Vinícius Klein and Helena Queiroz
Introduction
Brazilian adherence to the GPA aims to increase competitiveness in public procurement through the participation of international firms. Among various requirements, the GPA includes transparency as a basic principle and addresses informational requirements of public procurement in Article XVI. Transparency is a constitutional principle for Public Administration (in art. 37 of the Brazilian Constitution) and a principle for public procurement legislation (art. 5 of Federal Law nº 14.133/2021). Transparency is a well-established tool to control public administration and avoid corruption and other forms of misbehaving. GPA informational requirements include essential information about the proposal as in Brazilian legislation, but also about a need to present information and reasons about how the proceedings were conducted. This is relevant since foreign bidders face several entry barriers both formal (law and other regulations) and informal (the role of personal networks, societal rules, etc.,) to join national public procurements in Brazil. The information about how the public tender was conducted can be valuable to foreigners that aim to enter public procurement in Brazil. Therefore, adherence to the GPA can contribute to reduce the informational asymmetry between national and foreign bidders, without eliminating it, especially in informal institutions and rules. Rafael Wallbach Schwind had presented other practical barriers to foreign companies’ participation in the previous post here.
Transparency and Access to Markets
The need to make the necessary information public and accessible for a potential supplier to make a bid in public procurement is already presented in the Federal Law nº 14.133/2021. In addition, language is not an effective barrier nowadays. The informational requirements of the GPA are in Article XVII, which regulates the disclosure of information to parties. Article XVII is more demanding than the current Brazilian legislation since it demands disclosure to parties regarding the relative advantages of the successful tender and all information showing that the procurement process was a fairly and impartial one. In the current Brazilian legal framework, this information can be requested by external controlling bodies, but not usually by unsuccessful parties.
“transparency is not a panacea and has limitations.”
The information regarding the relative advantage of successful tender presented in the GPA can be a mechanism to share knowledge about the dynamics of public tenders in Brazil. The effectiveness of the mechanism will depend on how the response from the procuring entity will give necessary and precise information on its reasoning. If the procuring entity aims to increase foreign tenders’ participation this is an opportunity to convey, not just formal rules but also informal rules and proceedings that are not explicitly in the legal rules.
Moreover, it can be a tool to maximise the control of Brazilian procurement. However, transparency is not a panacea and has limitations.
The first issue is the limitation on sharing information by the reasoning regarding the motives of the successful tender and the procurement proceeding. The pattern of reasoning in a formal document is not compatible with sharing informal customs and practices. After all, informal customs are not easily presented as reasons for public administration decisions. However, if the reasoning presented is precise and trustworthy it is possible to have increasing credibility in Brazilian procurement, attracting more international tenders. Transparent processes with clear rules give greater visibility to decision-making and, most of all, reassure participants in the bidding process about the credibility of the results.
Likewise, transparency itself is usually presented as positive and a solution to governance flaws. Nevertheless, an ideal of transparency does not show the precise definition of its cost and benefits. For instance, a requirement of total and complete transparency is not cost-efficient and even feasible. A definition of transparency must include the existence of asymmetries, a mechanism for the transference of information, a sender, and a receiver. The transfer of information between these two parties influences how decisions will be made, depending on how, and what information is transferred to the receiver, together with the receiver’s interpretations of the information that was transferred.
“GPA accession can be a tool to attract international companies to public tenders and to enhance the efficiency of public procurement with better transparency and accountability”
Although it seems simple, in practice such dynamic is not that clear, because we deal with multiple actors along with third parties’ interests.[1] Further, there is a risk that the information is not precisely processed by the receiver or is even presented in a way that makes it difficult for the receiver to understand it. Thus, transparency is not a simple dichotomy, but a question of level or graduation.[2]
In public tenders, a high level of transparency can be costly to public agents that will have to consider the use of the information by external control bodies and the formal pattern of reasoning in these documents. Also, learning-by-doing knowledge and personal connections will not be in the reasoning and will remain a comparative advantage of national companies.
However, Brazil’s adherence to GPA can attract international companies to domestic tenders and, thus, increase efficiency and innovation in public procurement. Despite the several difficulties and the need to overcome a path-dependence trajectory, as already pointed out in the first post of this series, here, the implementation of transparency requirements can contribute to change.
Conclusion
The GPA’s transparency requirements, especially the advantage of a specific proposal or the impartially and fairness of a public procurement, can enhance accountability and attract foreign tenders. To achieve that the information must be sufficient and precise, but also presented in a way that is easy to process outside of the Brazilian public sector framework.
Total transparency is not cost-effective since public procurement process will respond to formal and informal rules and not all of them are compatible with a formal reasoning by public authorities. Then, to improve public procurement, the answer cannot be transparency at any cost.
Despite transparency not being a panacea, it plays an active role in the fight against corruption, efficiency in public procurement, and accountability for decision-making. Therefore, GPA accession can be a tool to attract international companies to public tenders and to enhance the efficiency of public procurement with better transparency and accountability.
[1] FORSSBAECK, Jeans and OXELHEIM, Lars. The Multifaceted Concept of Transparency. In: In J. Forssbaeck, & L. Oxelheim (Eds.). Economic and Institutional Transparency. Oxford University Press, 2015, pp. 5-8.
[2] DIAKOPOULOS, Nicholas. Transparency. In: DUBBER, Markus D.; PASQUALE, Frank; DAS, Sunit. The Oxford Handbook of Ethics and AI. Oxford: Oxford University Press, 2020, p. 199.
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