Are we asking for the opposite of what the law designed?
In recent years, the Federal Court of Auditors (TCU) has repeatedly held that, even in integrated contracting, the Administration must have a detailed cost estimate.
While Federal Laws 8,666/1993 and 12,462/2011 were still in force, the TCU consolidated the understanding that a detailed budget is not mandatory to launch an integrated contracting tender – because the tender may be based on a summary/parametric budget – but must be required when the contractor delivers the basic/detailed design, since it is the basis for amendments, rebalancing and oversight (TCU Precedent 258/2010, as well as Plenary Judgments 2,433/2016, 2,136/2017, 2,312/2017 and 544/2021).
The changes introduced by Law 14,133/2021 did not affect the court’s understanding: since the issuance of the Procurement and Contracts Manual, updated on August 29, 2024, it has been expressly stated that “although a detailed budget is not mandatory for tenders under the integrated contracting regime, TCU case law holds that it must subsequently be prepared by the contractor and submitted to the Administration”, based on art. 56, §5 and art. 46, §3 of the new Procurement Law and on judgments prior to it.
This understanding plays an important role: public oversight needs to know how much the project will cost and to have technical parameters for monitoring.
But does this requirement – as if the Administration had the right to know, line by line, the company’s internal cost compositions – not ignore the very legal regime of integrated contracting?
The essence of integrated contracting is simple: the Administration defines the desired result (through the preliminary design), and the private party undertakes to devise the solution, prepare the designs and execute them for a lump-sum price. The risk of underestimating cost, overestimating quantities or choosing more expensive technical solutions lies entirely with the private party – that is the meaning of the risk allocation provided for in the law.
Therefore, when the manager or the oversight body requires the contractor to present a detailed budget during execution, with unit cost compositions, charges, inputs and BDI (overhead and profit), what is being done, in practice, is taking away from the contractor control over the very risk assigned to it.
If the budget comes to be shared, discussed and adjusted throughout execution, the logic of full responsibility for the price falls apart. The Administration goes back to discussing each cost item – and the integration between design and execution that justified the regime loses its meaning.
The concern of oversight bodies is understandable: without knowing the cost bases, how can overpricing, price adjustment or rebalancing be assessed? But the remedy may be wrong. The detailed budget required by the TCU belongs to the Administration, not to the contractor. It serves internal and external oversight, the verification of cost-effectiveness and decisions on contract amendments – not intervention in the formation of private costs.
In its own recent precedents, such as Plenary Judgment 1873/2024, the Court reinforces that the risk of quantitative or technological variation, as long as compatible with the preliminary design, lies with the contractor.
If the risk is the contractor’s, so is the budget.
Requiring the private party to “open up the spreadsheet” in detail during execution may be useful as a transparency tool, but it is legally inconsistent: either there is a full transfer of risk, or there is co-management of costs; having both at the same time distorts the regime.
The best practice seems to be to distinguish purposes:
- the Administration must maintain and update its detailed reference budget as a control parameter;
- the contractor may be asked to demonstrate specific cost compositions, but only when necessary for rebalancing claims, qualitative changes or discussions about supervening events, as expressly provided in art. 56, §5 of the Procurement Law;
- outside these cases, requiring a “detailed execution budget” is incompatible with the regime and paradoxically creates the very excess of formalism that integrated contracting was created to avoid.
Perhaps the turning point is this: if the Administration transfers the cost risk but still wants to know and approve the detailed cost, then it is not delegating the risk — it is merely outsourcing execution.
And if that is the case, perhaps the problem lies not in the model of Law 14,133, but in our difficulty in trusting it.
