ activities. 148
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
CHAPTER V – GENERAL PROVISIONS
Article 10 - The Chief of Staff’s Legal Department is in charge of providing legal advice to PPI’s Executive Office.
Article 11 - The Administration Office of the Presidency’s Office will be in charge of the managing activities related to human resources, logistical resources, and planning and preparing budgets for the administrative department of PPI’s Executive Office.
Article 12 - Requests for staff to work in PPI’s Executive Office will be made through the Presidency’s Chief of Staff.
Sole Paragraph - The requests mentioned in the head of the article are not to be denied and are to be for an indeterminate duration, and shall be granted except for the cases provided in the law.
Article 13 - PPI’s requests for military personnel in the Armed Forces and requests for the assignment of members in the Military Police or Military Fire Departments will be made through the Minister of the President’s Institutional Security Office directly to the Ministry of Defense or the governments of states or Federal District, as the case may be.
§ 1 - The military personnel at the disposal of PPI’s Executive Office are connected to the President’s Institutional Security Office for disciplinary purposes, as well as compensation and changes, according to any special circumstance applicable to each armed force.
§ 2 - The requests referred to in the head of the article cannot be denied and will be granted, except for cases set forth in the legislation.
Article 14 - Public servants and government employees working for any entity or body of the federal government and put at the disposal of the PPI’s Executive Office shall have all the rights and advantages they are entitled with the body or entity of origin, including promotion related to public servants.
§ 1 - The public servant or government employee that has been requested will continue to contribute to the social security entity of which he or she is a member, without interruption to the time of service in the body or entity of origin.
§ 2 - The time during which the public servant or government employee remains at the disposal of the PPI’s Executive Office will be considered, for all purposes of their career, as a public servant or government employee, as actual time worked in their position in the body or entity of origin.
Article 15 - Working in a politically appointed position or position of trust in the PPI’s Executive Office constitutes, for the military staff, military activity and relevant service, and for the civil staff, relevant service and title of achievement for all purposes of their career working for the government.
Article 16 - In the performance of its activities, the PPI’s Executive Office may enter into contracts, cooperation agreements, agreements in general, or other similar instruments with national or international entities or organizations with respect to subject matters under its authority, including for the purposes of decentralized performance of specialized technical services.
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
ANNEX II a) Chart of politically appointed positions in the executive office of presidency’s Investment Partnership Program - PPI
DEPARTMENTS NUMBER OF POSITIONS POSITIONS NE/DAS
EXECUTIVE OFFICE 1 Executive Secretary NE Executive Secretary’s 1 101.6 Assistant 1 Special Assistant 102.5
3 Assistant 102.4
CABINET 1 Chief of Cabinet 101.4
3 Technical Assistant 102.3 OFFICE FOR THE ORGANIZATION OF PUBLIC 1 Secretary 101.6 POLICIES 1 Assistant 102.4
3 Director of the Program 101.5
OFFICE FOR PROJECT COORDINATION 1 Secretary 101.6
1 Assistant 102.4
3 Director of the Program 101.5 OFFICE FOR THE ORGANIZATION OF 1 Secretary 101.6 INVESTMENTS AND PARTNERSHIPS 1 Assistant 102.4
3 Director of the Program 101.5 b) Summary chart of costs with politically appointed positions in the presidency’s executive office of the Investment Partnership Program
CODE DAS-UNIT QUANTITY TOTAL AMOUNT NE 6,41 1 6,41 DAS 101.6 6,27 4 25,08 DAS 101.5 5,04 9 45,36 DAS 101.4 3,84 1 3,84 DAS 102.5 5,04 1 5,04 DAS 102.4 3,84 6 23,04 DAS 102.3 2,10 3 6,30 TOTAL 25 115,07
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
ANNEX III
Rellocation of positions
FROM SEGES/MP TO PPI’S EXECUTIVE OFFICE CODE DAS-UNIT QUANTITY TOTAL AMOUNT DAS 101.6 6,27 4 25,08
DAS 101.5 5,04 9 45,36
DAS 101.4 3,84 1 3,84
DAS 102.5 5,04 1 5,04
DAS 102.4 3,84 6 23,04
DAS 102.3 2,10 3 6,30
TOTAL 24 108,66 *
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
PPI ORDINANCE No. 1 (GENERAL PROVISIONS FOR INFRASTRUCTURE PROJECTS)
Sets forth general guidelines and strategies to be adopted by the bodies and entities of the federal public administration in the process of executing venture contracts within the Presidency’s Investment Partnership Program.
THE PRESIDENCY’S INVESTMENT PARTNERSHIP PROGRAM COUNCIL, in the exercise of its authority per Article 7, § 2 and § 6, of Provisional Measure No. 727, dated May 12, 2016, and
Whereas there is a need to optimize the use of human resources in the several government bodies and entities by means of standardizing basic procedures, rules and guidelines related to the procurement procedures and the execution of partnership contracts;
Whereas there is a need to improve the economic and financial modelling studies, the elaboration of the risk matrix for each project and the careful and transparent preparation of invitations to bid and partnership agreements that encourage competition; and
Whereas there is a need to inform the society about the new guidelines and the general procedures that will be the basis for the next government infrastructure contracts through the execution of partnership agreements with the private sector
This Ordinance establishes:
Article 1 - This Ordinance establishes general and strategic guidelines to be adopted by the bodies and entities of the federal public administration in the procuring process of government infrastructure ventures part of the Presidency’s Investment Partnership Program Council – PPI.
Sole Paragraph - For the purposes of this Ordinance, procuring process means the stages of planning, procurement, execution of agreements and monitoring the ventures.
Article 2 - In the procuring process of government infrastructure ventures mentioned in Article 1, the competent authorities shall comply with, whenever possible and unless otherwise provided in specific regulation, the procedures and guidelines provided herein, for the purposes of standardizing procedures, general rules and guidelines applicable to the projects and sectors involved.
Article 3 - The regulatory choices used in the new ventures to be structured and the government exclusive attributions therein must be justified and based in its respective administrative procedures.
Article 4 - For each PPI venture, the competent bodies or entities shall assign a government representative who will be in charge of monitoring the venture and who will be responsible for:
I – managing the schedule of activities; II – gathering and reviewing data, information and premises; III – adapting the studies made, in view of the results obtained in technical evaluations and public consultations;
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IV – sequencing the stages of the contracting process; V – monitoring the Technical Feasibility, Economic Financial and Environmental Studies (EVTEA), whenever necessary; and VI – organizing and conducting technical meetings with other government bodies, including control agencies.
Article 5 - The government shall ensure transparency to the procuring processes of ventures referred to herein, making documents, procedures, and additional procurement rules available to the public through government official gazette and the internet.
§ 1 - In the event of potential foreign bidders, the competent bodies and entities shall make the main documents related to the venture procurement public translated into English.
§ 2 - The competent bodies and entities shall forward the information in the head of this article, duly updated, to the Presidency’s Investment Partnership Program Office, who shall also make it public on their website.
Article 6 - When the scope of the contract so requires, the bidding process of ventures will be conditioned upon, per the applicable laws, certification of environmental feasibility upon issuance of the Preliminary License – LP or the guidelines applicable to environmental licensing.
Article 7 - When drafting the request for proposals and the draft of the agreement, a risk matrix sharing the venture risk shall be included as well as the identification, appraisal and risk allocation to the party that is better suited to manage it, with the lowest cost for the process, so that future extraordinary agreement reviews are kept to a minimum.
Article 8 - The ventures and partnership agreements shall be structured based on modern regulatory practices, with focus on the services to be provided, as well as including performance clauses and objective goals to be agreed upon, according to the specific characteristics of each project and sector.
Article 9 - Whenever possible, venture structure shall take into consideration implementation of telecommunications or optic fiber network infrastructure along roads, railways, gas pipelines or other ventures where such measure proves to be necessary.
Sole Paragraph - The infrastructure implementation mentioned in the head of the article will be object of a technical study in each venture, and the bodies and the competent bodies and entities shall justify the cases in which it proves to be technically, operationally or economically unfeasible.
Article 10 - The request for proposals and the venture agreement shall provide rules with respect to governance, transparency and overseeing conditions under which parties related to the concessionaire may be hired, with the purpose of ensuring the transparency of the execution of the works needed for the provision of services under concession, especially when the government is a partner in a specific purpose entity.
Article 11 - The ventures shall include investments compatible with the level of services required, which shall reflect the actual needs of the users throughout the agreement term, as to avoid imposing unnecessary investments.
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Article 12 - The drafted request for proposals and the agreements for each venture shall include specific rules to provide for mechanisms that discourage the postponement of the investment schedule set forth in the agreement or noncompliance with the agreed-upon timetable.
Article 13 - The ventures will be structured aiming at strengthening the regulatory agencies’ performance, especially concerning regulation, monitoring, inspection and monitoring of contracts.
Article 14 - The Technical Feasibility, Economic Financial and Environmental Studies – EVTEA and the legal documents related to the venture shall only be submitted to the PPI’s Council when they are sufficiently consistent and robust.
§ 1 - The EVTEA will be built upon clear and objective bases, sufficiently adequate to ensure the models are robust and consistent, in addition to taking into consideration the complexity and the specific characteristic of each project.
§ 2 - The EVTEA shall be submitted to public hearing prior to being forwarded to the Federal Accounting Court.
Article 15 - The drafted requests for proposals and agreement and its exhibits, with respect to each venture, shall be submitted to public hearing by the competent body or agency.
Sole Paragraph - The public hearing will be published through the government official gazette and on the internet, with its purpose dully identified, the reason for the extension, the proposed conditions, among other relevant information, providing at least forty-five days for suggestions from interested parties to be sent in, unless otherwise provided.
Article 16 - The EVTEA and the legal documents related to the venture shall also be submitted to the Federal Accounting Court.
§ 1 - The government representative referred to in Article 4 shall organize, whenever necessary, technical meetings with the Federal Accounting Court so that the documents are swiftly reviewed, possible questions are answered and, if the case may be, the documents may be corrected.
§ 2 - The request for proposals for that venture may be released after the documents are forwarded to the Federal Accounting Court by the competent body or entity, in compliance with the terms provided in the legislations.
Article 17 - The request for proposals for the venture may set the term within which the proposals may be delivered, whenever possible, provided that it is not shorter than one hundred days, so that the interested parties may study the project and any related information.
Article 18 - The procuring process for the ventures referred to herein shall receive priority treatment by all bodies and entities involved, respected the following:
I – the regulatory agencies shall regulate, monitor, conduct inspections and oversee the ventures in execution; II – the applicable sector ministries shall plan and make political decisions about the ventures; and
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III – the PPI Council shall settle any disputes between the bodies involved, without prejudice to the authority and powers provided in the law.
Article 19 - The Presidency’s Investment Partnership Program Office may issue supplementary regulations to the guidelines provided herein.
Article 20 - This Ordinance enters into effect on the date of its publication.
WELLINGTON MOREIRA FRANCO - Council’s Executive Secretary
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
PPI ORDINANCE No. 5 (APPROVED CONDITIONS FOR THE AIRPORT PROJECTS)
Approves concession as an operational modality to explore international airports to which it refers and defines additional conditions applicable to the privatization process.
THE PRESIDENCY’S INVESTMENT PARTNERSHIP PROGRAM COUNCIL, in the exercise of its authority per Article 7, § 2 and § 6, of Provisional Measure No. 727, dated May 12, 2016, and
Whereas the following airports were included in the National Privatization Program – PND (by and through Decree No. 8,517, dated as of September 10, 2015, pursuant to Decree No. 7,624, dated as of November 22, 2011): Aeroporto Internacional Deputado Luís Eduardo Magalhães, located in Salvador, State of Bahia; Aeroporto Internacional Salgado Filho, located in Porto Alegre, State of Rio Grande do Sul; Aeroporto Internacional Hercílio Luz, located in Florianópolis, State of Santa Catarina; and Aeroporto Internacional Pinto Martins, located in Fortaleza, State of Ceará;
Have adopted the following rules:
Article 1 - The use of concession as an operational modality for the exploration of the following international airports is hereby approved:
I – Aeroporto Internacional Deputado Luís Eduardo Magalhães, located in Salvador, State of Bahia; II – Aeroporto Internacional Salgado Filho, located in Porto Alegre, State of Rio Grande do Sul; III – Aeroporto Internacional Hercílio Luz, located in Florianópolis, State of Santa Catarina; and IV – Aeroporto Internacional Pinto Martins, located in Fortaleza, State of Ceará.
Article 2 - The term for the concession shall be of twenty-five years for Aeroporto Internacional Salgado Filho and thirty years for the other airports referred to in Article 1.
Article 3 - The bidding process will be performed in simultaneous auctions of the airports referred to in Art 1, to take place in a public session, through the handing in of economic proposals in closed envelopes, with live bidding in those cases bid notice provides for.
Sole Paragraph - The bidding process will be performed under the inversion of phases, where only the auction’s winning bidder’s documents showing legal, fiscal, economic and financial, and technical standing will be opened.
Article 4 - In view of antitrust issues, airports located in the same geographical area must be granted to different economic groups, as provided in the bid notice.
Sole Paragraph - The National Civil Aviation Agency [Agência Nacional de Aviação Civil] – Anac may establish additional restrictions of regulatory and antitrust nature to taking part in the bidding process.
Article 5 - The minimum amount for the Fixed Contribution to the System to be paid by the concessionaire will be the amount resulting from the Technical Feasibility, Economic Financial and Environmental Studies – EVTEA
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that brings the cash flow to zero, taking into account the parameters established, such as the weighted average capital cost, investments, operational costs, revenue resulting from fees or other sources, taxes, insurance, the terms and payment conditions for the concession as established herein.
§ 1 - The concessionaires shall pay twenty-five per cent of the minimum amount of the Fixed Contribution, plus possible premium offered in the auction, as the Initial Fixed Contribution, on the date of execution of the concession agreement.
§ 2 - The Yearly Fixed Contribution, to be adjusted by the Broad Consumer Price Index – IPCA issued by the Brazilian Institute of Geography and Statistics [Instituto Brasileiro de Geografia e Estatística] – IBGE, or another official index that comes to substitute it, will correspond to seventy-five of the minimum amount of the Fixed Contribution as defined in the head of this article and will be paid as follows:
Period Amount First to fifth year 0 Sixth year 20% of the quota Seventh year 40% of the quota Eight year 60% of the quota Ninth year 80% of the quota Tenth year until end of the concession 100% d of the quota
§ 3 - In the EVTEA of each airport amounts to fund possible personnel adjustment programs will be taken into consideration, to be paid to Brazilian Company of Airport Infrastructure [Empresa Brasileira de Infraestrutura Aeroportuária] – Infraero, on the date of the execution of the concession agreement, and the amounts that are not to be used in these programs shall be allocated by Infraero into the National Civil Aviation Fund [Fundo Nacional de Aviação Civil] – FNAC.
§ 4 - The concession bid notice shall provide, as an obligation to be complied with prior to the execution of the concession agreement, payment, by the winners of the bidding process, of reimbursement for the preparation of the EVTEA, as well as costs owed to the entity that organized the auction and payment to Infraero related to funding personnel adjustment programs, according to § 3.
§ 5 - Except for the cases provided in § 3 and § 4, the funds obtained from concessions will be FNAC’s revenue.
Article 6 - The criteria to judge the proposals in the auction shall be the highest Initial Fixed Contribution offered, taking into consideration, in the case of the group of airports, the amounts that maximize the Global Fixed Contribution offered to the federal government.
Sole Paragraph - The concessionaires shall pay the Initial Fixed Contribution offered on the date of the execution of the agreement.
Article 7 - Additionally, there will also be a five per cent yearly payment made as Variable Contribution, which will be calculated over the total gross revenue of the concessionaires and their wholly-owned subsidiaries.
Article 8 - For the purposes of defining the fees applicable to the concessions referred to in Article 1, the amounts in effect with respect to airport fees related to rating Infraero’s Category 1 airports and incorporating the amount 157
MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]
corresponding to the extinction of the Airport Fee Additional [Adicional da Tarifa Aeroportuária] – Ataero should be considered, without prejudice to adjustments and other charges to be created by Anac.
Article 9 - In addition to other requirements provided in the bid notice, that are necessary to take part in the auction, the airport operator’s equity interest in the bidding consortium must be equivalent to at least fifteen per cent.
Sole Paragraph - The airport operator shall show proof of previous experience in processing at least nine million, nine million, seven million and four million passengers per year, in one single airport, in at least one of the five previous years, applicable to, respectively, the concession of Aeroporto Internacional Deputado Luís Eduardo Magalhães, Aeroporto Internacional Salgado Filho, Aeroporto Internacional Pinto Martins, and Aeroporto Internacional Hercílio Luz.
Article 10 - Article 5 of Ordinance No. 6, dated June 26, 2015, enacted by the National Privatization Council is hereby repealed.
Article 11 - This Ordinance enters into effect on the date of its publication.
WELLINGTON MOREIRA FRANCO - Council’s Executive Secretary
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MADRONA ADVOGADOS INFRASTRUCTURE TEAM PARTNER ROSANE MENEZES LOHBAUER [email protected]