Recent changes in the Expression of Interest Procedure (PMI) should encourage private agents to cooperate with the Federal Public Administration in modeling partnerships and bidding procedures. The new rules were established by Decree No. 10,104/19 in November of last year.

The PMI is the instrument commonly adopted by the Federal Public Administration to seek out private partners in the preparation of surveys, investigations, and technical studies necessary to structure projects, concessions, and bids in general. Through it, a public call is conducted in order to seek out individuals and companies interested in technically supporting the structuring of public bidding projects.

If the material produced is effectively used in the preparation of the bid notice for the public tender to which the studies refer, the private party will be reimbursed for the consulting services provided, under the terms of the call for bids notice and the respective draft contract. These documents shall require the winner of the bidding procedure to reimburse the private party directly, in whole or in part, for expenses incurred in performing the consulting.

Decree No. 10,104/19 amended Decree No. 8,428/15, which regulates the procedure. The text is the result of a proposal prepared by the Special Bureau of the Investment Partnership Program of the President’s Chief of Staff and brought in innovations that make PMI more advantageous in the eyes of the Public Administration and private parties.

It is worth highlighting the expansion of the scope of the PMI, under the terms of article 1 of Decree No. 8,428/15. Previously, the PMI could only be used in "enterprises that are subject to a concession or permission for public services, a public-private partnership, the leasing of public assets, or the granting of a real property right." The new wording also includes the structuring of "company privatization and partnership contracts, in accordance with the provisions of paragraph 2 of article 1 of Law No. 13,334, of September 13, 2016.”[1]

Partnership agreements are all those agreements related to "common concession, sponsored concession, administrative concession, concession governed by sector legislation, public service permission, leasing of public property, concession of real property right, and other public-private businesses that, due to their strategic nature and their complexity, specificity, volume of investments, long term, risks, or uncertainties involved, adopt a similar legal structure."

The possibility of using the PMI for processes for privatization of mixed economy companies and public enterprises goes in the same direction as recent government initiatives to foster the privatization of public assets and services.

Two other relevant changes:

  • The selection process for the partner responsible for the studies may precede the authorization phase for the presentation of projects, surveys, investigations, or studies (article 1, paragraph 5).
  • Authorization to submit projects may be granted with exclusivity or to a limited number of interested parties (article 6, I).

With regard to the anticipated selection and restricted number of interested parties, a provision allows the public call for bid notice of the PMI to establish as evaluation and study selection criteria, in an alternative or cumulative manner: (i) professional experience, (ii) the work plan, and (iii) preliminary assessments on the venture (article 10, sole paragraph).

Also as a relevant innovation, the decree revokes the previous provision that provided for supplementary compensation to private parties in the event of a need for corrections and changes in the studies (paragraph 6 of article 15 of Decree No. 8,428/15). This acts as an incentive for the final value provided for in the call notice to take into account any need for adjustments and changes. In addition to minimizing the risk of future financial discussions holding up the project, the measure contributes to lowering the cost of the bidding process as a whole.

Admittedly, the changes brought about by Decree No. 10,104/19 increase the scope of action and effectiveness of the PMI, on the one hand, and reduce expenses with projects prepared and unused, on the other. This normative change in the PMI accompanies the new trend of bidding procedures, provided for in the bill (PL 1,295/95)[2] that intends to substantially amend Law No. 8,666/93. These are changes that promise to give greater efficiency and legal certainty to the execution of public contracts for the construction of more effective bidding models and improvement of infrastructure projects in Brazil.

[1] Law which instituted the Investment Partnership Program (PPI), aimed at expanding and strengthening interaction between the public power and private initiative.

[2] PL 1,295/1995.