By Camillo Giamundo and Leonardo Muradian Cundari

The new procurement law (Law 14,133/21), despite retaining many of the provisions and procedures of the former law (Law 8,666/93), incorporated a series of mechanisms found in specific public procurement rules, such as the auction law (Law 10,520/02) and the Differentiated Procurement Regime (Law 12,462/11).

An example is integrated and semi-integrated contracting, models that already existed and had therefore been tested by the Public Administration in recent years, and which were incorporated into the general procurement law in order to unify certain aspects of the tender procedure in a single law.

Initially used in contracts awarded by Petrobras, integrated contracting became widespread after the enactment of the Differentiated Procurement Regime law, established specifically to accelerate the construction and modernization of stadiums and airports in order to improve the country’s infrastructure for the 2014 World Cup and the 2016 Olympic Games. The novelty drew attention for its modernizing character, although in practice the model faced a series of criticisms regarding overbilled contracts or contracts that were never delivered.

Ten years after being codified, integrated and semi-integrated contracting was adopted by the new procurement law, making it important to understand its concept, functions and purposes.

Integrated contracting is, under the law itself, a regime for contracting engineering works and services in which the contractor is responsible for preparing and developing the basic and detailed designs, executing engineering works and services, supplying goods or providing special services, and carrying out assembly, testing, pre-operation and all other operations necessary and sufficient for the final delivery of the object.

Semi-integrated contracting is defined in the same way, except that the contractor does not prepare or develop the basic design, and its work begins with the detailed design.

These contracting models work on a turnkey basis, in which the contracting party, in this case the Public Administration, receives the works in their final form, ready to begin operations and fulfill their purpose.

It can therefore be seen that the private contractor is responsible for preparing, developing and executing most of the contract, which is a significant change from the former procurement law: now, the same company may be responsible for preparing the design and executing the works, which was previously prohibited by art. 9 of the former law.

The purpose of these models is contained in the very name of the institution: integrating the stages of engineering works or services by delegating them to the private sector, from the basic design to delivery in final form. This purpose seeks to provide (i) greater standardization of the service provided or the works executed, given that the same company is present throughout almost the entire process; and (ii) cost reduction, since fragmenting contracts would require more than one tender, each with a specific object, and greater economic and financial expenditure as a result of the “retail versus wholesale” logic — that is, contracting services from a single company may be cheaper than splitting them among several contractors.

Despite these advances in terms of innovation and modernization of public works, these models also place significant burdens on companies. The law provides that, because the design and execution are delegated, much of the burden and risk will fall on the private contractor, which will be responsible for events occurring after the contract is signed (art. 22, §4 of the new procurement law). However, regarding the other inherent risks, whatever they may be, the law requires the tender notice to include a risk matrix agreed between the Public Administration and the company, allocating them between both.

The risk matrix, in turn, is a mandatory contract clause in the contracting models discussed here, which must define the risks arising from the contract and distribute them between the parties, as well as establishing the initial economic and financial balance. Based on this clause, given this initial configuration, economic and financial rebalancing will only be admissible when the cause is not provided for in the risk matrix, that is, when responsibility for the event was not previously assigned.

From the private sector’s perspective, it should be noted that these models allow relatively more room for maneuver, provided it is formally approved by the Public Administration (arts. 6, XXVII, “b”, and 46, §3). It is therefore for the private contractor to harmonize the design, supply of goods, execution and other stages delegated to it.

This category of contracting fits the Public Administration’s modernizing goal of achieving more advantageous and innovative targets and results, from which the use of the method known as performance-based accountability can be inferred — that is, accountability is focused to a greater extent on the final result. By being designed as a target-focused form of contracting, the Law itself separates obligations of means from obligations of result, justifying the greater freedom granted to the private contractor to innovate.

Experience with integrated and semi-integrated contracting has so far proved quite successful and positive in the Brazilian infrastructure sector for the objectives for which it was designed. Now that they are expressly provided for in the general procurement law, they are expected to contribute to greater dynamism in public procurement while ensuring legal certainty through the risk allocation previously agreed between the contracting party and the contractor.

Published by Migalhas (in Portuguese).