Failed Bidding Due to No Bidders vs. Failed Bidding Due to Rejected Bids: Key Differences and the Options Open to the Government

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

When a public bidding process draws no bidders, or every bid is rejected, the government is not left stuck. Law 14.133/2021 sets out a different path for each situation, each with its own requirements and its own risks of personal liability for the public official in charge.

The Difference Between a Deserted Bidding and a Failed Bidding

A deserted bidding (licitação deserta) occurs when the procedure is properly published, but no one shows up to compete for the contract. There are no bids to evaluate, simply because the market did not respond to the public call. The process ends without a single bidder, and the cause of the failure lies outside the government’s control.

A failed bidding (licitação fracassada), by contrast, assumes there were interested parties. The bidders appear and submit bids, but all of them end up disqualified at the qualification stage, or their offers are rejected for failing to meet the bidding notice. The practical result is the same: no contract is awarded. The cause, however, is completely different.

This difference is not merely theoretical. It determines which legal basis the government may invoke and which steps it must take before moving to a direct contract award. Confusing the two is one of the most common flaws in administrative proceedings, and oversight bodies often cite it as a defect in the stated justification.

Under Law 14.133/2021, the two situations are treated in a more integrated way than under the previous legislation. Even so, the public official must identify precisely what happened in the failed process, because misreading the situation taints the entire justification for the contract that follows.

Requirements for a Direct Award by Waiver

Law 14.133/2021 brings both scenarios together in a single provision. Article 75, item III, authorizes a waiver of the bidding requirement for a contract that keeps all the conditions set out in the bidding notice of a process held less than one year earlier, when that earlier process failed.

The provision covers two situations. The first, where no interested bidders came forward or no valid bids were submitted, corresponds to a deserted bidding. The second, where the bids showed prices clearly higher than those prevailing in the market, is close to a failed bidding caused by the economic unfeasibility of the offers.

The central requirement is that the conditions of the original bidding notice remain unchanged. The government cannot use the waiver to alter the scope of the contract, increase quantities, or relax requirements that would have kept potential competitors out. Any significant change undermines the legal basis and forces the official to launch a new competitive procedure.

In addition, the direct award must be made within one year of the failed bidding. Once that period has passed, market conditions are presumed to have changed, and a contract based on outdated parameters loses its footing. Courts of accounts closely check compliance with this time limit.

Keep in mind that the waiver does not eliminate the internal phase of the process. The terms of reference, the cost estimate, and authorization from the competent authority are still required. The absence of competition reduces outward formalities, but it does not relax the documentary rigor that supports the decision to contract.

It determines which legal basis the government may invoke and which steps it must take before moving to a direct contract award.

When Repeating the Bidding Is Still Required

Not every failed bidding immediately authorizes a direct award. The waiver assumes that repeating the process would be inconvenient for the government, whether because of the risk of harm or because the contract is urgent. That justification must be documented in the file, not merely assumed by the official.

In the case of a failed bidding in particular, oversight bodies usually expect additional caution. Before waiving the bidding, the official should check whether the disqualification or rejection of bids was caused by excessive requirements in the notice itself. If the notice was too restrictive, the correct course is to fix it and hold the process again.

A direct award also does not remove the need for a price survey. Even without competition, the government must show that the contract price is in line with the market. This is one of the most closely scrutinized points, because the lack of competition increases the risk of overpricing and of improper favoritism toward a particular supplier.

There is also a duty to explain why repeating the process would cause concrete harm. Generic arguments, such as mere delay, rarely persuade courts of accounts. The best approach is to point to objective consequences, such as the interruption of an essential service or the loss of a legal deadline tied to the contract’s subject matter.

Liability Risks for the Public Official

A direct award by waiver is not a blank check. The official who uses it takes on the burden of proving, in the file, that every legal requirement has been met. A poorly reasoned justification is the main gateway to later challenges and to the disallowance of amounts paid.

The consequences of an irregular waiver cut across different spheres. On the administrative side, the court of accounts may order the contract annulled and assess a debt against the responsible official. In the sphere of administrative misconduct (improbidade administrativa), a contract made outside the cases allowed by law may amount to harm to public assets, with corresponding sanctions.

Law 14.133/2021 also defines criminal offenses tied to improper direct awards. Admitting, enabling, or causing a direct award outside the cases provided by law exposes the person involved to a specific criminal penalty. This criminal dimension underscores the importance of carefully documenting each step.

Liability does not fall only on the official who authorizes spending. Legal advisers, committee members, and other agents who take part in preparing the file may also be called to answer, to the extent of their involvement. For that reason, clarity about who decided what is an essential part of protecting everyone involved.

Best Practices for Protecting a Direct Award

The recommended approach is to build a robust administrative file. A legal opinion, a price justification, a showing that the case fits the legal provision, and a record of why repeating the bidding is not feasible all protect both the public interest and the official in the event of an audit.

Documenting the sequence of events is also decisive. Ideally, the direct award file should expressly refer back to the failed bidding, with copies of the bidding notice, the minutes, and the acts of disqualification or rejection. This link shows that the waiver arose from a real and recent process.

Frequently Asked Questions

Are a deserted bidding and a failed bidding the same thing?

No. A deserted bidding happens when no interested party shows up. A failed bidding happens when there are interested parties, but all of them are disqualified or have their bids rejected. Although the outcome is the same in both cases, with no contract awarded, the cause and the legal treatment are different, and that affects the justification for a direct award.

Can the government award a contract directly after a failed bidding?

Yes, as long as the requirements of Article 75, item III, of Law 14.133/2021 are met, such as keeping the conditions of the bidding notice and acting within one year. Before doing so, however, the official should check whether the failure was caused by excessive requirements in the notice, which can be corrected in a new bidding process.

What precautions help avoid liability for the public official?

Fully documenting the process is the best protection. That includes justifying why repeating the bidding is not feasible, conducting a price survey, showing that the case fits the legal provision, and obtaining a legal opinion. A detailed justification lowers the risk of challenges in the administrative, administrative misconduct, and criminal spheres, and supports the decision before oversight bodies.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.