Giuseppe Giamundo Neto and Fernanda Leoni

In recent years, the Brazilian State has signaled a search for greater efficiency in public management through cooperation with the private sector. Models such as concessions, permits, public-private partnerships (PPPs) and other arrangements have been widely adopted to delegate the performance of public services and works to private parties, generally in a deliberate context of modernization and cost reduction, which is not always achieved. Non-profit entities, such as third-sector organizations, are also, to some extent, recurring “partners” of the State, through the development of various social projects.

However, the absence of a dedicated and systematized legal regime for partnerships lato sensu raises questions about the legal certainty, transparency and effectiveness of these relationships. This is the case, for example, of technical cooperation agreements and covenants (convênios): the former not regulated — except by the general provisions of the General Law on Public Procurement and Administrative Contracts [1] — and the latter covered by generic rules on control and transfer of funds, without broader rules on obligations and counterparts [2].

Collaboration between the public and private sectors is nothing new. Since the creation of the first autonomous agencies and concessions in the 1930s, Brazil has signaled the need to delegate certain activities to private parties, especially those of an industrial and commercial nature. The movement toward administrative decentralization and the expansion of autonomous agencies was reinforced by the 1967 administrative reform, consolidating the distinction between direct and indirect administration and creating an environment conducive to contracts with private parties [3].

However, it was in the 1990s, with the privatization process and the creation of new partnership instruments, that a greater push toward a managerial model of public administration can be seen, guided by the pursuit of efficiency and inspired by principles such as subsidiarity, in which the role of the private sector comes to be seen as essential [4]. From then on, the Brazilian State moved to concentrate on activities established as “essential”, delegating to the private sector the performance of other functions, such as the provision of public services, the management of public assets and the promotion of private initiatives of public interest.

A mosaic of laws and the pillars of systematization

Although Brazil has experienced growing institutionalization of partnerships, there is a notable absence of a legal regime that systematizes the different forms of arrangements between the State and private parties in their many discrepancies. Today, partnerships are governed by a mosaic of specific laws, such as the Concessions Law (Federal Law No. 8,987/1995), the PPP Law (Federal Law No. 11,079/2004), the Social Organizations Law (Federal Law No. 9,637/1998) and the Regulatory Framework for Civil Society Organizations (Federal Law No. 13,019/2014), among others. Although important, these laws do not comprehensively address the complexity and variety of relationships between the public and private sectors — which is a constant in Law.

Without any intention of exhausting the subject, but rather with the aim of offering some general considerations, three pillars seem relevant to us in thinking about the beginning of a systematization: (1) a general classification of the various concepts that can be included in the definition of “partnership”; (2) the outlining of applicable principles; and (3) the creation of obligations and counterparts designed for each of the different partnership models.

A microsystem based on categories previously established by legal scholars [5], but with a broader and more detailed approach, could not only make the institutions easier to understand, but also provide tailored answers. Partnerships delegating public services, for example, could be subdivided according to the nature of the service provided and how the private partner is remunerated. Partnerships promoting private initiatives, on the other hand, could follow stricter criteria for granting tax benefits and transferring funds, in order to prevent abuse and fraud.

Another important aspect concerns mapping the fundamental principles applicable to the system. The principle of subsidiarity, for example, which directs State action only to activities in which the private sector is unable to act efficiently, is an important pillar. Efficiency, incorporated into the 1988 Constitution by Constitutional Amendment No. 19/1998, is also an important guide for public management. Furthermore, the principle of transparency is indispensable in conducting these partnerships, particularly regarding clarity in the criteria for selecting private partners and in the rules for performing and overseeing the contracts.

Another key pillar lies in drafting clauses and conditions governing the obligations and counterparts of each party. On the one hand, the rules on PPPs and concessions provide more structured rules for these partnership models, and have even been responsible for modernizing contractual conditions, with new institutions such as the risk and responsibility matrix; on the other hand, partnerships with third-sector entities still suffer from a symptomatic misunderstanding stemming from equally mistaken views of non-governmental organizations.

Given the plurality of partnership models between the State and private parties and the lack of unified legislation, the country would benefit immensely from a specific legal microsystem to regulate these relationships. Although this largely depends on the Legislative Branch, it can also rely on a systematic reading by legal practitioners — obviously within the limits allowed by legality. While a legally consolidated system could eliminate overlaps and inconsistencies between different laws and establish clear guidelines for the execution, performance and termination of all types of partnerships, the day-to-day interpretation of the rules in a realistic and contextualized way is a powerful instrument for adapting the system to the new dynamics involved in it.

In this context, oversight and control mechanisms also play a prominent role, with the active participation of the Courts of Auditors and the Public Prosecutor’s Office as agents of guidance rather than repression or discouragement. Accountability and evaluation of the results of these partnerships, which are certainly mandatory, should not only ensure that public funds are used efficiently and that the services provided meet the population’s needs, but should also serve as an educational tool and a means of improving management.

Therefore, the Brazilian experience with partnerships between the State and private parties shows that, although these relationships are emblematic of the modernization of public administration and the improvement of services to the population, they still lack a clear and consolidated legal regime. Creating a specific legal microsystem to regulate these partnerships is necessary and welcome, given the challenges posed by the growing complexity of relationships between the public and private sectors and the inadequacy of general procurement rules to deal with these complexities.

[1] See article 184 of Federal Law No. 14,133/2021: “Art. 184. The provisions of this Law shall apply, where appropriate and in the absence of a specific rule, to covenants, agreements, arrangements and other similar instruments entered into by bodies and entities of the Public Administration, as established in regulations of the federal Executive Branch”.

[2] Despite the undeniable progress in the wording of Federal Decree No. 11,531/2023, which revokes Decree No. 6,170/2007, it is still a very recent rule, and the results of its application should be better analyzed in the coming years.

[3] GROTTI, Dinorá Adelaide Musetti. A experiência brasileira nas concessões de serviço público. Revista Interesse Público. Belo Horizonte, no. 42, year 9. Mar-Apr. 2007.

[4] DI PIETRO, Maria Sylvia Zanella. Parcerias na administração pública: concessão, permissão, franquia, terceirização, parceria público-privada. 12th ed. Rio de Janeiro: Forense, 2019.

[5] A first step toward systematization is classification. Dinorá Adelaide Musetti Grotti, in her analysis of Public Administration partnerships, suggests a taxonomy that can serve as a basis. She divides partnerships into four major groups: (i) partnerships as a way of delegating public services; (ii) partnerships as a mechanism for promoting private initiatives of public interest; (iii) partnerships as an instrument for reducing bureaucracy in public administration; and (iv) outsourcing (GROTTI, Dinorá Adelaide Musetti. Parcerias na administração pública. Revista Brasileira de Direito Administrativo e Regulatório. No. 05. São Paulo: MP Editora. 2012).

Originally published by ConJur (in Portuguese).