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Selling to the government in Brazil: the 2021 Procurement Law for foreign and Brazilian bidders

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Last verified: 2026-10-27 · Status: Stable

Federal, state and municipal purchases in Brazil follow the Procurement Law (Lei nº 14.133 of 2021), whose money thresholds are updated every year; for 2026, contracts above R$261,968,421.04 are major contracts that require the winner to adopt a compliance program within six months. International tenders may not set barriers against foreign bidders, but may grant domestic goods and services a preference margin of up to 10 percent, or 20 percent for locally developed technology, which can be extended to Mercosur suppliers under reciprocity. Contracts may carry performance guarantees of up to 5 percent (10 percent for complex works), fines of 0.5 to 30 percent and debarment of up to 6 years, and disputes can go to arbitration.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026 (the rate was R$5.5007 on 26 October and R$5.0377 on 23 October, so conversions move with the market). Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Major contract (grande vulto) threshold for 2026	261968421.04 BRLLei nº 14.133 art. 6 XXII; Decreto nº 12.807, as of 2026-10-27 · in force
Value limit for direct contracting of engineering works and services, 2026	130984.20 BRLLei nº 14.133 art. 75 I; Decreto nº 12.807, as of 2026-10-27 · in force
Value limit for direct contracting of other services and purchases, 2026	65492.11 BRLLei nº 14.133 art. 75 II; Decreto nº 12.807, as of 2026-10-27 · in force
Maximum preference margin for domestic goods and services	10 %Lei nº 14.133 art. 26 § 1 II, as of 2026-10-27 · in force
Maximum preference margin for goods and services developed in Brazil	20 %Lei nº 14.133 art. 26 § 2, as of 2026-10-27 · in force
Maximum performance guarantee (standard / complex)	5 / 10 % of contract valueLei nº 14.133 art. 98, as of 2026-10-27 · in force
Range of contractual fines	0.5 to 30 % of contract valueLei nº 14.133 art. 156 § 3, as of 2026-10-27 · in force
Deadline for winners of major contracts to implement an integrity program	6 monthsLei nº 14.133 art. 25 § 4, as of 2026-10-27 · in force

The rule

1. No barriers to foreign bidders, with a preference margin. In international tenders the notice may not set qualification, classification or judging conditions that bar foreign bidders. If foreign bidders may quote in foreign currency, Brazilian bidders may too, with equivalent payment guarantees. A margin of preference may be granted to domestic manufactured goods and services that meet Brazilian technical standards, of up to 10 percent, or up to 20 percent for goods and services resulting from technological development in Brazil; it can be extended to goods and services from Mercosur member states if there is reciprocity under an international agreement approved by Congress, and it does not apply when domestic capacity is below the quantity sought.
Cost to do it: Pricing effect: a foreign product loses to a domestic one priced up to the preference margin above it.
Example: Foreign bid R$100 per unit against a domestic bid of R$108 under a 10 percent margin: the domestic bid wins, since R$108 is within R$110. / About US$18.75 against US$20.25 per unit.Lei nº 14.133 (Procurement Law), Art. 52 §§ 1, 3 and 6; art. 26 §§ 1, 2 and 5, 2021-04-01 official text · verified 2026-10-27

2. Foreign companies not operating in Brazil present equivalent documents to qualify, as regulated by the federal Executive. Companies may bid in consortium unless justified otherwise: members are jointly liable, technical and financial qualifications are added up, the notice adds 10 to 30 percent to the financial qualification required of a single bidder (except all small business consortia), and the winning consortium must be formed and registered before signing.
Cost to do it: Translation, apostille or legalization of documents and consortium registration costs.Lei nº 14.133, Art. 70 sole paragraph; art. 15 items I to V and §§ 1 to 3, 2021-04-01 official text · verified 2026-10-27

3. 2026 money thresholds. The Procurement Law's amounts are updated yearly. From 1 January 2026, major contracts (grande vulto) are those above R$261,968,421.04; direct contracting without tender (dispensa) by value is allowed below R$130,984.20 for engineering works and services and vehicle maintenance, and below R$65,492.11 for other services and purchases.
Example: Major contract threshold R$261,968,421.04; dispensa limits R$130,984.20 and R$65,492.11. / About US$49.1 million; about US$24,554 and US$12,277.Lei nº 14.133 arts. 6 XXII and 75 I and II; Decreto nº 12.807 of 29 December 2025 (Annex), Decreto nº 12.807 arts. 1, 4 and 5 and Annex, 2025-12-29 official text · verified 2026-10-27 · changed: Decreto nº 12.807 updated the amounts in force from 1 January 2026 and revoked Decreto nº 12.343 of 30 December 2024; it delegated future yearly updates to the Ministry of Management and Innovation in Public Services.

4. Compliance program for major contracts. For works, services and supplies of major value, the tender notice must require the winning bidder to implement an integrity program within 6 months of signing, under a regulation that sets the measures, proof and penalties. Implementing or improving an integrity program is also a factor when sanctions are set.
Cost to do it: Cost of building the program (policies, training, due diligence, reporting channel); professional fees are negotiated.Lei nº 14.133, Art. 25 § 4; art. 156 § 1 V, 2021-04-01 official text · verified 2026-10-27

5. Performance guarantees. The authority may require a guarantee in the notice, and the contractor chooses between cash or book entry government bonds, surety insurance, a bank guarantee from an institution authorized by the Central Bank, or a single payment capitalization bond. The guarantee may be up to 5 percent of the initial contract value, or up to 10 percent when justified by technical complexity and risk; for continuous contracts over one year, the annual value is the base.
Cost to do it: Up to 5 or 10 percent of the contract value tied up in a guarantee, or the premium of surety insurance.
Example: Contract of R$10,000,000: guarantee of up to R$500,000, or R$1,000,000 for a complex work. / About US$1.87 million of contract value; guarantee up to about US$93,700 or US$187,500.Lei nº 14.133, art. 96 § 1 IV included by Lei nº 14.770 of 2023, Arts. 96 § 1 and 98, 2021-04-01 official text · verified 2026-10-27

6. Sanctions. Infractions are punished with warning, fine, a bar on bidding and contracting with the sanctioning federal, state or municipal entity for up to 3 years, or a declaration of unfitness (inidoneidade) barring contracts with all levels of government for 3 to 6 years. Fines may not be below 0.5 percent nor above 30 percent of the contract value and may be cumulated with the other sanctions.
Cost to do it: Fine of 0.5 to 30 percent of the contract value.
Example: On a R$10,000,000 contract, a fine ranges from R$50,000 to R$3,000,000. / About US$9,373 to US$562,400.Lei nº 14.133, Art. 156 caput and §§ 3 to 5 and 7, 2021-04-01 official text · verified 2026-10-27

7. Dispute resolution. Contracts under the law may use conciliation, mediation, dispute boards and arbitration for disputes over disposable property rights, such as rebalancing the contract's economic and financial equation, contractual breaches by either party and the calculation of indemnities.Lei nº 14.133, Art. 151, 2021-04-01 official text · verified 2026-10-27

Provision	Use	R$	About US$
Art. 6 XXII	Major contract (grande vulto)	261,968,421.04	49.1 million
Art. 75 I	Direct contracting, engineering works and services, vehicle maintenance	130,984.20	24,554
Art. 75 II	Direct contracting, other services and purchases	65,492.11	12,277
Art. 70 III	Documentation waivable (R&D products)	392,952.63	73,661

Procurement Law amounts in force from 1 January 2026 (Decreto nº 12.807 Annex); USD at R$5.3346

Worked example

A Spanish engineering group bids for a R$300,000,000 (about US$56.2 million) federal hospital construction contract in consortium with a Brazilian builder. The contract is above the 2026 major contract threshold of R$261,968,421.04, so the consortium must implement an integrity program within 6 months of signing (Lei nº 14.133 art. 25 § 4). The notice asks for a 10 percent guarantee for technical complexity, R$30,000,000 (about US$5.6 million), which the consortium posts as surety insurance (arts. 96 and 98). The contract provides for a dispute board and arbitration for rebalancing claims (art. 151).
Within Mercosur, a supplier from Argentina or another member state can benefit from the domestic preference margin only if a reciprocity agreement approved by Congress provides for it (art. 26 § 1 III); otherwise it competes as any foreign bidder.

Step by step

1. Monitor tenders in the national public procurement portal (PNCP), where notices and the yearly updated amounts are published (Decreto nº 12.807 art. 2).
2. Check whether a preference margin applies and price accordingly.
3. Prepare qualification documents; a foreign company not operating in Brazil files equivalent documents, legalized or apostilled and translated.
4. Decide on a consortium with a Brazilian partner and agree leadership, joint liability and the 10 to 30 percent financial qualification uplift.
5. Line up a guarantee provider (insurer or Central Bank authorized bank) for up to 5 or 10 percent of the contract value.
6. For major contracts, budget the integrity program to be in place within 6 months of signing.

Common traps

Treating the guarantee as optional. When the notice requires it, the contract cannot be signed without it; for surety insurance the notice gives at least one month after the award to post it (art. 96 § 3).
Underestimating sanctions. A declaration of unfitness bars contracts with every level of government for 3 to 6 years (art. 156 § 5).
Missing the integrity program deadline on major contracts (art. 25 § 4).
Using last year's thresholds. The amounts change every 1 January; the 2026 figures come from Decreto nº 12.807.

Sources

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