Tuesday November 21, 2023
Public procurement in Brazil was buffeted by the “Operation Car Wash” corruption scandal, reshaped by reform, and now is being redirected under re-elected President Luiz Inácio Lula da Silva. Controversially, Lula was himself tarred by the “Car Wash” scandal and spent 580 days imprisoned before Brazil’s Supreme Court ruled his imprisonment unlawful. Lula won the presidency again, and then his new administration withdrew Brazil’s coverage offer for entry into the WTO Government Procurement Agreement — an abrupt U-turn from the market-opening initiative of the prior Bolsonaro administration.
This free one-hour webinar, led by academics and attorneys from Brazil, will discuss the most recent developments under President Lula — anti-corruption, contracting and the future direction of public procurement in Brazil:
- Anti-corruption in the wake of Operation “Car Wash” (R. Rainho)
- How Brazil’s companies have enhanced anti-corruption efforts (M. Menezes)
- Brazil turns away from the WTO Government Procurement Agreement (C. Pereira)
- Future of public procurement in Brazil — panel discussion on the Clean Company Act (Law No. 12846/13) and the new Public Procurement Law (Law No. 14133/21), whistleblower reforms, and the Improbity Act (on unlawful acts in public administration).
Panelists
- Mauricio Moreira Menezes is a Full Professor of Business Law at the University of the State of Rio de Janeiro and partner of Moreira Menezes, Martins, Advogados. He is specialized in business law, including corporate, mergers and acquisitions, capital market, banking, business contracts, bankruptcy, anti-corruption and arbitration.
- Renata Costa Rainho is a visiting scholar at GWU Law School and a doctoral student in administrative law at Universidade Federal de Minas Gerais (UFMG) (Brazil). She is a lawyer specialized in administrative law, including infrastructure, PPPs (CP³P-F), government contracts, bidding procedures, compliance and anti-corruption.
- Cesar Pereira C.Arb FCiarb is a partner at Justen, Pereira, Oliveira & Talamini, based in São Paulo, Brazil. He is co-head of his firm’s practices in infrastructure and in dispute resolution (arbitration and mediation). He has a doctorate in administrative law from PUCSP (Brazil) and has been a visiting scholar at GWU, Columbia University and the University of Nottingham. He is a Fellow of the Public Procurement Research Group at the University of Nottingham.
Moderator
Christopher Yukins, George Washington University Law School
Resources
Webinar — Brazil’s Public Procurement Market: New Opportunities, New Challenges (GW Law, Feb. 2021): Prior webinar featured leading experts on U.S. and Brazilian public procurement law, who discussed Brazil’s public procurement rules on socioeconomic preferences, procurement strategies, anti-corruption and compliance, and bid challenges. The panel reviewed Brazil’s application for accession to the World Trade Organization’s Agreement on Government Procurement (which seemed a dramatic turnabout from Brazil’s long-criticized protectionism), and Brazil’s new public procurement law (Law 14.133/2021/PT) (automated translation/EN) (Licks summary/EN) (KGV on presidential changes/EN) which addresses electronic publication of opportunities, arbitration, competitive dialogues, criminal bid-rigging, pooled construction information using “Building Information Modeling” (BIM), contractor compliance (Maeda Ayres & Sarubbi summary/EN), and environmental sustainability (De Paula Dias summary/EN) (Chambers summary/EN). English-Portuguese translations of key procurement terms.
Anti-Corruption
Anti-Corruption Mechanisms Adopted by Brazil: Deterrence and Detection, by Rafael Tonicelli de Mello Quelho (Oct. 2023) — editor’s note: This paper, originally prepared as part of a course curriculum at the International Anti-Corruption Academy (Austria), briefly reviews Brazil’s statutory and institutional responses to corruption; issues discussed in this paper are explored in more detail below, in the author’s paper prepared as a student at Harvard Law School.
The Anticorruption Leniency Program in Brazil: A Path Towards Institutional Cooperation, by Rafael Tonicelli de Mello Quelho (Harvard Law School, LL.M. Program, Spring 2022) — Abstract: The enactment of the Clean Company Act (CCA or Law No. 12,846/2013) represented an unprecedented effort of Brazil to mitigate its longstanding problem with corporate corruption. The statute imposes strict civil and administrative liability on legal entities for the practice of corrupt acts against national and foreign Public Administration. In addition, it establishes the possibility of execution of leniency agreements between infringing legal entities and public authorities, enabling the reduction of sanctions in exchange for collaboration in investigations. Despite being a promising tool to rehabilitate companies and leverage the State’s investigative powers, experience has shown that the Brazilian anticorruption leniency program suffers from severe deficiencies. Brazil has adopted a model of institutional multiplicity to fight corruption, meaning that multiple institutions have overlapping authority to enforce anticorruption measure. Currently, the lack of cooperation among these multiple institutions has led to an environment of legal uncertainty and unpredictability that undermines the willingness of companies to adhere to such programs. For instance, in theory, a company may sign a leniency agreement with one institution and later be sanctioned by another one for the same facts informed in the agreement. In order to provide a greater level of predictability, efficiency and attractiveness to the Brazilian anticorruption leniency program, this paper proposes cooperative procedures and a new institutional arrangement to address the issue.
Transparency Measures and Open Government in Brazil, by Rafael Tonicelli de Mello Quelho (Nov. 2023) (outlines leading transparency measures employed by the federal government in Brazil to mitigate corruption risks in public procurement).
OECD, Brazil’s Phase 4 Monitoring Report (Oct. 19, 2023) (“This report details Brazil’s achievements and challenges in respect to implementation and enforcement of the OECD Anti-Bribery Convention, as well as progress made since the Phase 3 evaluation in 2014.”).
Operation Car Wash: Is this the biggest corruption scandal in history?, by Jonathan Watts, Guardian, June 1, 2021 (“What began as an investigation into money laundering quickly turned into something much greater, uncovering a vast and intricate web of political and corporate racketeering”)
U.S. Department of Justice, Odebrecht and Braskem Plead Guilty and Agree to Pay at Least $3.5 Billion in Global Penalties to Resolve Largest Foreign Bribery Case in History (Dec. 21, 2016)
Brazil’s New public procurement law
Federal Law No. 14,133 (2021) (new public procurement law): English translation (unofficial) of the new law which took effect in April 2023. Among other things, the new law (i) makes it substantially easier for foreign firms to compete in Brazilian public procurement markets; (ii) emphasizes contractor compliance (an “integrity program”) as a part of contract award (Arts. 25 & 60) and as an essential part of post-corruption rehabilitation (Arts. 125 & 163); (iii) makes gender equality a potential tie-breaker in judging contract awards (Art. 60); and (iv) opened the door to new competitive methods such as competitive dialogue (competitive negotiations) (Art. 28).
New Public Procurement Law Focuses on Environmental, Social and Governance Compliance, by Leopoldo Pagotto/FreitasLeite (Int’l Bar Ass’n, Aug. 2021).
Brazil’s new procurement law and its possible impacts on government procured construction contracts, by Ana Carolina Barretto, Mauro Hiane de Moura and Francisco de Andrade Figueira (Int’l Bar Ass’n, Sept. 2022)
International Trade
Cesar Pereira & Rafael Wallbach Schwind, The GPA/WTO and Latin America: lessons from Brazil’s accession process, 2023 Pub. Proc. L. Rev. 249 (“Future expansion of GPA/WTO membership can draw important lessons from the Brazilian experience in its accession process. This article analyses both the process that led to Brazil’s fast and broad three offers of GPA coverage and the known reasons for Brazil to review its position and withdraw the offers, stalling the accession process.”). This material was first published by Thomson Reuters, trading as Sweet & Maxwell, 5 Canada Square, Canary Wharf, London, E14 5AQ, in the Public Procurement Law Review, citation as noted, and is reproduced with the authors’ permission per the authors’ agreement with the publishers. For further details, please see the publishers’ website.
WTO Procurement Pact: North Macedonia Joins, Brazil Pulls Offer, by Jean Heilman Grier (June 8, 2023) (“It should be noted that Brazil only retracted its market access offer, it did not withdraw its GPA application, as Panama did in 2013. That would allow it to resume its accession negotiations later if it can be persuaded to return to the negotiating table. . . . According to press reports, Brazil’s withdrawal was prompted by several factors. One was that the Lula government thought Brazil had offered too much procurement to GPA parties and that would reduce its leverage in negotiating bilateral agreements. . . . Another factor was the demands of the parties that it open procurement in its health sector. President Lula’s government was particularly concerned Its GPA offer would have removed the margin of preference for Brazilian suppliers of the Unified Health System and eliminated the State’s ability to induce national production of equipment like ventilators, syringes, and masks. . . . A third concern was that Brazil would not have been able to use offsets for compensation or technology transfer when purchasing foreign products, due to the GPA’s prohibition of offsets (except when permitted by the parties for developing countries). Finally, the Brazilian government was worried that its tabled offer would restrain the State’s ability to use procurement to assist companies that take industrial and technological development risks.”).
EU-Mercosur Trade Agreement – Government Procurement (Sept. 2022) (proposed text): Subject to normal general exceptions (e.g., for national security and environmental purposes) (Art. 3), the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay) and the European Union would agree not to discriminate in covered public procurements (Art. 5). See, e.g., Jean Heilman Grier, EU-Mercosur: Limited Procurement Commitments (July 2021).
Brazil’s Lula upbeat on EU-Mercosur deal, calls for peace in Ukraine, Hans von der Burchard, Politico (July 19, 2023) (“Lula also indicated that he’s keen to seek some sort of tradeoff with the EU, particularly on public procurement concessions under the deal that would open up public contracts in the Mercosur countries, such as infrastructure projects, to big European companies. He said that these market-opening clauses may need to be altered to better protect South American companies: ‘Why should a country … make such a concession to kill our small and medium enterprises, to kill the possibilities of new entrepreneurs?’ he asked. ‘We have an interest to reindustrialize Brazil.'”).