Historically, price is the primary factor for public sector entities when selecting suppliers. Public sector entities, at the national and sub-national level, are precluded from making a distinction between domestic and foreign-owned companies during the tendering process.
Recent reform to government procurement 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 be required to have a local partner. The Finance Ministry believes this streamlined process will 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 it must understand the rules and regulations, which typically depend on the sector. Bids may require presentations on financing, engineering, equipment capabilities, training, and after-sale services. Winning bids are chosen based on lowest price, best technology, or a combination of the two. When two equally qualified vendors are considered, the necessity for experience implementing regulations provide a preference for Brazilian goods and services.
Brazil permits foreign companies with established legal entities in Brazil to compete for procurement financed by multilateral development bank loans.
Brazil is implementing a new government procurement law, which went into effect April 2021, and should become fully implemented in 2024. U.S. and international companies participating in Brazil’s public procurements should experience substantial improvements including standardized bidding deadlines, implementation of electronic bidding processes, publishing of government bids in a national procurement portal, and additional flexibility in access and equality for foreigners regarding required documentation. This law applies to procurements at the national and sub-national levels, although Brazilian states and municipalities may not meet all of the requirements by the 2024 deadline.
For projects in architectural and engineering services, Brazil will require that bidders use Building Information Modeling (BIM) or similar international standards in their projects. While there will continue to be national preferences, the overall goal is for public bids at the federal, state and municipal levels to align with World Trade Organization (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.
Multilateral Development Banks
The U.S. 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 to 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.
For more information, please contact U.S. Commercial Service Industry Specialist Patrick Levy at Patrick.Levy@trade.gov