consistency and equivalence requirements for international competitive bidding vis- -vis the

1

Brazil – Federal Government and the State of São Paulo

Consistency and Equivalence requirements for international competitive bidding vis-à-vis the provisions of Sections I and II of the Procurement Guidelines

Guidelines

paragraph(s)

Policy requirements Required for the Piloting

Program

Review of the Brazilian procurement

practices

Section I

Eligibility

paragraphs 1.6 -

1.8

Conditions for participation to be

limited to those that are essential

to fulfill the contract requirements.

Exceptions indicated in para 1.8.

Those provisions of the Guidelines

would be made applicable through

the Legal Agreement (LA).

The policy requirements are met:

Conditions for participation are limited to those necessary

to perform the contract as stated in Articles 27 to 33 of

the procurement law. Nationals and foreigners are treated

equally when bidding for government contracts as

required by Article 3 of the procurement law.

The following policy requirement is not met:

Foreign bidders need to be locally incorporated in order

to bid for government contracts—a requirement primarily

instituted in order to make any prospective government

supplier, whether domestic or foreign, subject to the same

legal and judicial system (and therefore as a way of

making all bidders compete for and execute government

contracts under equal rules and conditions).

Local incorporation implies registering in the Cadastro

Nacional de Pessoas Jurídicas (CNPJ), the taxpayer

registry administered by the country’s Ministry of

Finance (Ministério da Fazenda). Since obtaining a CNPJ

number requires a Brazilian address, foreign company

applicants must either establish a local branch office in

the country or designate a local agent that would act as a

bidder’s legal representative. Once incorporated in the

country, foreign companies (and foreign capital) are

2

Guidelines

paragraph(s)


Program


practices legally treated as local.

According to the World Bank’s Doing Business in 2010

report, applying for a CNPJ number takes about 22 days

and the service is provided at no cost to the applicant.

Joint ventures

Paragraph 1.10

Mandatory association between

firms is not acceptable.

Those provisions of the Guidelines

would be made applicable through

the LA.

The policy requirement is not met:

Foreign bidders are never required to associate with local

companies to bid for government contracts. But in case of

an association between a foreigner and a local, the

Brazilian company (or technically, the company with

local legal representation) is required to be the leader

according to Article 33 of the procurement law. Such

requirement does not apply for competitive bidding

subject to international competition as defined by local

procurement law 8.666/93.

Section II

Two-stage

Bidding

paragraph 2.6

Turnkey contract

Paragraph 2.22

Applies to large and complex, or

turnkey, contracts that potentially

attract the participation of foreign

bidders.

Procedure may follow two stages:

1) non-priced technical proposals;

2) issuance of BDs to bidders, and

submission of technical priced

proposals.

Bank review of complex, high

value, and non-standardized

bidding processes as part of its

assessment of the country systems.

Possibility to use Bank SBDs or

harmonized MPDs for specific

bids/contracts to be identified in

the Procurement Plan (PP) for the

pilot project.

Modifications as may be needed by

the country institutional and legal

framework to allow for the country

policies and procedures to apply.


The legal framework does not provide for two-stage

bidding as described in this requirement.

Notification and

Advertisement

paragraphs 2.7-

General Procurement Notice

(GPN) and Specific Procurement

Notices (SPN) for ICB contracts

The executing agency of each pilot

project will be required to publish

in UNDB, and on an electronic

The policy requirement is met:

Transparency is a valued principle by Brazilian rules and

procedures for public procurement. Other than sole-

3

Guidelines

paragraph(s)


Program


practices 2.8 to be published on UN

Development Business online and

Dg market.

free access portal, all contracts

identified as likely to attract

foreign competition.

Such contracts to be flagged in the

Procurement Plan (PP).

Publication of all mandatory

documents at the pilot project level

on a fully functional and freely

accessible website of the executing

agency.

source transactions, every procurement process carried

out by the federal government (including price

quotations) is publicly advertised in both the ComprasNet

website and the federal official gazette, irrespective of

estimated contract size and procurement method. In

addition to these two (widely accessible) public

advertising channels, and depending on the procurement

method, some procurement opportunities may be

advertised in newspapers of national, state, and/or

municipal circulation. Finally, for those SICAF-

registered suppliers who sign up for the service,

ComprasNet can notify them of upcoming reverse

auction procurement events via e-mail immediately after

the events are advertised online.

In São Paulo, all procurement opportunities and contract

awards are published in the website of the state official

gazette, known as e-negociospublicos. In addition, all

reverse auction invitations to tender are published in

Pregão.sp, including detailed, process-specific

information such as bidding documents, clarifications,

complaints, and minutes of bid sessions.

Prequalification

paragraphs 2.9-

2.10

Use of prequalification for large

complex requirements limited to

capability and resources to

perform the particular contract

with regard to experience, past

performance, personnel, facilities

and financial position.

The PP will be used to identify

bidding processes that would

benefit from pre-qualification.

Advertisement as per requirements

above.

Prequalification requirements to be

assessed by comparison with the

harmonized pre-qualification

MPD.


Use of prequalification is regulated by Article 114 of the

procurement law. According to the procurement law,

bidder pre-qualification may only be used (i) for large

contracts procured through open competitive process,

known as ―concorrências‖, which is used for large works,

and (ii) if justified by the technical complexity of the

contract. The use of pre-qualification must be approved

in advance by the agency’s highest procurement authority

on the basis of a detailed (written) justification for the use

4

Guidelines

paragraph(s)


Program


practices of the procedure by the bid evaluation committee.

Pre-qualification is carried out on a pass/fail basis.

Article 114 of the procurement law establishes that the

pre-qualification procedure must be consistent with the

qualification assessment guidance set forth by the

procurement law for open competitive bidding

procurement in general and concorrências in particular,

which is based on objective criteria and the pass/fail

principle.

Bidding

Documents

paragraphs 2.11-

2.12, and 2.16 –

2.18

Bidding documents must provide

information sufficient for a

prospective bidder to prepare a

bid. Use of Bank standard bidding

documents is mandatory for ICB -

this requirement will have to be

modified for the pilots.

Existence of national sample

bidding documents (NSBDs) not

required, but mandatory use of

standard bidding documents

acceptable to the Bank when

international competition is sought

under pilot projects.

Specific provisions to be validated

vis-à-vis the checklist below, and

to be stated in the LA.


São Paulo has nine standard bidding documents, covering

the procurement of goods, works, and non-consulting

services. The use of standard bidding documents is

mandatory. The documents’ standard content complies

with the minimum content requirements introduced by

the federal procurement law and provides all relevant

information for bidders to prepare a responsive bid.

The federal government does not publish standard

bidding documents of mandatory use.

Validity of bids

and bid security

paragraphs 2.13-

2.14

Bidding documents must state bid

validity period.

Bid security not mandatory

Review of clauses in the bidding

documents accepted for use under

pilot projects when international

competition is anticipated.


When required, the amount of the bid security is limited

to 1% of the estimated cost in convites, tomadas de preço

and concorrências (Articles 31 and 32 of Law 8.666/93).

For reverse auctions (which are mostly done

electronically), bid securities are not required (Article 5

of Law 10.520/2002).

Article 60 of law 10.520/2002 and Article 64 of law

5

Guidelines

paragraph(s)


Program


practices 8.666/93 provide for 60 days of bid validity period unless

otherwise stated in bidding documents.

Language

paragraph 2.15

English, French, or Spanish, in

addition to the national language

of the country.

National language can be used

provided that it is used

internationally and that a

translation in English, French or

Spanish be made available to

foreign bidders for contracts that

have been identified for

international bidding in the PP.

Advertisement and bidding

documents should be issued in an

international language (English,

French or Spanish) in addition to

the national language, and

contracts with foreign entities

should be signed in the

international language the bidders

used for their bids.


All documents concerning procurement processes are

prepared in the national language, Portuguese.

While complying with the language requirement under

current Bank projects, Brazilian counterparts have often

indicated to the Bank that this requirement represents a

burden for them. Given the size of the Brazilian market,

the growing importance of its economy both within and

outside the region, and the fact that companies interested

in doing business in Brazil typically operate through local

offices or representatives, the Region proposes that the

OPRC considers allowing the use of Portuguese for the

purposes of a possible UCS pilot project in Brazil. A

review of data from 384 forms (i.e., information on ICB

contracts) over several years up to 2007 showed that 98%

of all Bank-financed civil works contracts in Brazil were

awarded to firms registered in Brazil. Similarly, 85% of

all ICB contracts for procurement of goods were awarded

to suppliers registered in Brazil, and this percentage

climbs to 93% if several large contracts for procurement

of condoms financed by HIV/AIDS projects are

excluded.

Standards/Brand

Names

paragraphs 2.19-

2.20

Use of standards and

specifications that promote

competition or based on "or

equivalent" if brand name is used.

National standard may be specified

after review of their non

discriminatory nature in the

bidding documents accepted for

use under pilot projects.


The procurement law forbids the use of brands and labels

(Article 15). Technical specifications need to be prepared

using technical and functional characteristics. Use of

brand names are especially relevant for procurement of

goods and, in this respect, the reverse auction law

6

Guidelines

paragraph(s)


Program


practices (Article 3) demands the use of neutral specifications and

forbids any reference or statement in the specifications

that might limit or restrict competition. If a brand or label

is mentioned in the bidding documents, it shall be

followed by the expression ―or similar‖. Compliance with

the law is enforced by information technology as

databases of goods and services are reviewed and

audited.

The procurement law forbids the use of conditions or

requirements that could restrict competition or favor

specific companies, including standards (Article 3, para.

1).

Pricing

paragraphs 2.21

& 2.23

Bid must be invited on the basis of

specified INCOTERMS

Mandatory use of INCOTERMS

for comparison purposes, or fully

equivalent provisions.


Bidders are required to submit the total price for the

goods, works or services, including taxes, fees, levies,

insurance, transportation and any other costs incidental to

have goods, works and services delivered to the final

destination. For procurement of goods, bids are invited on

terms similar to the INCOTERM DDP.

Price Adjustment

paragraphs 2.24-

2.25

Bidding documents must specify if

price adjustment applies and price

adjustment must be based on a

prescribed formula.

Requirement for price adjustment

as a contractual term to be included

in the bidding documents accepted

for use under pilot projects when

international competition is

anticipated.

The policy requirement is met

Bidding documents must indicate whether or not price

adjustment will apply (Article 40 of the procurement

law). When applicable, the adjustment formula will use

specific inflation indexes that will refer to the date of the

submission of bids or the date when the official estimated

cost was prepared.

Currency and

Payments

paragraphs 2.28-

Bids documents must state

currency provisions and the

conversion mechanism. Payment

National currency acceptable

provided it is freely and fully

convertible and country does not


Bidding processes subject to international competition

7

Guidelines

paragraph(s)


Program


practices 2.36 provisions must also be stated in

the bidding documents.

apply restriction or control on

foreign exchange.

Contract terms to allow payment in

foreign currency directly and/or as

percentage of contract price at

predefined exchange rates (in no

more than 3 currencies) expressed

in the bidding documents accepted

for use under pilot projects when

international competition is

anticipated.

allow foreigners and locals to submit bids in foreign

currency (Article 42). All other bidding processes require

bids expressed in local currency (Article 5). The

Brazilian currency, the Real, is freely and fully

convertible.

Alternative bids

Conditions of

Contract

paragraphs 2.37

& 2.38

Contract documents must clearly

define the procedure to submit

alternative bids, and the scope of

work, rights and obligations of the

parties, and provide for fair and

clear allocation of risk.

General Conditions of Contracts

(GCC) for contracts covering

goods, works and services to be

consistent with international

requirements when international

competition is sought.

To be part of the bidding



competition is anticipated (see

checklist below).

The following policy requirement is substantially met:

Alternative bids:

Alternative bids are only allowed in processes that follow

the procedures ―best technical proposal‖ and ―best

technical proposal and price combination‖. These

procedures are used for hiring consulting services and, on

exceptional basis, for procurement of major equipment

when the options available in the market present

significant differences in terms of quality, productivity

and reliability and these differences can be objectively

measured. In such exceptional cases, the top official of

the purchasing agency, usually the Minister, will have to

clear the process.

The following policy requirement is met:

Conditions of Contract:

São Paulo has GCCs for contracts of goods (single

delivery or multiple deliveries), non-consulting services

(services based on unit prices and services based on

lump-sum charges), and works (small works, medium-

8

Guidelines

paragraph(s)


Program


practices size works, and large/complex works). Implementing

agencies are required to use the appropriate standard

GCCs and an attorney from PGE must approve the

contract before signature.

The content of GCCs is consistent with internationally

accepted practices and also compatible with Article 55 of

the federal procurement law, which sets out the minimum

content for every government contract. All GCCs

include, at a minimum, the following:

- Description of the item

- Contract period and delivery requirements

- Prices, payment conditions, and price

adjustment formula if applicable

- Timeframes for contract implementation and

responsibilities of supplier and employer

- Performance guarantees if required

- Rights and responsibilities of each party,

including penalties and fines

- Conditions for contract termination

- Explicit linkage between the contract, the

bidding documents and the supplier’s bid

- Legislation applicable to contract

- Dispute resolution procedures

9

Guidelines

paragraph(s)


Program


practices

The federal government does publish GCCs of mandatory

use.

Performance

Security,

Liquidated

Damages

Force Majeure

paragraphs

2.39/2.40, 2.41&

2.42

Format and provisions to be

included in the bidding

documents.

(to be assessed as part of the

assessment of the country legal and

institutional framework).


Performance securities are not mandatory but if required,

bidders can choose one of the following formats: cash,

government bonds, insurance bonds, and bank guarantee

(Article 56). The law limits the amount of the

performance security to 5% of the contract price and, in

case of large and complex works, this amount can go to

the maximum of 10% of the contract price. Suppliers and

contractors that provide cash as performance security will

receive their money back adjusted for inflation.

If a price offered by a bidder is considered to be too low

and risky, the performance security shall include an

additional premium equivalent to difference between the

price offered and the estimated price (Article 48).

For contracts that are terminated based on force majeure,

the contractor or supplier will have its performance

security returned and will be paid for the services or

goods delivered up to the date of contract termination and

for demobilization costs (Articles 78 and 79).

Assessment of liquidated damages are defined in specific

bidding documents and the law requires that penalties be

collected firstly through the performance security,

secondly from payment deductions and finally through

court order (Articles 86, 87 and 88).

Applicable law

and settlement of

The conditions of contract shall

provide for settlement of disputes

National law to apply. The policy requirement is met:

10

Guidelines

paragraph(s)


Program


practices disputes

paragraph 2.43

and state the applicable law. For the procurement of goods, works, and services, the

procurement law provides an alternative dispute

resolution (ADR) mechanism, or amicable settlement

process, that has proved to work well over the years.

Unsatisfied parts to a contract that has gone through the

ADR process can seek recourse through the country’s

courts of law.

Time for bid

preparation

paragraph 2.44

Time allowed for the preparation

and submission of bids shall be

determined on the basis of the

magnitude and complexity of the

requirement.

Requirement to be stipulated for

each executing agency

implementing pilot projects.

To be closely monitored as one key

compliance indicator (see Stage

III).


Timeframes for preparation and submission of bids are

adequate in providing enough time for potential bidders

to obtain the bidding documents and response to an

invitation to bid. Timeframes are also consistent with the

method, nature, and complexity of the procurement

process at hand. Specifically, for the non-auction open

competitive bidding procurement method, the time

provided for submission of bids varies (per the

procurement law) according to the complexity of the

contract. For example, procurement processes for

consulting services with an estimated award size of at

least R$1.5 million (about $840,000) and awarded on the

basis of ―best technical proposal‖ have a minimum bid

preparation period of 45 days. In contrast, processes for

procurement of goods and works in the same award size

bracket but awarded on the basis of the lowest offered

price (among qualified bidders) have a minimum of 30

days for bid preparation.1

1 Besides the 45 and 30 day periods, other minimum proposal preparation time periods stipulated under law 8.666/93, depending on the nature of the process and

in strict accordance with the proposal preparation’s expected underlying complexity (as proxied by estimated award size), include 15 and 5 days.

11

Guidelines

paragraph(s)


Program


practices For reverse auctions, as defined by law 10.520/02, the

minimum time allowed for the submission of bids is eight

days regardless of the estimated award size (and since

there is no variation in award criteria for this procurement

method). Bids for reverse auctions are relatively simple

and most of the times submitted electronically.

Bid opening

procedures

paragraph 2.45

Bids to be opened in public at the

time and place designated in the

bidding documents.

Rejection of late bids.

Assessment of legal framework to

ensure that the national law covers

this requirement, and evaluation of

compliance at the pilot project

executing agency level, and

monitoring during pilot project

implementation.


Bids must be opened in a public proceeding, as defined

and regulated in Article 43 of the procurement law (for

non-auction competitive bidding) and Article 4 of the

reverse auction law (for reverse auctions). All bids

submitted after the bid submission deadline are rejected.

For non-auction competitive bidding, it is a de facto

practice in the country to open bids immediately

following the bid submission deadline. The reverse

auction law does explicitly stipulate that the public

opening of bids will immediately follow the submission

deadline (in the case of electronic reverse auctions—

which account for 97% of all reverse auctions

implemented by the federal government—the practice is

automatically enforced by the ComprasNet electronic

auction hosting system).

For all procurement methods and invitation modalities,

minutes with details of the proceedings at bid opening

ceremonies are kept electronically and are freely

available for review online on the ComprasNet website.

Confidentiality After bid opening, evaluation and National law to apply.

12

Guidelines

paragraph(s)


Program


practices paragraph 2.47 recommendations and other

information shall not be disclosed

until after publication of the

award.


After bid opening, the evaluation process is confidential

and all documents related to this process can only be

handled by the bid evaluation committee. After

publication of the award, bidders are entitled to dispute

the result by filing a complaint, which is locally known as

―recursos‖.

Disclosure of bid information during post award

debriefing, as required by the Constitution, is full.

Submitted bids are considered public documents and are

made available to any interested party upon request, as

clearly defined in the legal framework.

Examination,

evaluation and

comparison of

bids;

Post-qualification

paragraphs 2.48 -

2.54, and 2.58

Bids to be evaluated and awarded

on the basis of the criteria stated in

the bidding documents and

quantified using cost to the

maximum extent.

Post-qualification applies when

there is no pre-qualification.

To be part of the bidding




checklist below).


For reverse auctions, price is the sole evaluation criterion,

as defined in Article 4 of law 10.520/2002. Post-

qualification of the winner is done before award.

For non-auction competitive methods, there are three

types of evaluation mechanisms: lowest price (goods and

works), quality and cost (consultants), and best quality

(consultants). For lowest price bidding processes, the

evaluation of bids and award decision will take into

account only the price offered. For quality and cost and

for best quality, bidding documents shall spell out the

evaluation criteria as well as the weights for technical and

price proposals in the case of the former. Works can only

be procured through lowest price. Consultants can be

selected using any of the three evaluation mechanisms

(Articles 45 and 46).

13

Guidelines

paragraph(s)


Program


practices

In the Federal Government only and for non-auction

procurement methods only, Law 8.666/93 provides for a

two or three-step open, competitive bidding procedure.

For procurement of goods and works, a two step process

is followed (for consultants, three steps) whereby bidders

submit two sealed envelopes to the implementing Agency

at the same time. The first envelope contains a price

proposal. The second envelope contains the bidder’s

legal, financial, and technical qualification documents, in

accordance with the requirements of the bidding

documents. The evaluation process includes two distinct

evaluation steps. In the first step, only the envelopes

containing the qualification documents for all bidders are

opened and reviewed by the bid evaluation committee.

Only the bidders deemed in full compliance with the

bidding documents advance to the second step, during

which the envelopes containing the price proposal are

opened. The contract is awarded to the qualified bidder

who submitted the lowest price. Price envelopes for

unqualified bidders—as determined by the bid evaluation

committee on the basis of the bidding documents—are

returned unopened after the award decision is made.

In São Paulo, the State’s legal framework was modified

to adopt a post qualification procedure by requiring that

financial envelopes in paper based procurement be

opened first2. The qualifications of the three lowest

bidders are evaluated on a second step, which takes place

immediately after ranking the price proposals. This

procedure of opening prices before the qualification

documents is locally named ―inversão das fases‖.

2 This practice was introduced by State Law 13.121/08 and further regulated by State Decree 54.010/09.

14

Guidelines

paragraph(s)


Program


practices

Domestic

preference for

goods

GL 2.55-2.56

Defines the Bank's procedures for

use of domestic preference.

Use of discriminatory domestic

preferences (e.g. by nationality)

will not be allowed in the bidding




checklist below).

The policy requirements are not met:

The law does not allow the use of any provision to grant

preferences to locals (Article 3). Foreigners and locals are

treated equally in government procurement.

If there is a tie between two or more bids, law 8.666/93

establishes that, as tie-break criteria, preference should be

given to goods, works, and services that are produced or

rendered (i) by Brazilian firms funded with domestic

capital; (ii) in Brazil; (iii) by Brazilian firms (regardless

of how they are funded); and (iv) by firms that invest in

research and development in Brazil (in that order). If a tie

persists even after applying these criteria, the winner is to

be named based on a random draw among tied bidders.

As an exception to the first paragraph, in procurement of

goods and services of the information technology sector,

local bids as defined by the law are allowed an

opportunity to match or beat the winning bid when local

bids are within a 10% range of the winning bid. If local

bidders forgo the opportunity, ranking and award will

follow usual procedures defined in the procurement law

or the reverse auction law. Local bids are those offering

goods and services manufactured in the country or that

contain technology developed in Brazil, according to

Decree 7.174 dated May 2010.

Also an exception to the legal requirement that all

companies be treated equally (Article 3), Law 123 of

15

Guidelines

paragraph(s)


Program


practices 2006, or the general Law of small and medium

enterprises (SMEs)3 introduces a tie-breaking criterion

that favors such businesses in the context of competitive

public procurement. Specifically, any bid from a

qualified SME bidder (i.e. bidding document responsive)

that is equal to or within 10% of the lowest priced

proposal when the latter was submitted by a qualified

non-SME bidder (5% in the case of reverse auctions) will

be considered as ―tied‖ with it. The SME bidder(s) in

question will then be given the opportunity to, if they so

desire, re-issue a price proposal that is lower than the

originally-lowest priced bid, in order to win the contract.

Bid validity,

Award of

Contract

Rejection of bids

Publication

paragraphs 2.57,

2.59-2.60, and

2.61-2.64

Award to the lowest evaluated

bidder which meets the

requirements of the bidding

documents including technical

capacity and financial resources.

Publication of awards is required

within two weeks.

Rejection of all bids to be

justified.

Assessment of legal framework to

ensure that the national law covers

bid validity, contract award, and

rejection of bids requirements, and

evaluation of compliance at the

pilot project executing agency

level, and monitoring during pilot

project implementation.

The executing agency for each

pilot project would be required to

have (a) a functioning electronic

system for retaining information on

its procurement processes and

managing invoices and certificates

payments; and (b) a fully

functional website that is freely

accessible to all stakeholders,

including bidders and civil society,


For reverse auctions, the award is made to the bidder

offering the lowest price that meets the requirements set

in the bidding documents (Article 4 of law 10.520/2002).

For non-auction competitive procurement, the

procurement law requires that the award be made to the

lowest price in case of lowest price-type of bidding

(Article 45), and to the bidder with the highest score in

the case of quality and cost and best quality types of

bidding processes.

All contract awards, irrespective of the amount, need to

be published no later than the fifth business day of the

month following the award (Article 61). Contract awards

are posted on the ComprasNet website and published in

3 The Law refers to SMEs as micro and small enterprises. Micro enterprises are defined as those with annual revenues of up to R$240,000 (about $133,000);

small enterprises are defined as those with annual revenues above R$240,000 and up to R$2.4 million ($1.3 million).

16

Guidelines

paragraph(s)


Program


practices for posting information regarding

its organization, procurement

regulations, SBDs, procurement

opportunities, information related

to the award of contracts, and

procurement plans.

the federal official gazette. In São Paulo, all contract

awards are published at enegociospublicos.com.

Rejection of all bids needs to be justified and approved

by the OD (Article 49). Publication of the decision is

required and bidders are allowed to complain.

17

Standard Bidding Documents – Federal Government and the State of São Paulo

Checklist of Clauses and Key Findings

The government of the state of São Paulo has nine standard bidding documents of mandatory use. Specifically, São Paulo’s

Office of the Solicitor-General (Procuradoria Geral do Estado de São Paulo, or PGE) has developed and disseminated the following

standard bidding documents (SBDs), corresponding to the various procurement methods:

Two SBDs for the concorrência method (with and without inversão das fases)

Two SBDs for the tomada de preços method (with and without inversão das fases)

One SBD for the convite method

Four SBDs for reverse auctions (single-delivery of off-the-shelf goods, multiple deliveries of off-the-shelf goods, non-

consulting services based on unit prices, and non-consulting services based on lump-sum prices)

All nine SBDs were crafted by PGE subject-matter expert attorneys (in effect, the São Paulo counterparts of AGU legal

advisors at the federal level). Moreover, PGE has a clear authority to review and periodically update the SBDs in order to both reflect

market needs and continue to contribute towards improving procurement efficiency.

Besides standard bidding documents, PGE has developed and disseminated a standard contract document, including general

conditions of contract, for the execution of public works. The use of standard contracts, as the use of SBDs, is mandatory to state

government agencies.

The Bank reviewed all nine standard bidding documents and the standard contract issued by the State of São Paulo as part of

the preparation work to propose a pilot for country systems in Brazil. The federal government does not issue standard bidding

documents of mandatory use. The team that reviewed the documents issued by São Paulo found that the Brazilian procurement law

8.666/93 provides granular details about issues concerning the implementation of procurement processes. As a result, bidding

documents tend to be short compared to Bank’s standard bidding documents as Brazilian bidding documents will typically refer to the

18

procurement law rather than duplicate its content. In fact, the longest bidding documents issued by São Paulo are only 21 pages long.

On the other hand, the procurement law 8.666/93 is significantly longer than the Bank’s Guidelines as it covers in detail procurement

procedures that the Bank rather leaves to the bidding documents. As a consequence of this characteristic of the legal and regulatory

framework, the review of São Paulo’s standard bidding documents according to the checklist provided in the methodology to pilot

country systems is separated into two broad groups: first, this report will only present the issues of the checklist that are actually

regulated by the procurement law and, consequently, apply to all bidding documents issued in the country; unless those issues are not

covered by the report on assessment of the OECD/DAC benchmarking tool, this report will not discuss those issues in detail again and

it will rather refer the reader to the specific part of the report of the OECD/DAC benchmarking tool. Secondly, the report will present

and discuss only the clauses of the checklist that are dealt with at the level of bidding documents published by São Paulo.

Clauses covered by the Procurement Law (8.666/93) and that apply to all bidding documents issued in the country, including

the federal government and the State of São Paulo

Clause Subject Reference in the

procurement law Reference in the report of assessment of the OECD/DAC

Benchmarking Tool; or

Comment to the relevant clause in the law

Comments

1. Fraud and

Corruption

Articles 89 to 108 Sub-indicator 12 (a), Page 86 It is substantially

equivalent but

specific clause to

cover Bank’s right

of inspection and

audit needs to be

added.

2. Eligible Bidders

Article 3 Sub-indicator 1(d), Pages 42-44 Equivalent, except

for the

requirement to

have a CNPJ as

described earlier

in this report and

in sub-indicator 1

19

(d) of the

benchmarking

report.

3. Sections of

Bidding Documents

Article 42,

paragraph 2

Note: Bidding documents must include engineering designs,

technical specifications, estimated costs and unit costs, bill of

quantities, and draft contract.

Equivalent.

4. Documents

Comprising the Bid

Articles 27 to 33 Note: Bids should have a set of documents demonstrating legal,

fiscal, financial and technical qualifications of the bidder.

Documents showing legal qualifications:

Identification of the person signing the bid

Statutes

Corporate acts identifying the current board of the company

Articles of incorporation

Foreigners should also include authorization to operate in the

country.

Documents showing technical qualifications:

For procurement of works, registration at the council of

engineering and architecture

Certificates showing previous experience in similar works and

services

Résumé of the project manager

When required, certification of visit to site of works

Résumé of key technical team that will work on the contract

List of plant and equipment available to perform the contract

Documents showing financial qualifications:

Certification that the company has not filed for bankruptcy

Balance of sheets for the last fiscal year

Equivalent.

20

Documents showing fiscal qualifications:

Taxpayer identification number

Registration with local tax collection agencies

Non-arrears tax statements

Clearance certificate from the social security office

In São Paulo, companies that are registered at CAUFESP, the State’s

database of suppliers, do not need to submit copies of the documents

showing technical, financial, legal and fiscal qualifications with their

bids. The state administration will check the corresponding

information online.

According to Article 32 of the procurement law, foreign bidders may

submit notarized and certified translated documents that are

equivalent to the ones issued in Brazil.

5. Alternative Bids

Article 46,

paragraph 3 Note: The procurement law requires implementing agencies to

prepare engineering designs (and impact assessments) before a

bidding process for works can be advertised. As a result, government

agencies usually have detailed specifications and designs by the time

bidding documents are written. Because of this detailed preparation

work that leads to a procurement process, bidding documents for

works typically will not consider alternative bids. It should be noted

however that the procurement law does allow for specific processes

to consider alternative bids but this is considered an exception that

requires prior approval from the Ordenador de Despesas.

It is substantially

equivalent.

6. Currencies of Bid

Article 5 Note: Except for bidding processes subject to international

competition, all bids shall be submitted in national currency.

Equivalent.

21

7. Documents

Establishing the

Qualifications of the

Bidder

Articles 27 to 33 Note: As presented in 4 above ―Documents comprising the bid‖, bidders are

required by law to submit a set of documents showing that they comply

with technical, financial, legal and fiscal requirements to bid.

According to Article 32 of the procurement law, foreign bidders may

submit notarized and certified translated documents that are

equivalent to the ones issued in Brazil.

Equivalent.

8. Period of Validity

of Bids

Article 64 of law

8.666/93 and

Article 60 of law

10.520/2002

Note: Article 60 of law 10.520/2002 and Article 64 of law 8.666/93 define

that bids shall be valid for a period of 60 days unless otherwise stated in

bidding documents. Bid validity has never been an issue on reverse

auctions, which are largely done through the internet and the award is swift.

Equivalent.

9. Bid Security and

Bid-Securing

Declaration

Articles 31 and 32

of law 8.666/93 and

Article 5 of law

10.520/2002

Note: For reverse auctions (which are mostly done electronically), bid

security is forbidden by the reverse auction law. For the other procurement

methods (convite, tomada de preço and concorrência), the amount of the

bid security is limited to 1% of the estimated cost. When required, bid

securities can be presented in one of the following formats: cash,

government debts bonds, insurance bond, or bank guarantee.

In São Paulo, bid securities are not required by default. Bidders who fail to

sign a contract will be debarred for a period of up to five years.

Equivalent.

10. Bid Opening Article 43 of law

8.666/93 and

Article 4 of law

10.520/2002

Sub-indicator 1(g), Page 47 Equivalent.

11. Confidentiality Article 3 of law

8.666/93

Sub-indicator 1(f), Page 46

Equivalent.

12. Clarification of

Bids

Article 43 of law

8.666/93

Note: The procedure for clarification of bids described in the procurement

law is similar to the one presented in the Bank’s SBDs. The bid evaluation

committee may contact bidders for purposes of clarification of bids but

change in the substance of the bid or inclusion of new documents is not

Equivalent.

22

permitted.

13. Domestic

Preference

Article 3 of law

8.666/93

Note: Local and foreign registered bidders are treated on equal footing

when bidding for government contracts. The use of domestic preference is

not permitted by the law (except for procurement of goods and services of

the information technology sector and, even in such case, locals will have to

offer a bid that matches or beats the winning bid to get the award).

Equivalent.

14. Performance

Security

Article 56 of law

8.666/93

Note: When required in the bidding documents, performance security is

normally equivalent to 5% of the contract amount and it can go up to 10%

in case of risky bids. Performance securities can be presented in one of the

following formats: cash, government debts bonds, insurance bond, or bank

guarantee.

Equivalent.

15. Notification of

Award

Article 61 of law

8.666/93 and

mandatory use of

procurement

information

systems

Note: All awards are published in the internet (Comprasnet in the case of

federal government and BEC/SP and e-negociospublicos.com.br, in the

case of São Paulo). In addition, a summary of all contracts signed by the

government must be published no later than the fifth business day of the

month following the award (also available in the internet).

Equivalent.

15. Comparison of

bids

Law 123/2006 Note: The only issue worth mentioning is that law 123/2006

introduces a tie-breaking criterion that favors small and medium

enterprises4 in the context of competitive public procurement.

Specifically, any bid from a qualified (i.e., bidding document

responsive) SME bidder that is equal to or within 10% of the lowest

priced proposal when the latter was submitted by a qualified non-

SME bidder (5% in the case of reverse auctions) will be considered

as ―tied‖ with it. The SME bidder(s) in question will then be given

the opportunity to, if they so desire, re-issue a price proposal that is

lower than the originally-lowest priced bid, in order to win the

Equivalent.

4 The law refers to SMEs as micro and small enterprises. Micro enterprises are defined as those with annual revenues of up to R$240,000 (about $133,000); small

enterprises are defined as those with annual revenues above R$240,000 and up to R$2.4 million ($1.3 million).

23

contract.

16. Settlement of

Disputes

Sub-indicator 8(b), Page 76. Equivalent.

17. Terms of

Payment

Article 40 of law

8.666/93 Note: Payment must take place within 30 days of invoice receipt.

Suppliers are entitled to receive compensation in the event of

payment delay. Payments for works are based on measurements that

take place according to the work plan. Payments for goods are made

after delivery and acceptance.

Equivalent.

Review of specific clauses on São Paulo’s standard bidding documents and GCCs

1. Language of Bid

Bids should be prepared in Portuguese language. Comments

2. Bid Submission Form

and Price Schedules

The bid submission form has to include name, address, taxpayer identification number, name

and number of the bidding process, brief description of the scope of the works, total price and

bid validity.

Price schedules need to have the bill of quantities with unit prices.

Equivalent.

3. Bid Prices and

Discounts

Bidders are required to submit the total price for the goods, works or services, including taxes,

fees, levies, insurance, transportation and any other costs incidental to have goods, works and

services delivered to the final destination. For procurement of goods, bids are invited on terms

similar to the INCOTERM DDP. For procurement of works, bidders are required to quote unit

prices and such prices to include all duties, taxes and other levies.

Not equivalent.

4. Submission, Sealing

and Marking of Bids

For reverse auctions, bids are submitted electronically using the internet. For the other

methods, particularly for procurement of works, bids will be hand-delivered at the venue of

the opening ceremony, at the date and time specified in the bidding documents.

Equivalent.

24

5. Late Bids For reverse auctions, the information system will not allow bidders to submit a bid after the

deadline. For the other procurement methods, late bids are rejected.

Equivalent.

6. Contractor’s

Responsibilities

Contracts for works have a long and detailed list of contractor’s responsibilities as follows:

Correction of defects in the works and services delivered during the defects liability

period, which is set at five years after issuance of the completion certificate

Contracting insurance against civil liability, work-related accidents, physical accidents

Contractor is liable for work accidents not covered by insurance

Surveillance of the site of works

To inform the employer of the name and position of all workers

To store and keep materials that will be used to execute the contract

To ensure that workers follow safety and hygiene regulations

To appoint a representative who will be the contact person with the employer

To make and display a billboard with information provided by the employer about the

contract

To provide free access to the site of works as well as to provide any requested information

to supervisors appointed by the employer

To carry required labor and social security documentation for all workers

To be liable to damage caused to the employer or to a third party during execution of the

contract

To pay for utilities used in the site of works

To familiarize with the conditions of the site of works

To oversee the professional and personal conduct of workers and forbid drink of alcoholic

beverages

To replace personnel at the request of the employer

To provide uniform to workers

To train workers on prevention of fire accidents

To warn the employer in writing of unforeseen situations during contract execution

To provide prompt medical assistance to workers involved in accidents

Equivalent.