Public procurement moves $ 9.5 trillion a year worldwide. In Brazil, R$ 90 billion is moved in the federal government alone. Together, public procurement at the federal and state levels accounts for about 10% of the GDP (Gross Domestic Product). These figures demonstrate the importance of the topic addressed during the Brazil – European Union International Seminar Brazil - European Union on good practices in public procurement held last Wednesday (3 April) in the Ministry of Economy, in Brasilia.
At the opening of the event, Gleisson Rubin, Special Deputy Secretary for De-bureaucratisation, Management and Digital Government, highlighted the importance of the partnership with the EU since 2008. He stressed how this partnership can contribute to consolidate the process of revamping public procurement in the country, making it fairer and more efficient.
"We focus on scale and efficiency gains and consider procurement a strategic policy tool. In the federal government alone, public procurement moves R$ 90 billion per year.” Mr. Rubin said that public procurement is "one of the most relevant topics to the population, as it directly reflects on the service delivered to citizens."
According to Claudia Gintersdorfer, Deputy Head of the European Union Delegation to Brazil (DELBRA), managing public procurement is fundamental to the creation of a business environment with clear and predictable rules. According to her, the EU's partnership with the Brazilian government has yielded good results, and this should also occur in the public procurement arena. "Public procurement is an enabling tool to promote and develop more innovative and effective economic models," Ms. Gintersdorfer said.
Cristiano Heckert, Secretary of Management of the Ministry of Economy, stressed the importance of the dialogue between Brazil and the EU. "We believe in the joint procurement model. Like the European Union, we have great differences when it comes to the contracting authorities that buy every day. We can learn a lot and share what we have accomplished here in Brazil, “Mr. Heckert said.
Finally, Marcela Pompeu, Head of the European division in the Ministry of Foreign Affairs, recalled the longevity of the EU-Brazil partnership, with Brazil being the first Latin American country to establish relations with the EU.
EU versus Brazil
The morning panel compared the principles and priorities of the European Union and the Brazilian public procurement legislation.
Bonifácio García Porras, Head of the Innovation Policy for Growth Unit, Directorate General for Enterprise and Industry, European Commission, explained that EU public procurement laws are based on the principles of non-discrimination, equal treatment, transparency and horizontal policies. "We are concerned with giving equal status to all companies interested in competing, without discrimination by country or size, equal treatment for all member countries, and transparency of processes. These are the principles of the EU legislation on public procurement."
Mr. García highlighted some topics of special importance, such as the professionalisation of public buyers; the promotion of strategic sectors such as information technology, health and construction; and the promotion of environmental and socially sustainable and innovative procurement.
According to Brazilian expert Rafael Sérgio Lima de Oliveira, from the Office of the Attorney General (AGU) and the National School of Public Administration (ENAP), the Brazilian public procurement process is based on isonomy, selection of the most advantageous bid for the administration, promotion of sustainable national development and creation of leverage for micro and small enterprises,
The main criterion of choice is price and it is very strict , and electronic tendering is the preferred system. Mr. Oliveira pointed out that although Congress is discussing changes in the public procurement process, the bill under analysis maintains the current framework. He also listed the simplification and adaptability of purchasing processes and the strategic integration of public procurement as some of the areas to be worked on.
The professionalisation of public buyers remains one of the major challenges of any public procurement system, according to Paulo Magina of the Organization for Economic Cooperation and Development (OECD). He reported that various strategies have been adopted, including collaborative work with the academia, research centres and the private sector. "Investing in the training of public procurement professionals has several benefits, since this is one of the strategic governance areas where best practices produce an immediate economic effect," he said.
In the EU, the recommendation has been not to create a separate public buyer career, but to invest in the skills and continuous training of professionals. According to Daniel W. Bloemers of the Directorate-General for Internal Market, the European Commission offers a number of tools to promote professionalisation in procurement, such as the e-Competence Centre for Public Procurement, the library of good practices for the sharing of experience, and training courses.
The Brazilian government also promotes the training of public buyers, but according to Sérgio Tadeu Neiva Carvalho, from Brazil's National Disciplinary Board, this is one of the positions civil servants most avoid: "Many people see it as a punishment when they are appointed to be buyers". Therefore, it is necessary that measures for career enhancement and professional training be implemented to change this situation.
Fighting fraud and corruption
In the afternoon, the second panel discussed Brazilian and EU initiatives to prevent fraud and corruption in public procurement. Tânia Lopes Pimenta Chioato presented some contributions from Brazil's Federal Court of Accounts, including the Risk Map, which assesses the risk of corruption occurring in public institutions. According to Ms. Chioato, no agency wants to be classified as high risk, so it is common for the poorly evaluated to take steps to reverse the situation and get a better rating.
According to Mr. García, the EU strategy to combat fraud and corruption is mainly based on transparency: purchases must be made electronically and contracts must be available for consultation, except in exceptional cases of confidential information. In addition, Member States should monitor and report on measures to prevent and detect fraud, corruption and conflicts of interest in public procurement processes.
Micro and small enterprises
The last panel discussed the participation of micro and small enterprises (MSEs) in public procurement. International expert Kamala Dawar of the University of Sussex was hired by the Sector Dialogues, and presented a video giving an overview of the participation of MSEs in public procurement in Brazil and in OECD countries. Between 2009 and 2011, 29% of public procurement in the EU was made up of MSEs. In Brazil, between 2013 and 2017, 26% of federal spending on public procurement went to MSEs.
Ms. Dawar listed a number of challenges that MSEs face to participate in public procurement, such as lack of information and government transparency, and unfair competition from medium and large companies. She also mentioned excessive bureaucracy and billing requirements to enter the process, the lack of training of teams and poor accounting skills.
Mr. Bloemers argued that giving MSEs opportunities in public procurement does not mean creating policies that benefit these companies but, rather, establishing general non-discriminatory rules that encourage their participation. The measures adopted by the EU include dividing contracts into lots, limiting the company's turnover requirement to twice the contract value, and reducing red tape (supporting documents required only for winning bidder).
Renato Fenili, Deputy Secretary of Management of the Ministry of Economy, explained that Brazil chose to treat public procurement as a public policy and to create rules that benefit MSEs. These rules include a 25% reserve of lots for MSEs in contracts that can be divided, subcontracting MSEs in construction and engineering contracts and exclusive participation of MSEs in contracts of up to R$80 thousand.
"Encouraging MSE participation is a great thing as long as we measure the results and create ways to prevent large companies from creating micro and small businesses to participate in the competition," Mr. Fenili said.
The seminar is part of a cooperation project between the EU and Brazil through the Sector Dialogues. The objective is to assess and improve opportunities for entering the public procurement market. This cooperation will enable the establishment of an international public procurement observatory that will support the integration of best practices and the establishment of international agreements in this field.
According to Carlos Oliveira, DELBRA's minister-counsellor, "the event was a starting point and everyone wants to keep this discussion going. The mission of Brazilian specialists to Europe will be an important step to deepen this dialogue."
For Mr. Fenili, the seminar was an opportunity for those involved in public procurement to get out of their bubble and discuss the issue. "This is a unique moment. A bill to update the public procurement system should be voted on in the next few days. It's up to us to make improvements. I am sure that the joint agenda with the EU will last."
© 2017- Sector Dialogues Facility. Funded by the European Union.