Nº 18 Government Procurement Strategies in Brazil Auction
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GOVERNMENT PROCUREMENT STRATEGIES IN BRAZIL AUCTION THEORY AND “BIG DATA” 2013 Nº 18 ISBN 978-85-64878-15-0 GOVERNMENT PROCUREMENT STRATEGIES IN BRAZIL AUCTION THEORY AND “BIG DATA” 2013 Nº 18 ISBN 978-85-64878-15-0 2 FGV PROJETOS | GOVERNMENT PROCUREMENT STRATEGIES IN BRAZIL 3 Founder and First President Director Luiz Simões Lopes Cesar Cunha Campos SUMMARY President Technical Director Carlos Ivan Simonsen Leal Ricardo Simonsen Vice-Presidents Director of Control Sergio Franklin Quintella, Francisco Oswaldo Neves Dornelles and Antônio Carlos Kfouri Aidar Marcos Cintra Cavalcante de Albuquerque PRESENTATION 04 Director of Quality Francisco Eduardo Torres de Sá BOARD OF DIRECTORS 1. INTRODUCTION 06 Market Director President Sidnei Gonzalez Carlos Ivan Simonsen Leal 2. ANALYSIS OF DEFINING THE BIDDING PRODUCT Market Deputy Directors 12 Vice-Presidents Carlos Augusto Lopes da Costa Sergio Franklin Quintella, Francisco Oswaldo Neves Dornelles and José Bento Carlos Amaral Marcos Cintra Cavalcante de Albuquerque 3. MARKET ANALYSIS 12 Voting Members EDITORIAL CREDITS Armando Klabin, Carlos Alberto Pires de Carvalho e Albuquerque, Ernane Galvêas, 4. THEORETICAL ANALYSIS OF THE BUYING PROCESS (AUCTION THEORY) 14 José Luiz Miranda, Lindolpho de Carvalho Dias, Manoel Pio Corrêa Júnior, Editor in Chief Marcílio Marques Moreira and Roberto Paulo Cezar de Andrade Sidnei Gonzalez Deputies Author and Editorial Orientation 5. ANALYSIS OF THE PROCUREMENT FORMAT 18 Antonio Monteiro de Castro Filho, Cristiano Buarque Franco Neto, Fernando Blumenschein Eduardo Baptista Vianna, Gilberto Duarte Prado, Jacob Palis Júnior, José Ermírio de Moraes Neto, José Julio de Almeida Senna and Editorial Coordination 6. ANALYZING THE FORMS OF PAYMENT 20 Marcelo José Basílio de Souza Marinho. Melina Bandeira Editorial Production 7. CASE STUDY 20 BOARD OF TRUSTEES Manuela Fantinato President Graphic Design Carlos Alberto Lenz César Protásio Maria João Macedo 8. CLOSING COMMENTS 24 Patricia Werner Vice-President Camila Senna João Alfredo Dias Lins (Klabin Irmãos e Cia) BIBLIOGRAPHY 26 Revision, Editing and Collaboration Voting Members David del Vecchio Alexandre Koch Torres de Assis, Angélica Moreira da Silva (Federação Brasileira de Marianna Jardim APPENDIX Bancos), Carlos Moacyr Gomes de Almeida, Dante Letti (Souza Cruz S.A.), 27 Edmundo Penna Barbosa da Silva, Heitor Chagas de Oliveira, Jaques Wagner (Estado Translation da Bahia), Luiz Chor (Chozil Engenharia Ltda.), Marcelo Serfaty, James Mulholland Marcio João de Andrade Fortes, Maurício Matos Peixoto, Orlando dos Santos Marques (Publicis Brasil Comunicação Ltda.), Pedro Henrique Mariani Bittencourt (Banco BBM Photos S.A.), Raul Calfat (Votorantim Participações S.A.), Rodrigo Vaunizio Pires de Azevedo www.corbis.com (IRB - Brasil Resseguros S.A.), Ronaldo Mendonça Vilela (Sindicato das Empresas de www.shutterstock.com Seguros Privados, de Capitalização e de Resseguros no Estado do Rio de Janeiro e do Espírito Santo), Sérgio Ribeiro da Costa Werlang and Tarso Genro (Estado do Rio Grande do Sul). Deputies Aldo Floris, José Carlos Schmidt Murta Ribeiro, Luiz Ildefonso Simões Lopes (Brookfield Brasil Ltda.), Luiz Roberto Nascimento Silva, Manoel Fernando Thompson Motta Filho, Murilo Pinto de Oliveira Ferreira (Vale S.A.), Nilson Teixeira (Banco de Investimentos Crédit Suisse S.A.), Olavo Monteiro de Carvalho (Monteiro Aranha Participações S.A.), Patrick de Larragoiti Lucas (Sul América Companhia Nacional de Seguros), Rui Barreto (Café Solúvel Brasília S.A.) and Sérgio Lins Andrade (Andrade Gutierrez S.A.). Headquarters Praia de Botafogo, 190, Rio de Janeiro – RJ, CEP 22250-900 or Caixa Postal 62.591 CEP 22257-970, Tel: (21) 3799-5498, www.fgv.br This issue is available for download at Institution of technical-scientific, educational and philanthropic character, created on FGV Projetos’ website: December 20, 1944 as a legal entity of private law with the objective to act, broadly, in all www.fgv.br/fgvprojetos subjects of scientific character, with emphasis on social sciences: administration, law and economics, contributing for the social-economical development of the country. 4 FGV PROJETOS | GOVERNMENT PROCUREMENT STRATEGIES IN BRAZIL 5 PRESENTATION In Brazil, the policy of sustained economic growth with less income inequality has emphasized the importance of adopting more efficient public administration practices, both at the federal level as well as in the states and municipalities. In this context, government procurement plays a role in the economy in terms of public spending as well as a policy tool, mobilizing production chains with great potential to spur development. The study of FGV Projetos, coordinated by the economist Fernando Blumenschein, developed a methodological framework based on a series of studies related to the formatting of strategies for government procurement conducted by the National Fund for Education Development (FNDE). This study highlights the potential of applying auction theory with “Big Data” in methodologies that design and implement public procurement processes. Methodological advances in this field have had two important consequences. First, there is the improvement of efficiency in government spending. This process has led to savings of approximately R$ 866 million for the Brazilian Government in the period 2008-2010, obtained through FNDE systematic application of procurement strategies developed by FGV Foundation. Second, the design of public procurement policies could affect the development of specific productive supply chains at the national level or on spurring regional economic growth. By publishing this analysis, we reaffirm the commitment of FGV Foundation to the production of public goods and to knowledge sharing. We thus hope to inspire new initiatives, especially at the state and municipal levels, in order to create a solid strategy for government procurement that can contribute to our country and to its socioeconomic development. The Brazilian experience can also serve as a model for other countries seeking greater government transparency and other long-term benefits. Enjoy! Cesar Cunha Campos Director | FGV Projetos 6 FGV PROJETOS | GOVERNMENT PROCUREMENT STRATEGIES IN BRAZIL 7 1. INTRODUCTION Government purchases account for a significant portion of the Brazilian economy and have grown considerably over the last few years. According to data from the Ministry of Planning, the volume of federal government purchases rose from R$ 40.6 billion in 2007 to R$ 72.6 billion in 2012, as shown in Chart 1. Chart 1: Value of federal government purchases (R$ billion) Source: Ministry of Planning It is evident that electronic procurement has become the most relevant modality in federal government purchasing. Between 2007 and 2012, the number of acquisitions made through electronic procurement grew 78% in value and 33% in terms of the number of competitive bids. In 2012, acquisitions made via electronic procurement reached R$ 33.6 billion, representing 46% of all government purchases and 91% of competitive bids. It is worth noting, however, that a significant volume of government purchases – R$ 24.5 billion, or 34% of all goods and services acquired – occurred in cases in which competitive bidding was waived. Concerning goods, the most representative sector for purchases acquired through bidding in 2012 was “Vehicles”, which accounted for 24% of these purchases (R$ 5.5 billion). With respect to services, the most representative group was “General construction services in civil engineering”, which accounted for 29% of these contracts (R$ 7.3 billion). This panorama of federal government purchases shows both the evolution of its economic relevance and the growth of the modality of purchasing via electronic procurement. Together, these two elements suggest the potential of public procurement as a channel for improving the efficiency of public spending and promoting public policies. 8 FGV PROJETOS | GOVERNMENT PROCUREMENT STRATEGIES IN BRAZIL 9 In fact, the power of governmental procurement can be used to FORMATTING GOVERNMENTAL PROCUREMENT STRATEGIES encourage more efficient public spending through procurement strategies designed to meet this goal. In this sense, the scale of In this context, FGV has developed a specific methodological framework for governmental Electronic purchases can be raised in different ways. One possible way would be purchases through a series of studies on formatting governmental-procurement strategies. These procurement has through joint action by different branches of public administration, studies were carried out for the National Fund for Development of Education (FNDE)1 and are become the most whereby decisions are made to buy from a central agency, or some listed below: relevant modality in purchases are bundled together, leading to larger contracts for the I. “Strategies for Acquiring Micro-informatics Products” – July 2006 acquisition of goods and services. Alternatively, coordinated action II. “Strategies for Acquiring School Transportation Vehicles for the ‘The Way to School’ Program” federal government among different agencies can help to harmonize the standards and – July 2007 purchasing. requirements of products and services that are being bid upon, III. “Strategies for Acquiring School Laptops for the ‘A Computer for Every Pupil’ Project” – July 2008 to help improve these standards and requirements and increase IV. “Strategies for Acquiring Micro-informatics Products – the PROINFO Project” – July 2008 supply, thereby reducing the number