The basis for public procurement in Brazil is set forth in Law 8,666/93 (and in Law 13,303/16 regarding state controlled companies). This Law covers both public procurement and contracts entered into with the government (administrative contracts), and is the main legal reference regarding public procurement in Brazil. Also, Law 10.520/02 provides for a specific public procurement procedure (reversal bidding) and its electronic modality is regulated by Decree 5,450/05.

In the last few years, Brazilian public procurement has undergone some changes due to the hosting of the FIFA World Cup in 2014 and the Olympic Games in 2016. Decree 7,581/11 provided for a different treatment to be given to public procurement procedures related to these events. Some changes on the legislation were introduced to encourage national industry development, namely the possibility to favour national products and services in public procurement and the possibility to require offset measures in these proceedings. These last two changes have been brought by Law 12,349/10, which amended Law 8,666/93, and by Decree 7,546/11, which regulated these issues.

Also, Law 12,598/12, published in 2012 , provides for different treatment to public procurement in the defense area.

Finally, in 2016, Law 13,303/16 ("State Controlled Companies Statue") was enacted, which provides for the legal statute of state controlled companies - public companies, mixed-capital companies and their subsidiaries. The state controlled companies have up to 24 months, starting June 30, 2016, to adapt to the determinations of the State Controlled Companies Statue, which substitutes Law 8,666/93 for them . Such deadline has been generating controversies, due to the lack of precision regarding the extension of this "adaptation" and what can be done by the companies in this timeframe.

Law 8,666/93 provides that the same benefits provided to local companies in public procurement procedures can be extended to members of the Common Market of the South (Mercosur – Argentina, Brazil, Paraguay and Uruguay).

These benefits are basically the concession of preference margins to locally manufactured products or local services that comply with Brazilian technical norms, so that when competing against foreign companies, the local company will have a margin within which its products or services may be of higher prices than the competitor's and still have the contract awarded to it. Such margins can also be extended to products or services from members of Mercosur.

The basic principles are defined by Brazilian Constitution and the abovementioned legislation. The main principles applicable to the public sector are: legality, impersonality, morality, equality, publicity, administrative probity, binding nature of the public tender request for proposals document and objective judgment, isonomy, search for the best offer to the public entities, and promotion of national sustainable development. These principles are meant to ensure that the administration gets better "value for money".

Yes. On March 2012, Law 12,598/12 was issued setting forth new regulation for public procurement in these areas. It creates a registry of defense companies before the Ministry of Defense and concedes to these companies some benefits when participating in public procurement. When the government is procuring defense goods, it may restrict competition to companies registered and these companies will also enjoy tax benefits to perform activities related to defense.

For a company to register before the Ministry of Defense, it must comply with requirements to grant that the company is seated in Brazil, performs activities of research and development in Brazil and is effectively ruled by Brazilian partners.

Also, such law provides that administrative contracts related to defense must provide for specific clauses, such as the (i) continuity of the production of the technology offered, and (ii) technology transfer and offset rules, which will be set forth by the Ministry of Defense and/or by the request for proposal and the contract (aiming, among other objectives, the development of the national industry).

The Ministry of Defense, together with Brazilian Armed Forces, have already adopted the usage of requiring offset and technology transfer measures in its contracts by means of internal ordinances and rulings.