March 19, 2020

COVID-19 | Administrative Law

Administrative Law - updated on Mar 19 at 10:29 am

EMERGENCY SUPPLIES TO PUBLIC BODIES REQUIRE CERTAIN PRECAUTIONS

The need for public acquisitions without bidding procedures is an expected outcome of emergency events such as the current coronavirus (COVID-19) outbreak. In Brazil, Law No. 13,979/2020 (COVID-19 Act) establishes that public agencies have discretion to waive competitive bidding requirements to purchase goods, services and health inputs required to face the public health emergency caused by COVID-19.

The COVID-19 Act permits government agencies to purchase directly from a supplier if the delay be involved in conducting a routine procurement (e.g. which involves advertising and competitive tendering), allowing them to deliver goods or services in time to bring effective relief. There are several possible situations: need to purchase medicines, equipment, contracts of special emergency services (advertising, security, transportation, IT, communication), among others.

Although these procurement flexibilities are available in such cases, companies taking part in emergency public contracting should take some precautions to avoid future problems, such as administrative procedures and lawsuits:

• Emergency needs official justification: Companies need to evaluate whether the bidding waiver is fully justified, verifying whether the demand relates to the emergency and whether the amounts or contracting period provided seem suitable to meet it.

• How procurement agencies should set prices and choose suppliers: Public procurement process should fix prices in line with the prices normally set in similar contracts. The supplier should also note whether the expected price provided by government agencies is similar to the amount paid by other customers. It is also important and necessary to evaluate whether government agencies present a plausible justification for choosing a company as a supplier in emergency contract.

• Considering public official’s reputation: It is pertinent to consider the criminal and administrative record of relevant officials involved in the public procurement.

• Procedural formalities and transparency: Although less burdensome than a full competitive process, the bidding waiver also requires procedural formalities and the aforementioned aspects should be part of a formal administrative process, involving publication of basic contracting information on the Internet.

While public officials are the main target of all these recommendations, it is highly recommended that companies carefully consider established criteria for emergency contracting. Public emergency contracting is a sensitive topic to public opinion and often implies significant public spending. Such precautions may prevent unintended situations and, even if questionings from authorities arise, there will be good arguments for defending if observed.

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