Reduction of bureaucracy in public procurement is one of the main policy goals of the Brazilian federal government. Among the actions taken throughout 2019 in this regard is the promulgation of Normative Instruction No. 1/2019 by the Digital Government Bureau of the Ministry of Economy. One of the most relevant milestones in improving public-private dialogue, the rule governs the process of contracting for IT solutions by the bodies and entities of the Federal Public Administration that are part of the Information Technology Resources Management System (Sisp).

IN 19/2019 was promulgated in consideration of the recommendations provided in Appellate Decision No. 2,569/2019 by the Federal Court of Accounts (TCU), which identified a series of flaws and inefficiencies in practices and processes adopted by the Federal Public Administration for procuring IT solutions and indicated the need to adopt new parameters to better serve the public interest.

The changes introduced by IN 19/2019 shook up the market for service providers and suppliers of IT products and solutions, who were forced to change certain established practices in contracts with the government. The rule also served to clarify issues that previously lacked detail. One of them is proof of concept or POC, which means tests conducted to demonstrate whether a particular product or service works in practice and what its level of efficiency might be.

In procurement, the Public Administration uses POCs to assess, for example, the technical specifications, functionalities, performance, and suitability for the technological environment of the agency or entity in which the solution will be used, among other factors that are relevant to the procurement.

POCs generate documented evidence that supports the procuring public administrator's decisions to (i) plan a procurement (ascertaining the technical requirements of IT solutions that may meet needs, for example) or to (ii) assess the suitability of an IT solution submitted by a bidder to the technical specifications required in the call for bids (i.e., the Reference Term Sheet).

When a POC is performed during the contract planning stage, some procedures must be followed to remove the risk of targeting (albeit involuntarily) the notice and reference term sheet for the benefit of a particular IT solution or a specific bidder.

Although it does not expressly use the term POC for the purposes of planning a contract, IN 1/19 discusses the topic in its article 11, items I and II, when dealing with “comparative analysis of solutions” to support a Preliminary Technical Study for Procurement, a document that describes the review conducted by the Public Administration of the procurement conditions in terms of needs, requirements, alternatives, choices, intended results, and other characteristics. The objective is to demonstrate the technical and economic feasibility of the procurement.

The Preliminary Technical Study for Procurement must include this comparative analysis of IT solutions from the economic and qualitative point of view, observing market alternatives, different service delivery models, and different types of solutions in terms of specification, composition, or characteristics of the included goods and services, among other factors.

Once completed, the Preliminary Technical Study for Procurement will serve as a basis for preparing the Reference Term Sheets (or basic plan), which define the purpose of the procurement, describes the IT solution, and specifies the requirements of the procurement. Thus, it is essential that a POC be performed according to the procedures listed in the study in order to rule out the risks associated with targeted procurement.

In Appellate Decision No. 2,569/2018, the TCU condemned the practice of recording an opportunity involving the granting of differentiated discounts by IT solution manufacturers to resellers who provide their own human and material resources to perform a POC in a public procurement, an illegal practice that violates competitive bidding which should be avoided by market players in this segment.

Although the procedures set forth in IN 1/19 are binding only on bodies of the federal public administration, it is the case that they reflect best POC practices from the point of view of the government and the case law of the TCU. For this reason, the performance of a POC by those interested in cooperating with the Public Administration in the planning of future procurement should be in harmony with the rules of IN 1/19, assisting in having them be properly complied with by the procuring public entity.

With the constant need for improvement and modernization of the systems and processes used by public bodies and entities, the tendency is towards strong growth in IT solutions in procurement by the Brazilian Public Administration, which will require from interested companies strict compliance with the rules established by IN 1/19.