After more than two decades of consideration, Brazil finally has a new bidding law. Published on April 1, 2021, Law No. 14,133 incorporates a series of successful and unsuccessful experiences verified during the almost three decades of validity of Law No. 8,666/1993, in addition to demands from public managers and those who make contracts with the Public Administration.

Although it cannot be said that the new law completely abandoned the maximalism that marks Law No. 8,666/1993, the new law tried to create mechanisms that enable the public manager to carry out not only simple contracts, such as the provision of care services, but also more complex services, such as telecommunications, information technology, etc.

One of the most celebrated innovations is competitive dialogue, bidding modality for contracting works, services, and purchases, applicable in contracts that involve cumulatively:

  • technical or technological innovation;
  • lack of solutions available on the market;
  • inability of the administration to precisely define the technical specifications of the object to be contracted; or
  • the need to define technical means and alternatives to the solutions already defined and the legal and financial structure of the contract.

Inspired by European legislation, competitive dialogue takes place in two phases:

  • dialogue between bidders who meet minimum criteria determined by the Administration and
  • competition from the specification of the solution that meets the needs of the Administration according to the objective criteria published in the notice and that will be used for the selection of the proposal.

It will be up to the Management to define the winning proposal according to criteria disclosed at the beginning of the competitive phase, ensuring the most advantageous contracting.

The new bidding modality innovates by promoting a greater interaction between the Administration and bidders in the definition of the object to be contracted and aims to break the traditional way of public procurement.

The old bidding law, passed in 1993, brought strict procurement procedures to meet the principles of legality and impersonality. Thus, it attributed to the bidders a passive role throughout the procedure since they should manifest and submit proposals in strictly accordance with the law and the tender notice.

The Law on Public Service Concessions (Law No. 8,987/1995) and the Public Companies Law (Law No. 13,303/2016) already increased the dialogue and cooperation between the Administration and private companies, by introducing the expression of interest procedure (PMI) and the possibility of strategic partnerships between state and private companies respectively.

The rupture of the traditional paradigms of public procurement by these instruments and the introduction of the modality of competitive dialogue brings important points of reflection about its operationalization. The application of a procedure similar to competitive dialogue in the member countries of the European Union points to an accumulation of experiences and diagnoses that deserve to be carefully analyzed by the Brazilian public manager.

A survey of members of the European PPP Expertise Centre[1] points to the significant use of the competitive dialogue in complex public procurement, such as public-private partnerships. Aware of the limits of this first essay on the subject, we bring briefly the main positive and negative elements pointed out by this research.

The interviewees indicated that the competitive dialogue increased the communication between the Administration and the proponents, which allows to define more precisely the needs of the Administration and present a more appropriate design and innovative solutions. They also mention greater competitive tension during the dialogue period, which enables management to obtain a better cost-benefit ratio and agree on all vital commercial issues as long as there is competition between bidders. Moreover, there seems to be a general perception that the competitive dialogue does not expose the Administration to a greater risk of legal challenges than alternative procurement procedures.

On the other hand, the respondents also expressed many concerns regarding the new procedure, especially regarding the complexity, the cost and time of acquisition. The process is considered costly in terms of resources and time, and most managers who are interviewed admit that their staff are not well prepared to conduct such complex processes, so they would rely heavily on external consultants. Moreover, according to the managers interviewed, the modality does not present flexibility and/or clarity and cannot fit different circumstances.

The European experience shows that the adoption of an innovative instrument in the field of public procurement requires an experimental period by Brazilian public managers and, mainly, supervision by internal and external control bodies, which commonly base their audits on the more traditional criteria of public procurement (lower price or better technique and price).

It is interesting to note that the study itself highlights that the competitive dialogue procedure is not widely used by the European community, only the United Kingdom, France and Ireland use the procedure on a sufficient scale to carry out a reliable study.

The study also identified that competitors sometimes retain most competitive and innovative solutions until the last stage of the procedure to avoid risks and leak these solutions to their competitors. This tends to make the procedure more time consuming and less effective, by not encouraging dialogue and cooperative construction of the best solution for public administration.

In addition to the practical issues related to the European experience, some theoretical problematizations were also brought in Brazilian essays on the subject.

In recent text published on the site jota, Edcarlos Alves[2] points out the lack of capacity of the public manager to make the choice of the best solution presented by the participants of the dialogue in an impartial and technical way.

If the competitive dialogue is used in contracts where the Public Administration does not have the ability to accurately indicate the technical specifications or knowledge about the solutions offered in the market, how to ensure that the public manager will make the best choice among those offered by competitors? The challenge lies not only in choosing the best solution proposed but also in the choice of the competitors themselves who will participate in the discussions, when the Administration itself does not have sufficient knowledge about the market.

The Competitive dialogue, more than any other type of competition for public procurement, presupposes a disparity of information and knowledge between the public authorities and private companies. Law No. 14,133/2021 itself directs this problem by providing for the possibility of hiring technical advisory professionals (item XI, of art. 32).

Although the technical advice can solve the issue of lack of knowledge on the subject, ends up generating new public procurement, demanding more time and resources from the Administration.

In addition to all the issues mentioned above, there is a clear discrepancy between the robustness of the European rule compared to the lack of sufficient provisions to regulate the issue in the new Brazilian legislation. While Directive 2014/24 of the European Union contains broad provisions on the subject, Law No 14,133/2021 summed up to address the issue specifically in only one of its provisions (art. 32).

The lack of robust or rigid regulation may result from an attempt to increase flexibility in future public procurement, which is one of the objectives proposed by the new law. The public manager was given the freedom to define their selection criteria, requirements, and choice of the winning proposal, establishing only that the final proposal should be the more advantageous, not defining whether the advantage should be in economic, technical or innovation terms. In other words, there was clear scope for the public manager to define the criteria of this procedure, which, although it can be seen as an advantageous flexibility, is still a lack of specific regulation, something that has already been criticized in studies on the subject[3].

From a practical point of view, experience has shown that the lack of regulation and excessive discretion of the public manager have led the Courts of Auditors to act more strongly in order to suppress the lack of regulation or penalize excessive discretion, which may lead to more impositions or penalty by the control bodies. This creates legal uncertainty to the public manager and to the private companies that are not able to predict the future decisions of the Courts of Auditors.

Since the new Law No. 14,133/2021 was too brief in terms of regulations of this new competitive modality, public managers will have to define the issue, being susceptible to supervision and possible sanction by the control bodies, which may hinder or even prevent the use of this modality, depending on the caution of the manager who will evaluate its fit. Let us remember that the lack of clarity in the terms used by the law was also criticized for the use of this type of competition in Europe.

The critics made above were not made with the intention of discourage the use of this modality or to take credit from the innovation brought by law. They raise points that can still be the subject of legislative improvement. The diversity of practices should occur in a safe environment that allows the public manager to "risk" a more flexible procedure without having to worry about possible further accountability.

We understand that the title of this paper brings a rhetorical question, once only the courage of innovation of public managers, the technical preparation of public and private lawyers and the flexibility of the control bodies can enable the implementation and improvement of the instrument of the competitive dialogue in the country.

 

[1] European PPP Expertise Centre. Procurement of PPP and the use of Competitive Dialogue in Europe: A review of public sector practices across the EU. Available in: https://www.eib.org/attachments/epec/epec_procurement_ppp_competitive_dialogue_en.pdf. Accessed May 20, 2021.

[2] LIMA, Edcarlos Alves( "Competitive dialogue and the practical challenges of its operationalization – An innovative bidding modality, but which requires care to be used correctly by the public manager." Article published on 11/05/2021.

[3] Question scored by Celso de Almeida Afonso Neto in "Competitive dialogue: a stillborn in Brazilian law", text included in the work Limits of control of public administration in the rule of law / coordination of Fabrício Motta, Emerson Gabardo - Curitiba: Íthala, 2019.