by Davi Madalon Fraga

The so-called New Procurement Law (Federal Law 14,133/2021) replaces and consolidates many of the rules governing public procurement, including those contained in Federal Law 8,666/1993, the Reverse Auction Law and the RDC, among several others, directly affecting the legal regime of public contracts entered into in the form of a traditional administrative contract.

However, it is well known that the scarcity of funds for this type of contracting, among other pragmatic reasons, has led the Public Administration — especially at the Federal level — to opt for concession contracts or public-private partnerships (“PPPs”). Indeed, according to data from the Ministry of Infrastructure, investments of more than BRL 200 billion are estimated in projects of this kind between 2021 and 20221.

This prevalence of more modern contracting models as substitutes for the classic administrative contract raises the question: specifically regarding the legal regime of concessions and PPPs, does the new law impose any change?

After all, as is well known, these types of contract, despite the subsidiary application of the now former Procurement Law, have their own legal regime — governed, respectively, by Federal Laws 8,987/1995 and 11,079/2004 — and are therefore subject to specific rules.

Although this article does not intend to exhaust the subject or offer solutions to any controversial situations that may be identified, some initial conclusions can be drawn. After all, the application of the New Procurement Law is still in its infancy, as is its treatment by the courts and oversight bodies, so there is still much to be built in scholarship and case law before the impacts of this legislation on concession and PPP contracts are established.

It should be noted at the outset that the new Procurement Law does not directly change the content of Federal Laws 8,987/1995 and 11,079/2004. However, concessions of real rights of use were specifically regulated by the New Law, under art. 2, item I, according to which “[t]his Law applies [to] the disposal and grant of real rights of use of assets”.

In addition, all the changes made to tender procedures will also apply to all types of concessions and PPPs. In this regard, by way of example only — since this is not the main subject of this article — one may cite the possibility of using the competitive dialogue tender modality (art. 6, XLII, art. 28, V), a mechanism hitherto unknown in public procurement in Brazil; the unification of the appeal phase, which now takes place at the end of qualification (art. 165, §1, I); and the deadline for filing appeals, which was reduced from five to three business days (art. 165, I).

But as regards the subsidiary application of the General Law to concession and PPP regimes, does anything change?

As is well known, the former Federal Law 8,666/1993 (art. 124) expressly provided for its subsidiary and supplementary application to those types of contracting where there was no conflict with the specific legislation. The new Law repeats this provision in its art. 186, according to which “[t]he provisions of this Law apply subsidiarily to Law 8,987 of February 13, 1995, and Law 11,079 of December 30, 2004”.

It follows that any change to the legal regime of administrative contracts that does not conflict with the provisions of the Concessions Law and the PPP Law will also be reflected in these types of contracting. Some changes in the new legislation can be highlighted.

One of them is variable remuneration, specifically for the construction phase of the project, in which the Administration pays the private party directly for this. Under art. 144 of the New Law, in contracts for works, supplies and engineering services, variable remuneration linked to the contractor’s performance may be established, based on targets, quality standards, environmental sustainability criteria and delivery deadlines defined in the tender notice and the contract.

In this case, payment may be set as a percentage of the amount saved on a given expense, when the purpose of the contract is to implement a rationalization process, in which case the expenses will be charged to the same budget appropriations, as set out in specific regulations.

Another innovation is the possibility of establishing more than one annual adjustment index, whether specific or sector-based, under art. 92, §3. This legal provision is particularly interesting for public service concession contracts preceded by public works, since, from a market standpoint in a specific case, it is reasonable to envisage different indexes or formulas for adjusting the tariff paid by users or the concession fee paid by the concessionaire and the prices for carrying out works, for example.

The subsidiary application of the new Law to concession and PPP contracts involving public works also appears possible as regards the regulation of the economic and financial rebalancing of contracts. The updated legislation provides (art. 124, §2), as a typical factor giving rise to renegotiation to restore the contract’s economic and financial equation, works that have been prevented by delays in completing expropriation, eviction, administrative easement or environmental licensing procedures, due to circumstances beyond the contractor’s responsibility and control.

Finally, another positive highlight of the new Law regarding contracts, which will apply equally to concession contracts, is the rule in the sole paragraph of art. 123, which sets a maximum of one month for the Administration to respond to requests made by the contractor. Although there is no consequence for failing to meet this deadline, it is an important first step in trying to eliminate the administrative silence to which private parties contracted by the Government are usually subjected.

Article originally published in the Licitações e Contratos column on Portal da Infra (in Portuguese), on 07.23.2021.