Government Procurement: Brazil Opening to Foreign Bidders

Written by | Government Procurement and PPPs

Quick Read

  • Brazil’s rules have traditionally favoured local bidders, although there were international tenders.
  • The rules have been changed to increase competition by facilitating the participation of foreign bidders. The main rules will come into force on 11 May 2020.
  • The current policy from the Federal government is likely to continue improving competition by bringing foreign bidders.

Background

Brazil’s procurement laws and purchasing methods are very formalistic (click here for more detailed background information on Brazil’s procurement process) . Although government procurement processes in the recent past were marred by corruption, this appears to have changed substantially.

Opening Government Procurement for Foreign Bidders

On 20 October 2019, Brazil’s new Electronic Reverse Auction Regulations (Decree 10,024/2019) came into force. Electronic reverse auctions have been for some years the preferred method of procurement by government bodies. The new Regulations expressly allowed foreign bidders to provide their own translation of documents during the bidding stage (previously they had to be translated by certified Brazilian translators).

On 11 February 2020, Normative Instruction 10/2020 (“NI”) was published. The NI (which will come into force on 11 May 2020) was passed specifically for the purposes of allowing foreign bidders to register on the Federal government’s United Supplier Registration System (Sistema de Cadastramento Unificado de Fornecedores, “Sicaf”) so that they can participate in electronic reverse auctions (pregões electrônicos), electronic dispensation processes (dispensa eletrônica) and the electronic differentiated contracting regime (regime diferenciado de contratações eletrônico).

Additionally, the Brazilian online purchasing website (Comprasnet) will be made available in English.

The NI confirms that unless the foreign bidder wins the procurement process:

  • preliminary translations will no longer be required to be made by a certified Brazilian translator;
  • a Brazilian resident with the power to be served on behalf of the foreign entity will not need to be appointed; and
  • the foreign bidder will no longer be required to obtain its Brazilian company number (CNPJ).

Certified translations, the appointment of a Brazilian resident and the CNPJ will only be required when the contract for the purchase is to be executed (signed) – that is, after the foreign bidder wins the procurement process.

Foreign bidders will also not be required to obtain a Federal company registration number (CNPJ) prior to obtaining Sicaf registration. This will only be required for those foreign entities that have branch offices in Brazil (note that a branch is different from a subsidiary).

What are the practical effects of these changes?

The changes do bring about improvements to Brazil’s government procurement environment for foreign bidders.

However, I must emphasise that Brazil’s public procurement processes are far from straight forward. Brazil is not a “do-it-yourself” jurisdiction and invariably those who try to venture into Brazilian deals without the assistance of qualified professionals run into trouble.

Hence, the changes need to be treated as the elimination of several of the many hurdles that foreign bidders face when trying to sell to government bodies in Brazil.

Questions?

Contact me if you would like further information.

Last modified: March 11, 2020