How can foreign companies fight unfair public biddings in Brazil

Here follows an email forwarded to a client that was having problems with competitiveness in Brazilian public biddings, in which we suggested some measures to resolve it.

Dear Patrick "Eel" O'Brian,

We have evaluated several document, emails and news reports regarding the current and planned public biddings to be performed in Minas Gerais state, regarding the purchase of software.

The most important issues have proved to be the unfair competition in the public bidding, due to a pre determined technology being explicitly or implicitly favored in the public call for offers;

We have been asked about legal alternatives for forcing Minas Gerais government and public companies to provide a more competitive selection of suppliers.

In response to that, we shall make a number of considerations.

a)   Brazilian constitution and federal laws explicitly reject unfair public biddings.

b)   The existence of pre determined bids (licitações dirigidas) is well known in Brazil. There is massive jurisprudence that condemns such practice.

c)   The most usual legal action against unfair bidding procedures is the “mandado de segurança”, an emergency injunction that can be filed whenever a public officer or public agent is engaged in illegal activities, provided that the illegality is clear to see and not dependent on the production of evidence. For example: formal or procedural mistakes, lack of publicity, lack of competence, clear violation of the due process of law.  A mandado de segurança can be used before, during or immediately after a public bidding takes place. It usually cannot be used after the conclusion of the agreement between the public agent and the winning company. In this last case, an ordinary procedure shall be filed.

d)   In this specific case, we believe that the use of Mandado de Segurança is justified. We must survey the current status of the contract before advising if it is still possible to file it against all the public biddings relevant to the case, or only against the ones not yet completed.

e)    The Mandado de Segurança may be filed by any person. This includes ordinary citizens, associations, companies and, of course, public agents (attorneys at law, etc.). It is not common for foreign companies to file a Mandado de Segurança. But there is no prohibition to that.

We hope these considerations help you in advancing your resolutions.