By: Leonardo Neri

The new bidding law included among its provisions an article that expressly provides for the advance payment of amounts arising from public contracts. The understanding of the exceptionality of advance payment was already recognized by the courts and by the doctrine: “Contracts with signs of irregularities: 4 – Advance payment. In the context of administrative contracts, it is prohibited to make payments prior to the provision of services unless such procedure is technically justifiable and provided for in the contracting instrument, pursuant to art. 38 of Decree 93.872/86, combined with arts. 62 and 63 of Law 4.320/64 and art. 65, II, “c”, of Law 8.666/93. Based on this understanding, the rapporteur understood that there was an irregularity raised in the management of SPRF/GO regarding advance payments in a contract for the provision of armed surveillance services. It was found that only three monthly payments were made two, four and six days in advance of the final deadline for the provision of the corresponding services, which is why the rapporteur proposed only the issuance of an order to the agency, in order to avoid such practices, which was supported by the other ministers. Judgment No. 589/2010-1st Chamber, TC-032.806/2008-3, rel. Min-Subst. Marcos Bemquerer Costa, 09.02.2010.”

Thus, law 14.133/2021 now provides that it will not be permitted to carry out advance payment, partial or total, relating to contractual installments linked to the supply of goods, the execution of works or the provision of services, that is, payment for the contracting of goods and/or services will only be made by the Public Administration after delivery of the good or execution of the service.

However, the law allows for advance payment as long as it provides the Public Administration with significant savings in resources or represents an indispensable condition for obtaining the good or providing the service, a hypothesis that must be previously justified in the bidding process and expressly provided for in the bidding notice or formal direct contracting instrument. In exceptional cases, the public body must justify its decision, providing for such hypothesis in the instrument of invitation for direct contracting or in the bidding notice.

As a guarantee of delivery of goods or provision of services, the law provides as a condition for advance payment that the Administration may require the provision of an additional guarantee and, if the object is not executed within the period established in the contract, the advance amount must be returned.

Thus, Provisional Measure 1,047 of 2021, which provides for exceptional measures for the acquisition of goods and the contracting of services, including engineering, and supplies intended to combat the Covid-19 pandemic, in addition to dispensing with bidding and carrying out bidding in the form of an auction, electronic or in person, with reduced deadlines, also provides for the possibility of a contractual clause that establishes advance payment for goods acquired under an exceptional regime.

It is important to emphasize that the determination provided for in the Provisional Measure applies only and exclusively in the case of bidding or contracting aimed at combating the pandemic.

And despite the risks, such as non-receipt of the object or receipt with inadequacies that prevent its use, arising from this method of acquiring goods or services, the use of this procedure by the Public Administration must be preceded by a cautious analysis, especially when advance payment is not included as a guarantee, since its requirement is not mandatory.