Bidding Methods: How to Choose the Right Path for a Public Contract

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

The bidding method sets the procedure that Brazil’s public administration will follow for each contract, and choosing the wrong one can undermine the legality of the entire process. Knowing when to use a pregão (reverse auction), a concorrência (open competitive bidding), or competitive dialogue is the first step for companies and public managers who want to take part in government procurement with legal certainty.

What a bidding method is

A bidding method, or modalidade, is the procedure that organizes the competition among parties who want to contract with the government. Each method has its own deadlines, publicity requirements, and rules for submitting bids. Choosing the right one is not a bureaucratic formality. It shapes the entire competition and protects the principle of equal treatment among bidders.

Law 14.133, of 2021, known as the new Public Procurement and Administrative Contracts Law, reorganized this landscape. It fully replaced the previous legislation and now governs public contracting throughout Brazil, covering the Federal Government, the states, the Federal District, and the municipalities.

With this change, two traditional methods ceased to exist: the tomada de preços (mid-range competitive bidding) and the convite (invitation to bid). In their place, the structure became leaner and is guided by the subject of the contract, rather than by its estimated value, as was the case under the repealed regime.

The new law also consolidated rules that used to be scattered across different statutes. The rules on contracting, auxiliary procedures, and contract oversight now appear in a single text. This makes the law easier to read as a whole and reduces doubt about which rule applies at each stage of a public purchase.

The five methods under the new law

The current regime provides for five bidding methods. Each serves a specific purpose, and the public manager must identify which one fits the intended contract before starting the procedure.

The pregão is the method for purchasing common goods and services, meaning those whose performance and quality standards can be objectively defined in the bid notice. It is the most widely used method in practice. It is usually conducted electronically, with competition through successive bids.

The concorrência applies to contracts for special goods and services, as well as for construction and for common or special engineering services. Because these contracts involve more complex or larger-scale subject matter, it requires a more detailed qualification phase and allows different judging criteria, depending on the needs of the public administration.

The concurso (design or creative competition) is used to select technical, scientific, or artistic work. It is the right path when the government is seeking a project, a creation, or an intellectual solution, offering a prize or payment to the winner chosen by a specialized committee.

The leilão (auction) is meant for the sale of assets. Through it, the public administration sells real estate or unusable movable property, as well as property lawfully seized or pledged as security in enforcement proceedings, to whoever makes the highest bid, subject to a previously set minimum appraisal value.

The competitive dialogue is the novelty of the current regime. It is reserved for contracts involving technological innovation, or solutions that the public administration cannot define on its own in advance. Here, the government holds discussions with pre-selected bidders to develop alternatives capable of meeting the public need, and only then receives the final bids.

This focus on the subject of the contract is the main break from the previous model. Before, the estimated amount of the expenditure dictated the method. Now, the public manager starts from the nature of what is being contracted in order to choose the procedure, which narrows the room for artificial classifications and improper splitting of purchases.

A bidding method, or modalidade, is the procedure that organizes the competition among parties who want to contract with the government.

The judging criteria that guide the choice

Defining the bidding method is only part of the decision. The public administration must also set the judging criterion, which is the yardstick used to identify the winning bid. The two concepts are not the same, and the bid notice must make both clear from the start.

It is worth remembering that the bidding method and the judging criterion go hand in hand but answer different questions. The method answers how the competition will be conducted. The criterion answers how the winner will be chosen. Confusing the two is a frequent source of challenges to bid notices, especially when the notice mixes requirements that are incompatible with each other.

The permitted criteria include lowest price, highest discount, best technique or artistic content, a combination of technique and price, highest bid in the case of an auction, and greatest economic return. The choice depends on what the contract values most: lower cost, the quality of the solution, or a balanced combination of both.

In a purchase of common goods through a pregão, for example, lowest price usually prevails, because the quality standard is already set in the bid notice. For complex intellectual services, by contrast, technical merit carries more weight, since competing on price alone would not ensure the result the public administration expects.

For a company interested in bidding, reading the judging criterion carefully is a strategic step. It shows whether the competition will be decided on price, on the technical proposal, or on both. It also lets you calibrate your participation realistically and avoid the wasted effort of competing in bidding processes whose criterion does not favor your profile.

Consequences of choosing the wrong method

Placing a contract under the wrong bidding method is not a harmless mistake. The defect undermines the legality of the process and can lead to its annulment by oversight bodies or by the courts, wasting time and resources and creating uncertainty for everyone involved.

The improper splitting of expenditures calls for special attention. Artificially dividing a contract to avoid the stricter bidding method is a way of evading the procedure and exposes the public manager to liability. Companies that take part in these processes are vulnerable as well, because a contract signed on a flawed basis can be undone.

The courts of accounts have stepped up their oversight of how contracts are classified, requiring an express statement of reasons for the method chosen. Recording in the administrative file the technical reasons that justify the procedure adopted has become a recommended practice. It shows good faith and makes it easier for the public manager to defend the decision if the oversight bodies raise questions.

Frequently Asked Questions

Do the tomada de preços and the convite still exist?

No. The new Public Procurement Law abolished both methods. Contracts that once followed those procedures are now conducted through a pregão or a concorrência, depending on the subject of the contract. Bid notices published under the previous regime may still produce effects, but new contracts follow the current structure of five bidding methods.

Does the value of the contract still determine the bidding method?

Not as a central rule. Under the current regime, the method follows from the nature of the subject of the contract, not from its estimated value. The value remains relevant for other purposes, such as the possibility of direct contracting through a waiver of bidding in specific situations. But the choice among pregão, concorrência, and the other methods starts from what is being contracted.

When is competitive dialogue used?

Competitive dialogue is appropriate in more complex situations, especially when there is technological innovation or when the public administration cannot define the right technical solution on its own. In these cases, the government holds discussions with bidders selected in advance to develop viable alternatives, and only after that stage does it receive the final bids for judging.

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