Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
According to the GOB procurement law (8,666) passed in 1993, the price was traditionally the primary factor in selecting suppliers and the GOB is precluded from making a distinction between domestic and foreign-owned companies during the tendering process.
However, a new reform has made it easier for foreign companies to compete in public sector bids. As of October 2020, foreign companies can bid without needing to first establish a local representative. Only at the contract signing will a foreign company need to have a local partner. The Finance Ministry believes this streamlined process should bring more competition to the public sector, a market of about US$ 13 billion per year.
For an international company to successfully compete in public procurement, bidding, concession, or auction in Brazil, it must understand the provisions and procedures of Brazilian legislation. Characteristics and challenges can be sector-specific. Bids could require presentations on financing, engineering, equipment capabilities, training and after-sale service that will originate and be carried out within Brazil. Winning bids are chosen based on three principles: lowest price, best technology, or a combination of both. When two equally qualified vendors are considered, the law’s implementing regulations provide a preference to Brazilian goods and services.
Brazil permits foreign companies with established legal entities in Brazil to compete for procurement financed by multilateral development bank loans.
As mentioned in the introductory section, in preparation for Brazil to join the WTO’s Government Procurement Agreement, the country is adopting a new bidding law, (PL 4.253/2020), which will have a phased implementation over the next two years. U.S. and international companies participating in Brazil’s public procurement should see substantial improvements, including standardizing bidding deadlines, implementing electronic bidding processes, publishing government bids in a national procurement portal and more flexibility in access and equality for foreigners regarding required documentation. For projects in architectural and engineering services, Brazil will require that bidders use Building Information Modeling or a similar international standard in their projects. There will continue to be national preferences, for small businesses for example, however, the overall goal is for public bids at the federal, state and municipalities to align with WTO and international standards.
The U.S. Export-Import Bank (EXIM) provides both export insurance and working capital for U.S. exporters and guaranteed loans for Brazilian importers. Contact the international department of your bank for information regarding correspondent banks in Brazil and to see if they work with EXIM. You will also find contact information for EXIM insurance brokers and guaranteed lenders at U.S. EXIM Bank: Finance Guarantees & Insurance for US Exporters.
Multilateral Development Banks
The Commercial Service maintains Commercial Liaison Offices in each of the main multilateral development banks, including the Inter-American Development Bank (IDB) and the World Bank. These institutions lend billions of dollars in developing countries for projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help U.S. businesses learn how to get involved in bank-funded projects, and advocate on behalf of U.S. bidders.
New Measures COVID-19 Pandemic
During the pandemic, government fiscal measures to address the recession totaled over BRL$ 240 billion (US$ 45.28 billion) or 4% of GDP as of April 2020. This was well above the amount involved in the 2008 crisis (3.5% of GDP). Additionally, the National Economic and Social Development Bank (BNDES) expanded new credit offerings to micro and small businesses, including a 24-month grace period and a total term of 60 months. Furthermore, a monthly allowance of about US$ 110.00 per month, for three months, to informal, intermittent and Micro-Individual Enterprises (MEIs) was created and named the “coronavoucher.”
Commercial Liaison Office to the Inter-American Development Bank
Commercial Liaison Office to the World Bank.
Brazilian Federation of Banks (Febraban): https://portal.febraban.org.br/
For more information, please contact US Commercial Service Industry Specialist Patrick Levy at Patrick.Levy@trade.gov