LEI No. 11,079, December 30, 2004

Institutes general standards for bidding and contracting of public-private partnership within the framework of public administration.

THE PRESIDENT OF THE REPUBLIC I do know that the National Congress decrees and I sanction the following Law:

Chapter I

PRELIMINARY PROVISIONS

Art. 1º This Law institutes general standards for bidding and contracting public-private partnership in the framework of the Powers of the Union, the states, the Federal District and the Municipalities.

Single partagraph. This Act applies to the bodies of direct public administration, special funds, authorities, public foundations, public companies, mixed-economy societies and the remaining controlled entities directly or indirectly by the Union, States, Federal District and Municipalities.

Art. 2º Public-private partnership is the administrative contract of concession, in the sponsored or administrative modality.

§ 1º Sponsored Award is the granting of public services or public works of which it treats Law No. 8,987 of February 13, 1995, when it involves, additionally to the charged tariff of the users contrarily pecuniary of the public partner to the private partner.

§ 2º Administrative concession is the contract for the provision of services that the Public Administration is the direct or indirect usufruct, yet involves execution of work or supply and installation of goods.

§ 3º Does not constitute public-private partnership the common concession, thus understood to be granted public services or public works of which it treats Law No. 8,987 of February 13, 1995, when it does not involve pecuniary contraptation of the public partner to the private partner.

§ 4º It is vetoed to conclude the partnership contract public-private:

I-whose contract value is less than R$ 20,000,000.00 (twenty million reais);

II-whose period of provision of the service is less than 5 (five) years; or

III-which has as the sole object the supply of manpower, the supply and installation of equipment or the execution of public works.

Art. 3º Administrative grants are governed by this Law, applying to them additionally the provisions of the arts. 21, 23, 25 and 27 a 39 of Law No. 8,987, of February 13, 1995, and in art. 31 of Law No. 9,074 of July 7, 1995.

§ 1º The sponsored concessions are governed by this Act, by applying them to the provisions of the provisions of Law No. 8,987 of February 13, 1995 and in the laws that are correlates of it.

§ 2º Common concessions continue to be governed by Law No. 8,987 of February 13, 1995 and by the laws that are correlates of it, not by applying the provisions of this Law.

§ 3º Continue governed exclusively by Law No. 8,666 of June 21, 1993, and by the laws correlates to it of administrative contracts that do not characterize common concession, sponsored or administrative.

Art. 4º In the hiring of public-private partnership will be observed the following guidelines:

I- efficiency in the performance of state missions and the employment of the resources of the society;

II-respect to the interests and rights of the recipients of the services and private individuals tasked with their execution;

III-indelegability of the functions of regulation, jurisdictional, the exercise of police power and other unique activities of the State;

IV-fiscal responsibility in the celebration and execution of the partnerships;

V-transparency of the procedures and decisions;

VI-objective allocation of risks between the parties;

VII-financial sustainability and socio-economic advantages of the partnership projects.

Chapter II

OF THE PUBLIC-PRIVATE PARTNERSHIP AGREEMENTS

Art. 5º The clauses of the public-private partnership agreements will meet the provisions of the art. 23 of Law No. 8,987 of February 13, 1995, in what couber, and should also provide for:

I-the term of the contract, compatible with the amortization of the investments realized, not less than 5 (five), nor more than 35 (thirty-five) years, including possible extension;

II-the penalties applicable to the Public Administration and the private partner in the event of an inadimpletion contractual, fixed always in a manner commensurate with the seriousness of the lack committed, and the obligations assumed;

III-the allocation of risks between the parties, including those referring to the fortuitous case, greater strength, fact of the prince and extraordinary economic eagerness;

IV-the forms of remuneration and updating of the contractual values;

V-os mechanisms for the preservation of the actuality of the provision of the services;

VI-the facts that characterize the pecuniary default of the public partner, the modes and the period of regularization and, when there is, the form of the actuation of the warranty;

VII-the objective evaluation criteria of the performance of the private partner;

VIII-the provision, by the private partner, of sufficient performance guarantees and compatible with the burden and risks involved, observed the limits of § § 3º and 5º of the art. 56 of Law No. 8,666 of June 21, 1993, and, with respect to the sponsored concessions, the provisions of the inciso XV of the art. 18 of Law No. 8,987 of February 13, 1995;

IX-the sharing with the Public Administration of effective economic gains from the private partner arising from the reduction of the credit risk of the financing used by the private partner;

X-the realisation of survey of reversible goods, and the public partner may withhold payments to the private partner, in the value required for repair the irregularities eventually detected.

§ 1º The contractual clauses of automatic update of values based on indexes and mathematical formulas, when there are, will be applied with no need for approval by the Public Administration, except if this publication, in the official press, where there is, by the deadline of 15 (fifteen) days after submission of the invoice, reasons grounded in this Act or in the contract for the rejection of the update.

§ 2º The contracts will be able to additionally predict:

I-the requirements and conditions on which the public partner will authorize the transfer of the control of the specific purpose society to its funders, with the aim of furthering its financial restructuring and ensuring the continuity of the provision of the services, not applying for this effect as provided for in the inciso I of the single paragraph of the art. 27 of Law No. 8,987 of February 13, 1995;

II-the possibility of issuance of commitment on behalf of the funders of the project in relation to the pecuniary obligations of the Public Administration;

III-the legitimacy of the project's funders to receive compensation for early extinction of the contract, as well as payments effected by the funds and state-owned companies guaranteed partnerships public-private.

Art. 6º The contraption of the Public Administration in public-private partnership contracts can be done by:

I- bank order;

II-assignment of non-tax credits;

III-outorga of rights in the face of Public Administration;

IV-outorga of rights on Dominican public goods;

V-other means admitted into law.

Single paragraph. The contract could provide for the payment to the private variable remuneration partner linked to its performance, as targets and standards of quality and availability defined in the contract.

Art. 7º The contraption of the Public Administration will be mandatorily preceded by the provision of the service object of the public-private partnership agreement.

Single partagraph. It is provided to the Public Administration, pursuant to the contract, to make the payment of the contraption concerning the fruity tranche of service object of the public-private partnership agreement.

Chapter III

DAS GUARANTEES

Art. 8º The pecuniary obligations incurred by the Public Administration in public-private partnership agreement can be guaranteed by:

I-binding of recipes, observed the provisions of the inciso IV of the art. 167 of the Federal Constitution;

II-institution or use of special funds provided for in law;

III-contracting of insurance-guarantee with the holding companies that are not controlled by the Public Power;

IV-guarantee provided by international bodies or financial institutions that are not controlled by the Power Public;

V-guarantees provided by secured fund or state-owned enterprise created for that purpose;

VI-other mechanisms admitted to Law.

Chapter IV

OF THE SPECIFIC PURPOSE SOCIETY

Art. 9º Prior to the conclusion of the contract, it should be constituted of specific purpose, tasked with implanting and managing the object of the partnership.

§ 1º The transfer of the control of the specific purpose society will be conditional on the express authorization of the Public Administration, in the terms of the edict and the contract, observed the provisions of the single paragraph of the art. 27 of Law No. 8,987 of February 13, 1995.

§ 2º The specific purpose society will be able to take the form of open company, with securities admitted to trading on the market.

§ 3º The specific purpose society should obey standards of corporate governance and adopt standardized accounting and financial statements as per regulation.

§ 4º It is vetted to the Public Administration to be a holder of the majority of the voting capital of the societies of which it treats this Chapter.

§ 5º The vedation provided for in the § 4º of this article does not apply to the eventual acquisition of the majority of the voting capital of the specific purpose society by financial institution controlled by the Public Power in the event of an inaddition of financing contracts.

Chapter V

OF THE LICITATION

Art. 10. The contracting of public-private partnership will be preceded by bidding in the competition modality, being the opening of the licitatory process conditioned to:

I-authorization of the authority competent, grounded in technical study demonstrating:

a) the convenience and opportunity of contracting, upon identification of the reasons justifying the option by the form of partnership public-private sector;

b) that the expenses created or increased will not affect the fiscal results targets set out in the Annex referred to in § 1º of the art. 4º of the Supplementary Act No. 101 of May 4, 2000, owing to its financial effects, in the following periods, be compensated for by the permanent increase in revenue or by the permanent reduction of expenditure; and

c) when it is the case, as per the edited norms in the art form. 25 of this Act, the observance of the limits and conditions arising from the application of the arts. 29, 30 and 32 of the Supplementary Act No. 101 of May 4, 2000 by the obligations incurred by the Public Administration concerning the object of the contract;

II-elaboration of impact estimation budgetary-financial in the financial years in which it should invigorate the public-private partnership contract;

III-statement of the payer of the expense of which the obligations incurred by the Public Administration in the course of the contract are compliant with the budget guideline law and are provided for in the annual budget law;

IV-estimation of the flow of sufficient public resources for the compliance, for the duration of the contract and for financial year, of the obligations incurred by the Public Administration;

V-your object is provided for in the multiannual plan in force in the framework where the contract will be concluded;

VI-submission of the edital and contract minuta to the public consultation, upon publication in the official press, in newspapers of wide circulation and by electronic means, which should inform the justification for the hiring, the identification of the object, the term of the contract duration, its estimated value, setting minimum term of 30 (thirty) days for receipt of suggestions, the term of which will give itself at least 7 (seven) days before the scheduled date of the publication of the edital; and

VII-prior environmental licence or dispatch of the guidelines for environmental licensing of the venture, in the form of the regulation, where the object of the contract requires.

§ 1º The substantiation referred to in paragraphs (b and c of the inciso I of the caput of this article will contain the assumptions and methodology of calculation used, observed the general standards for consolidation of public accounts, without prejudice to the examination of the compatibility of expenditure on the other standards of the multiannual plan and the budget guideline law.

§ 2º Always that the signing of the contract occurs in devious exercise from the one in which the edict is published, should be preceded by the updating of the studies and demonstrations to which the incisos I to IV of the caput of this article are referred to.

§ 3º The sponsored grants in which more than 70% (seventy percent) of the private partner's remuneration is paid by the Public Administration will depend on specific legislative authorization.

Art. 11. The convening instrument will contain minuta of the contract, expressly indicate the submission of the tender to the standards of this Act and shall observe, in what couber, the § § 3º and 4º of the art. 15, the arts. 18, 19 and 21 of Law No. 8,987 of February 13, 1995, and may still provide for:

I-requirement for a bid guarantee of the bidder, observed the limit of the inciso III of the art. 31 of Law No. 8,666 of June 21, 1993;

II-(VETADO)

III-the employment of the private dispute resolution mechanisms, inclusive of arbitration, to be held in Brazil and in Portuguese language, pursuant to Law No. 9,307 of September 23, 1996, to address conflicts arising out of or relating to the contract.

Single paragraph. The edital should specify, when there are, the guarantees of the public partner's contraption to be granted to the private partner.

Art. 12. The certame for the contracting of public-private partnerships will comply with the procedure laid down in the current legislation on tenders and administrative contracts and also to the following:

I-o trial could be preceded by the qualification step of technical proposals, disclassifying bidders who fail to achieve the minimum score, which they will not participate in the following steps;

II-the trial will be able to adopt as criteria, in addition to those predicted in the incisos I and V of the art. 15 of Law No. 8,987 of February 13, 1995, the following:

a) lower value of the contraption to be paid by the Public Administration;

b) best proposal on the grounds of the combination of the criterion of the one with the best technique according to the weights set out in the edict;

III-the edital will define the manner of submission of the proposals economic, admitting:

a) proposals written in sealed envelopes; or

b) written proposals, followed by lances in viva voice;

IV-the edital will be able to predict the possibility of failure sanitation, supplementation of insufficiencies or even of corrections of formal character in the course of the procedure, as long as the bidder can to meet the requirements within the time limit set in the convenatory instrument.

§ 1º In the hypothesis of paragraph b of the inciso III of the caput of this article:

I-the lances in viva voice will always be offered in the reverse order of the classification of the written proposals, being vetted to the edital limiting the amount of bids;

II-o edital will be able to restrict the submission of bids in viva voice to bidders whose written proposal is at most 20% (twenty percent) greater than the value of the best proposal.

§ 2º The examination of proposals techniques, for the purposes of qualification or trial, will be done by motivated act, based on requirements, parameters and outcome indicators pertinent to the object, defined with clarity and objectivity in the edital.

Art. 13. The edital will be able to predict the reversal of the order of the habilitation and trial phases, hypothesis in which:

I-ended the classification phase of the bids or the bidding of bids, will be open the invading with the highest rated bidder's habilitation documents, for verification of the fulfillment of the conditions fixed in the edict;

II-verified the fulfillment of the requirements of the edital, the bidder will be declared the winner;

III-inability-rated bidder will be analyzed the bidder's habilitatory papers with the proposal ranked in 2º (second) place, and thus, successively, until a ranked bidder meets the conditions set in the edital;

IV-proclaimed the final result of the certame, the object will be awarded to the winner in the technical and economic conditions by it offered.

Chapter VI

PROVISIONS APPLICABLE TO THE UNION

Art. 14. It will be instituted, by decree, the governing body of federal public-private partnerships, with competence to:

I-define the priority services for implementation in the partnership regime public-private;

II-discipline the procedures for conclusion of these contracts;

III-authorize the opening of the bidding and approve its edital;

IV-appreciate the execution reports of the contracts.

§ 1º The body mentioned in the caput of this article will be composed by indication nominal representative and respective alternate from each of the following bodies:

I-Ministry of Planning, Budget and Management, to which they will fulfill the task of coordinating the respective activities;

II-Ministry of the Farm;

III-Civil House of the Presidency of the Republic.

§ 2º Of the meetings of the body referred to in the caput of this article to examine public-private partnership projects will participate in a representative of the body of direct Public Administration whose area of competence is pertinent to the object of the contract under review.

§ 3º For deliberation of the governing body on the contracting of public-private partnership, the expedient should be instructed with prior pronouncement and Reasoned:

I-of the Ministry of Planning, Budget and Management, on the merit of the project;

II-of the Ministry of Finance, as to the feasibility of the granting of the guarantee and its form, regarding the risks to the National Treasury and compliance with the limit of which it treats art. 22 of this Law.

§ 4º For the performance of its functions, the body quoted in the caput of this article could create technical support structure with the presence of representatives of institutions public.

§ 5º The body of which it treats the caput of this article shall refer to the National Congress and the Court of Auditors of the Union, with annual periodicity, performance reports of the contracts of public-private partnership.

§ 6º For the purposes of the fulfillment of the provisions of the inciso V of the art. 4º of this Act, re-salvaged the classified information as secretive, the reports that it treats § 5º of this article will be made available to the public, by means of public data transmission network.

Art. 15. It is incumbent upon the Ministries and the Regulatory Agencies, in their respective areas of competence, to submit the bidding edital to the governing body, proceed to bidding, monitor and scrutinize public-private partnership contracts.

Single partagraph. The Ministries and Regulatory Agencies will refer to the body referred to in the caput of the art. 14 of this Act, with semiannual periodicity, detailed reports about the implementation of public-private partnership agreements in the form defined in regulation.

Art. 16. Stay the Union, its authorities and public foundations authorized to participate, at the global limit of R$ 6,000,000,000.00 (six billion reais), in Guaranteed Public-Private Partnerships Fund-FGP, which will be for the purpose of providing assurance of payment of pecuniary obligations taken by the federal public partners by virtue of the partnerships that it treats this Act.

§ 1º The FGP will have private nature and own separate heritage from the heritage of the cotists, and will be subject to rights and obligations of their own.

§ 2º The Fund's patrimony will be formed by the aport of goods and rights realized by the cotists, by means of the integralization of quotas and for the income earned from his administration.

§ 3º The goods and rights transferred to the Fund will be assessed by specialist company, which is expected to present reasoned laude, with indication of the evaluation criteria adopted and instructed with the documents relating to the assets assessed.

§ 4º The integralization of the quotas could be carried out in cash, public debt securities, dominican real estate, movable property, inclusive of federal mixed economy company stocks surplus to the necessary for maintenance of their control by the Union, or other rights with equity value.

§ 5º The FGP will respond by its obligations to the goods and rights integral to its estate, not responding to the cotists for any obligation of the Fund, save by the integralization of the quotas they subscribe to.

§ 6º The integralization with goods referred to in § 4º of this article will be made independently of bidding, upon prior assessment and specific authorization of the President of the Republic, by proposal of the Minister of Finance.

§ 7º The aport of special or common use goods in the FGP will be conditioned on their disaffection in an individualized manner.

Art. 17. The FGP will be set up, administered, managed and represented judicial and extrajudicially by financial institution controlled, directly or indirectly, by the Union, with observance of the standards to which the inciso XXII of the art is concerned. 4º of Law No. 4,595 of December 31, 1964.

§ 1º The status and regulation of the FGP will be approved in the assembly of the cotists.

§ 2º A representation of the Union in the assembly of the cotists will give in the form of the inciso V of the art. 10 of the Decree-Law No. 147 of February 3, 1967.

§ 3º Caberá to the financial institution deliberating on the management and disposal of the FGP's assets and rights, zeling for the maintenance of its profitability and liquidity.

Art. 18. The FGP's guarantees will be provided in proportion to the value of the share of each cotist, being vetoed the granting of guarantee whose net present value, added to that of the guarantees previously provided and too much obligations, surpasses the total asset of the FGP.

§ 1º The guarantee will be provided in the form approved by the co-tists assembly, in the following modalities:

I-bail, without benefit of order for the guarantor;

II-pledge of mobile or integral rights of the FGP's patrimony, without transfer of the possession of the committed thing prior to the execution of the guarantee;

III-mortgage of immovable property of the FGP heritage;

IV-fiduciary disposition, remaining direct possession of the goods with the FGP or with fiduciary agent by it hired prior to the execution of the warranty;

V-other contracts that produce warranty effect, provided that they do not transfer the title or direct possession of the goods to the private partner before the execution of the warranty;

VI-warranty, real or personal, linked to a patrimony of affectation constituted in due process of the separation of goods and rights belonging to the FGP.

§ 2º The FGP will be able to provide counter-guarantees to insurers, financial institutions and international bodies that ensure compliance with the cotists ' pecuniary obligations in partnership contracts public-private.

§ 3º The discharge by the public partner of each debit parcel guaranteed by the FGP will impose proportional exoneration of the warranty.

§ 4º In the case of liquid and certain credit, title constant required accepted and not paid by the public partner, the guarantee could be triggered by the private partner from the 45º (quadrantieth fifth) day of its maturity.

§ 5º The private partner will be able to trigger the warranty on the constant debits of invoices issued and not yet accepted by the public partner, provided that, transcurring more than 90 (ninety) days of its maturity, there has been no express rejection by motivated act.

§ 6º The debit discharge by the FGP will impose its subrogation on the rights of the private partner.

§ 7º In case of inproceedings, the assets and rights of the Fund could be the subject of judicial constriction and divestment to satisfy the guaranteed obligations.

Art. 19 The FGP will not pay income to its cotists, assuring either of them the right to apply for the full or partial rescue of their quotas, corresponding to the estate not yet used for the grant of guarantees, making up for settlement based on the Fund's patrimonial situation.

Art. 20. The dissolution of the FGP, deliberated by the assembly of the cotists, will be conditional on the prior discharge of the entirety of the guaranteed debits or release of the guarantees by the creditors.

Single paragraph. Dissolved the FGP, its patrimony will be prorated among the cotists, based on the patrimonial situation at the date of the dissolution.

Art. 21. It is provided for the constitution of affectation patrimony which will not communicate with the remainder of the FGP's estate, by staying tied exclusively to the guarantee by virtue of which it has been constituted, and may not be the object of penhora, arrest, kidnapping, search and seizure or any act of judicial constriction arising from other obligations of the FGP.

Single paragraph. The constitution of the patrimony of affectation will be made by record in the Registration Office of Securities and Documents or, in the case of immovable property, in the corresponding Real estate Registration Cartoire.

Art. 22. The Union will only be able to hire public-private partnership when the sum of the continued character expenses derived from the set of the already contracted partnerships has not exceeded, in the previous year, at 1% (one percent) of the net current revenue of the exercise, and the annual expenses of the current contracts, in the 10 (ten) subsequent years, do not exceed 1% (one percent) of the net current revenue projected for the respective financial years.

Chapter VII

FINAL PROVISIONS

Art. 23. It shall be the Union authorised to provide incentive, pursuant to the Programme of Incentive to the Implementation of Social Interest Projects-PIPS, established by Law No. 10,735 of September 11, 2003 to the applications in investment funds, created by financial institutions, in receivables arising from the contracts of public-private partnerships.

Art. 24. The National Monetary Council shall establish, in the form of the relevant legislation, the guidelines for granting credit for the financing of contracts for public-private partnerships, as well as for participation of closed entities of complimentary foresight.

Art. 25. The National Treasury Board will edit, in the form of the relevant legislation, general standards relating to the consolidation of public accounts applicable to public-private partnership contracts.

Art. 26. The inciso I of § 1º of the art. 56 of Law No. 8,666 of June 21, 1993, it passes the invigoration with the following essay:

"Art. 56 ....................................................................................

para. 1º .........................................................................................

I-collateral in cash or in securities of public debt, owing to these having been issued in the scriptural form, upon registration in centralized settlement and custody system authorized by the Central Bank of Brazil and assessed by its economic values, as defined by the Ministry of Finance;

......................................................................................... " (NR)

Art. 27. Credit operations effected by public companies or mixed-economy companies controlled by the Union shall not be able to exceed 70% (seventy per cent) of the total financial resource sources of the specific purpose society, with for the areas of the North, Northeast and Midwest regions, where the Human Development Index-IDH is lower than the national average, such participation may not exceed 80% (eighty per cent).

§ 1º They will not be able to exceed 80% (eighty percent) of the total financial resource sources of the specific purpose society or 90% (ninety per cent) in the areas of the North, Northeast and Midwest regions, where the Human Development Index-IDH is lower than the national average, credit operations or capital contributions carried out cumulatively by:

I-closed provident entities supplementary;

II-public companies or mixed-economy companies controlled by the Union.

§ 2º For the purposes of the provisions of this article, is understood by source of financial resources the operations of credit and capital contributions to the specific purpose society.

Art. 28. The Union shall not be able to grant guarantee and undertake voluntary transfer to the States, Federal District and Municipalities if the sum of the continued character expenditure derived from the set of the partnerships already contracted by those of those in the year has exceeded, in the year previous, at 1% (one percent) of the net current revenue from the financial year or if the annual expenses of the current contracts in the 10 (ten) subsequent years exceed 1% (one percent) of the net current revenue projected for the respective exercises.

§ 1º The States, the Federal District and the Municipalities that hire ventures through public-private partnerships are expected to refer to the Federal Senate and the Registry of the National treasure, in advance of the hiring, the information necessary for fulfillment of the envisaged in the caput of this article.

§ 2º In the application of the limit laid down in the caput of this article, shall be computed the expenses derived from partnership contracts concluded by the direct Public Administration, authorities, public foundations, public companies, mixed economy societies and too many entities controlled, directly or indirectly, by the respective ente.

§ 3º (VETADO)

Art. 29. They shall be applicable, in what couber, the penalties provided for in the Decree-Law No. 2,848 of December 7, 1940-Criminal Code, in Law No. 8,429 of June 2, 1992-Administrative Improbity Act, in Law No. 10,028 of October 19, 2000-Law of Fiscal Crimes, in the Decree-Law No. 201 of February 27, 1967, and in Law No. 1,079 of April 10, 1950, without prejudice to the contractually foreseen financial penalties.

Art. 30. This Act comes into force on the date of its publication.

Brasilia, December 30, 2004; 183º of Independence and 116º of the Republic.

LUIZ INACIO LULA DA SILVA

Bernard Appy

Nelson Machado