Decree 12,304 of 2024 is an important step toward greater transparency, but raises doubts about the real capacity for implementation

The author argues that investing in compliance is not just a necessity, but a requirement for companies’ survival and prosperity. Unsplash. Rodrigo Bertoccelli, April 25, 2025 (Friday) – 5:57 a.m. The regulation of compliance in public procurement in Brazil has gained prominence in recent years, especially with the publication of Decree 12,304 of 2024, which came into force in February and complements Law 14,133 of 2021, known as the New Procurement and Contracts Law. This decree represents an important milestone in the pursuit of greater transparency, integrity and efficiency in relations between the public and private sectors. But are we really making consistent progress on this agenda?

The decree sets parameters for integrity programs in large-scale contracts, and defines criteria for breaking ties between bids and for the rehabilitation of bidders or contractors in the federal public administration. These programs must include audit mechanisms, incentives for reporting irregularities and internal procedures to prevent, detect and correct misconduct and fraud. The effectiveness of these measures, however, depends on the commitment of senior management, which must allocate adequate resources to ensure their implementation.

Integrity programs will be assessed based on their implementation, development and improvement, taking into account the effectiveness of the mechanisms adopted and the engagement of leaders. The decree also covers contracts entered into by state, Federal District and municipal administrations using federal funds, requiring each federative entity to designate the body responsible for assessing these programs. The CGU (Office of the Comptroller General) plays a central role in this process, with authority to issue complementary rules and delegate powers to other public bodies. For companies, the decree is an opportunity to stand out by demonstrating that their integrity programs are aligned with legal requirements. Implementing effective programs can increase the chances of success in tenders and strengthen companies’ reputation with the public administration and project financiers.

In Brazil, the Public and Private Integrity Promotion Program, better known as the “Pró-Ética Seal“, has been an important instrument for assessing compliance programs. Granted by the Ministry of Justice and Public Security, the seal recognizes companies and public bodies that stand out in adopting ethical and integrity practices.

Although the decree did not adopt the international standards ISO 37001 and ISO 37301 as a reference — which are important guides for companies building their programs — it allows the CGU to recognize assessments carried out by other public bodies, provided they are aligned with the established criteria.

IMPLEMENTATION CHALLENGES

Despite the progress, the effective implementation of these rules still faces significant challenges. One of them is the cost of implementing integrity programs, especially for smaller companies. There is a risk that the requirement will result in merely formal programs, without practical effectiveness. In addition, monitoring and assessing these programs requires a structure of trained professionals, something that is still lacking in many public administrations.

Another point of attention is the risk of transaction costs being passed on to the public administration, especially in smaller contracts. Law 14,133 of 2021 sought to mitigate this risk by making compliance mandatory only in high-risk situations, such as large-scale contracts and the rehabilitation of sanctioned companies. In other situations, compliance works as a tie-breaker and a mitigating factor for sanctions, encouraging the voluntary adoption of ethical practices.

RIO DE JANEIRO AS AN EXAMPLE

The State of Rio de Janeiro pioneered the implementation of integrity programs in public procurement by enacting Law 7,753 of 2017. This law requires such programs in contracts above BRL 650,000 for purchases and services and BRL 1.5 million for works and engineering services.

Rio de Janeiro’s initiative inspired other states and municipalities, which began adopting similar measures with reference values much lower than the Federal Government’s. A national trend toward more transparent and ethical public management has thus been consolidated. Companies taking part in state or municipal tenders without federal funds must pay attention to local rules.

CONTRACTS ABOVE BRL 250 MILLION

A key point of the decree is the requirement of integrity programs for consortia taking part in large-scale tenders. Currently, at the federal level, a large-scale contract is one worth more than BRL 250 million. The decree establishes that, in large-scale contracts involving consortia, all consortium members must prove that they have their own compliance program

This requirement poses additional challenges for companies that choose to join consortia. It is therefore essential to agree in advance with future consortium members that do not yet have an integrity program that one must be implemented if the consortium wins the tender. This can be provided for in a consortium formation commitment in the pre-tender context and reinforced in the consortium’s operating rules and procedures subsequently agreed among its members, should the consortium win the tender.

Under the decree, the companies forming the consortium and the consortium itself must have a compliance program. If it is not implemented, the public administration may impose sanctions, withhold payments and even terminate the contract.

The legislation sets a period of 6 months from the signing of the contract with the public entity for the integrity program to be implemented. Consortium members that do not yet have such a program must plan ahead, since, depending on the complexity of the organization, this period may be short for the necessary adjustments.

Yes, we are making progress in regulating compliance in public procurement, but much remains to be done. The decree is an important step, but its effectiveness will depend on the implementation capacity of companies and the public administration. The continuous evolution of compliance rules and practices is essential to ensure a fairer and more transparent business environment, promoting trust and integrity in relations between the public and private sectors.

In this context, investing in compliance is not just a necessity, but a requirement for companies’ survival and prosperity. As we move toward a more conscious and responsible future, compliance becomes a fundamental pillar for building a more ethical and sustainable corporate world. The regulation of compliance in public procurement is therefore a path of no return, but one that requires commitment and collaboration from all involved.

Originally published by Poder 360 (in Portuguese).