Brazil’s New Bidding Law: learn about the changes to public hiring and job position quotas
Job positions must be set aside for people with disabilities and people cleared to return to work after injury
In effect since April 1, 2021, the New Bidding and Administrative Contracts Law (Federal Law No. 14,133/2021) presents a range of issues that will continue to generate debate over the coming years. Although the law has been seen by many as a mere compilation of pre-existing legislation and practices, certain innovative aspects could have significant impacts on public contracts.
Among the various issues, one that stands out, in particular, relates to setting aside a minimum number of job positions for people with disabilities and those cleared by the National Institute for Social Security (INSS) to return to work after injury. The new law makes it clear that companies involved in public bids must systematically comply with this matter. Companies who fail to prove compliance risk being disqualified from bidding, as well as potentially facing sanctions established by this law and other existing regulatory norms.
Law No. 8,213/1991 sought to boost the number of PwDs in the labor market by instituting an affirmative action policy for companies with a workforce of 100 or more employees, in accordance with the numbers established in its Article 93. In this regard, people with disabilities must make up between two and five percent of a company’s total workforce, depending on its overall size.
Furthermore, as per Article 93, paragraph 1, if a company wishes to terminate a worker with a disability’s fixed-term contract – or otherwise terminate an open-ended contract without cause – they may only do so after hiring another worker with disability unless the company still meets the legally required quota.
Job position quotas as a requirement for bidding
The previous law treated meeting the quota for job positions for people with disabilities and people returning to work after injury essentially as a tie-breaker criterion in bidding processes (Article 3, paragraph 2, V of
Law No. 8,666/1993). However, the new law determines that prospective bidders must now submit a statement declaring they meet the required quota during the qualification phase. As such, if in Law No. 8,666/1993 this was a secondary issue, Law No. 14,133/2021 makes it a formal requirement in order to qualify for bidding processes (Article 63, IV).
Now a general rule for all bids, this quota was previously part of the electronic auction process on the Federal Government’s procurement portal (Comprasnet). Companies were required to fill out a declaration that they complied with such a quota, and risked disqualification if they declared non-compliance.
In recent times, there have been more elaborate discussions about how public bids can function to benefit society. Although the main function of administrative contracting is based on acquiring goods and services – frequently prioritizing price and the best methods and techniques, depending on the type of bid – the public administration can use its purchasing power to promote other issues related to sustainable national development. This can take on many dimensions, accounting for industrial, social, or environmental aspects, among others, and thus establishing a clear link between public procurements and promoting social objectives.
Penalties for non-compliance
As well as submitting a declaration in respect to complying with job position quotas, winning bidders must ensure this compliance is maintained throughout the term of the contract. Companies must be able to prove compliance whenever requested by the public administration, as per Article 116 of Law No. 14,133/2021.
Failure to comply with this requirement during the term of the contract can potentially constitute grounds for its termination, although the contracted company would have the right to dispute this.
This tends to create problems for companies participating in public bids, as many of them encounter difficulties in finding, attracting, hiring, and retaining PwDs, especially when job positions demand high-level qualifications. Nevertheless, it is an issue monitored within the scope of both labor legislation and public bids with the potential to become critical to companies who rely on revenue generated from contracts with public entities.
For the next two years, public bodies have the right to choose between following the old regulations or the new law. Even so, companies should pay close attention to the issue of job position quotas, given that it stands to be decisive both in terms of qualifying for bidding processes and for upholding the requirements of public contracts.
Given the overall scarcity of active PwDs in Brazil’s workforce – especially those with highly specialized qualifications – companies that find themselves facing difficulties hiring and retaining these employees should seek legal alternatives to avoid risking disqualification from bids and contracts terminated. This may involve certain forms of multidisciplinary analysis.