Approved by Congress after more than seven years of processing and signed by the Brazilian President on April 1, the New Public Procurement Law will replace, after two years of vacatio legis, Law No. 8,666/93, which has been in force for almost thirty years, and other disparate laws regarding procurement and administrative contracts.

No law is perfect, and the New Public Procurement Law could perhaps have implemented further advances on many points. In any case, and with the caveat that its actual effect will only be better known over time, from the interpretation and application reiterated by legal scholarship, the Judiciary and the Public Administration itself, among other law enforcement operators, it is possible to identify in it some positive developments.

It would be unfeasible to describe all these innovations in this brief article, but it may be informative to draw attention to some of the main pillars of the text:

1. Consolidation and simplification. Although the New Public Procurement Law has more articles than Law No. 8,666/93 considered alone (191 vs. 126), it seeks to implement an important simplification and rationalization of public procurement legislation, by consolidating provisions previously disciplined in Law No. 8,666/93 and other disparate laws, such as the Law of the Differentiated Contracting Regime and the Auction Law, incorporating positions already settled in the case law.

It is also clear that the New Public Procurement Law will not apply to state-owned enterprises, which will continue to be governed by their own statute (Law No. 13,303/16).

2. Modernization and adaptation of the law to new technologies. The new law seeks, correctly, to adapt to the digital world and new technologies. While this concern permeates a number of its provisions, it is worth noting the general rule that "bids will be held preferably in electronic form", assuming in-person sessions only exceptionally and subject to due grounds (art. 17, §2), or the provision that allows the electronic execution of contracts (art. 91, §3). They are not exactly innovations, although electronic formalization was not expressly included in specific public procurement laws and administrative contracts, but these measures undoubtedly consist of relevant steps to break our bureaucratic red tape culture.

As for new technologies, article 19, §3, according to which, "in the bidding for works and services of engineering and architecture, (...),Building Information Modelling (BIM) will preferably be adopted or similar or more advanced integrated technologies and processes that will replace it".

3. Environmental sustainability and diversity. In addition to the purely economic criterion and the defense of the equal protection nature of the bidding, the New Public Procurement Law deepens other values already provided for by specific public procurement laws and administrative contracts, among other laws to encourage diversity and environmental sustainability. Examples of provisions that promote innovation, diversity, inclusion, and other social aspects:                                                                                                                                                                                     
   • Article 5, by contemplating sustainable national development as one of the guiding principles of the new law;
   • Article 11, by establishing as the objective of the bidding process "encouraging innovation and sustainable national development";
   • Article 25, §9, by authorizing the notice to require that a minimum percentage of the labor responsible for the fulfillment of a particular contract be made up of " women who are victims of domestic violence" or by people "from or discharged from the prison system";
   • Article 60, III, assuming as a tiebreaker, the "development by the bidder of actions of equity between men and women in the workplace ";
   • Article 45, VI, by providing that bids for works and services must comply with the rules relating to "accessibility for people with disabilities or reduced mobility";
   • the various standards that provide for micro-enterprises and small businesses.

4. Integrity, compliance and prevention. As a legacy of Lava Jato and other anti-corruption measures, the new law establishes as an express objective of bidding processes "avoiding overpriced or manifestly unenforceable prices and overbilling in the execution of contracts". In bids for large-scale works, the notice must be "provide for the mandatory implementation of an integrity program by the winning bidder" (art. 25, §4). The "development by the bidder of an integrity program, as directed by the control bodies" is expressly permitted as a tiebreaker criterion (art. 60, IV). , The " implementation or improvement of an integrity program, in accordance with the standards and guidelines of the control bodies" is envisaged, as a criterion for sizing the sanction (art. 156).

5. Strengthening the obligation of compliance with the contract by the customer and the vendor. In recent years, various issues of administrative contracts have been discredited. On the one hand, there were frequent situations of non-compliance with the contract by the Government or, at least, suspension of its performance without due cause, resulting in stoppage and deterioration of works, payment obligations brought to the judiciary, and increased stock of sham bidding. This scenario discourages serious bidders or the presentation of a more efficient proposal. This also contributed to bidders treating the bidding and contract as mere formalities to be assumed unfulfilled, submitting unenforceable proposals, with the certainty that they could be renegotiated, throughout the performance of the contract, from the most ancillary conditions to those most characteristic of that type of contracting, creating an industry of artificial revisions and rebalancing.

The New Public Procurement Law seeks to correct this situation. Among other provisions aimed at ensuring compliance with the contract by the private sector, in contracts for works and engineering services of great size, it allows vendors to be required to ensure faithful compliance with the contract in the amount of up to 30% of the value of the contract. The new law also gives insurers who have issued this guarantee the right to monitor the contract and, where necessary, intervene in it to ensure compliance. It is an important innovation, because Law No. 8,666/93 contemplated as a maximum guarantee the value of 10% of the contract, which did not encourage insurers to act more proactively in monitoring the contract.

Responsible planning was also implemented, through mandatory preparation of the Annual Contracting Plan (Art. 12, VII and §1) and the express responsibility of the senior management of the contracting body or entity by "promoting a healthy and reliable environment, ensuring the alignment of contracting with strategic planning and budget laws" (art. 11, single paragraph).

It is also worth mentioning the institution of the duty of the Public Administration to strictly observe chronological order in the realization of payments due from it in its administrative contracts. This order will be verified by contract category: supply of goods, leases, provision of services, and execution of works. The agent responsible for approving payments may be personally liable in the event of non-compliance with this chronological order. This reduces the scope for favoritism.

6. Efficiency, flexibility and debureaucratization. The new law consolidated disparate legal provisions that promote the efficiency of bidding processes and procurement, as against merely formal issues.

For example, in evaluation of bids, the new law allows the price criterion to take into account not only the nominal value of the tender, but the lowest overall expenditure for the government, considering "indirect costs, related to the expenses of maintenance, use, replacement, depreciation and environmental impact of the object tendered, among other factors linked to its life cycle" (art. 34, §1).

With similar inspiration, the new law introduced as a criterion for judgment the "higher economic return", reserved for efficiency contracts, in which the remuneration of the vendor will consist of a percentage of the savings provided to the government.

Also as an unfolding of this search for greater efficiency, the new law offers greater flexibility in the bidding process, admitting a broader set of procurement modalities available to the Public Administration (integrated contracting, semi-integrated contracting, efficiency contract, etc.), judgment criteria and bidding alternatives. Some of these instruments were already available to state-owned enterprises and, depending on the adoption of the differentiated procurement regime, even for other state agencies and entities, but have now been raised to legal tools unquestionably applicable to the entire Public Administration, including direct, local, and foundational.

In parallel with the extension of the scope of some procurement modalities, the new law was noteworthy for creating the concept of competitive dialogue. Unthinkable in times more attached to our bureaucratic tradition, this modality of procurement allows discussion of solutions between the Public Administration and private stakeholders in intermediate phases of the bidding process, aiming to achieve the most efficient solution to meet the public interest.

7. Objective risk allocation. Finally, we highlight the provisions of the new law in order to honor the objective allocation of risks, including through the preparation of a risk matrix in contracts, bringing the law closer, in this respect, to other more modern statutes, such as PPPS legislation. Again, although the instrument was already legally available to state companies, there were doubts as to whether it could be used by the direct administration, local or foundational.

In addition to offering greater clarity to contracts regarding the distribution of responsibilities between the parties, the objective allocation of risks also seems to enable more flexible solutions to be designed according to the specificities of each contract. In that regard, Law No. 8,666/93 seemed much more rigid in that regard, in that way, to the extent that certain risks should, according to its predominant interpretation, necessarily be allocated to one party or the other, without much room for sharing or creating exceptions.

It is important, however, that this sharing of risks is done efficiently in each case, allocating the risks to the party with the greatest capacity to manage and mitigate them.

In parallel to these undeniable advances, some presidential vetoes to the law passed by the Brazilian Congress deserve attention. Twenty-six original provisions were rejected by the Executive Branch in the signed version of the New Public Procurement Law. Among them, we highlight the following:

• a) the right to receive legal advice from public law: the new law recognizes the duty of public law to represent judicially or extrajudicially public agents who have their acts questioned in the administrative, supervisory, or judicial spheres, provided that such acts have strictly observed guidance contained in the legal opinion. In the original version of the new law, this right was exceptional in the event that the legal opinion was drafted by a non-permanent professional of the Public Administration.

This exception was vetoed. In practice, if the legal opinion is emanating from a professional outside the Public Administration, the public agent will not be able to be represented judicially or extrajudicially by public law.

The veto seems appropriate to us. In addition to the original provision contrary to the professional prerogatives of lawyers, regardless of public or private careers, external legal opinions undergo internal procedures of approval and receipt by government attorneys. There is no reason to demote an external legal opinion, duly scrutinized through this procedure, just because the lawyer does not belong to the permanent staff of the Public Administration.

• b) Restriction of competitive dialogue: the original version of the new law limited the application of competitive dialogue to cases in which the modes of open or closed dispute did not allow proper assessment of the variation between the proposals. This restriction was also vetoed, and also in good time.

In practice, the limitation would intimidate the application of competitive dialogue, as it would be very difficult to justify why the open or closed mode of dispute was not adopted. The evaluation of the variation between proposals is the result of a process pertaining precisely to the stage of dialogue. In the end, the Public Administration may eventually come to the conclusion if there is the possibility of variation between the proposals of the pre-selected bidders and how this variation will be assessed.

• c) Monitoring competitive dialogue: in the version of the new law approved by the Legislative Branch, the Court of Auditors was allowed to follow and monitor competitive dialogues, opining, within a maximum of 40 business days, on the legality, legitimacy, and economic advantage of the procurement, before execution of the contract. This provision has been vetoed. Although we agree with the reasons for the veto, for which this duty of the Court of Auditors, in addition to going beyond the rigid list of Article 71 of the Constitution of the Republic, would harm the principle of separation of powers, in practice it is known that the control bodies have exerted a real and comprehensive interference in public procurement. The original rule had the merit of seeking to discipline this interference, which may occur incidentally and extemporaneously through representations, complaints, or audits by a jurisdiction or sampling, which inevitably imply the participation of the Court of Auditors in administrative contracts.

Other laws have already predicted prior involvement of the Court of Auditors in the more complex administrative procurement processes, and it seems to us that these measures have only brought about more legal certainty for public-private businesses.

• d) Escrow account: the new law seeks to strengthen the obligation of the contracting public power. Among other measures, the original version contained the provision that "in the procurement of works, the sending of the service order for the execution of each stage will necessarily be preceded by a deposit into an escrow account of the financial resources necessary to pay the expenses corresponding to the step to be performed" (art. 115, §2). In other words, work would not be started without cash and segregated in that regard.

The provision was vetoed. The veto reasons pointed out that the mandatory deposit into an escrow account as a requirement for sending a service order in the execution of works brings about the risk of pooling of resources, performing the financial relocation that may prove necessary or even to meet urgent or unexpected demands.

The new law aimed to prevent precisely this flexibility in the management of resources destined for the payment of service orders. If it is true that the issuance of the commitment note continues to be a requirement for the realization of public expenditure, it is not for the issuance of the service order. The New Public Procurement Law did not condition the issuance of the service order on the issuance of the commitment note, and the version signed did not do so even in relation to the deposit into an escrow account, which would be an even more effective measure for the vendor's safety. These absences will subject the vendor to the various disadvantages of discretionary or mandatory contingencies, encouraging opportunistic behavior by public administrators.

• e) Leniency agreement with the participation of the Court of Auditors: finally, the vetoes covered a provision pursuant to which, under the possibility executing a leniency agreement, under the Anti-Corruption Law, the Public Administration could exempt the person concerned from the administrative sanctions of the new law and, in the event of a favorable response by the Court of Auditors, also those sanctions provided for in the organic law of that body.

The provision was helpful. The execution of leniency agreements without binding other authorities entitled to the application of sanctions is the main risk for those concerned and certainly the factor that most causes a hindrance to collaboration in investigative procedures involving illegal acts vis-à-vis the Public Administration. The provision only implemented the possibility of cooperation between some of these legitimate authorities. There was no obligation. And facilitating this cooperation could bring about more legal certainty for the practices of leniency agreements.

In the case of the errors and successes of the New Procurement Law and the vetoes of the President of Brazil, there seems to be reason for us to believe that the new law may, in fact, constitute an important step towards a healthier and more efficient public procurement environment.