Economic and financial viability for public concession
Offering essential goods and services also means being prepared to meet the demands of the public sector. This is due to the fact that several companies specialize in the provision of services to municipalities, states and the Union. However, attention must be paid to meeting the specific norms that are required by the State’s contracting process.
The provision of services to the public sector by the private sector, in addition to public tenders and biddings, is basically carried out by three intermediaries: authorizations, permits and public concessions. The primary difference of these three is the particularity of the latter: the private company is responsible, in its name, for the control of all administrative, management and collection processes, always in accordance with what is established previously in public notice.
This edict will deal with the specificities related to the actions that should be performed by the private company in the place of the State. The call is always public and can participate companies that fit the required characteristics.
It is very important that companies that intend to carry out this kind of service be aware of the legal and technical requirements that a concession process requires. It is also important that public agencies be aware, in the same way, of compliance. To assist in the organization of plans and actions and in the verification of actions, before and after the process, the figure of the consultant and the auditor is fundamental.
What is a public concession?
The public concession, according to Brazilian Law 8.987/1995, is characterized by the delivery of the administration of a public service to the private initiative, by means of which, for a determined time, some service that is of obligation of the State to provide is, at a cost, managed by a private company. In addition to the public concessions, there are the authorizations, the permissions and the public-private partnerships, the PPPs.
Through a concession to private initiative, it will provide services instead of the State. However, the public concession differs from outsourcing, since in this process the private contractor does not have the autonomy to administer the service as a whole, only a specific portion. It also differs from privatization, because in this case the public company providing services is sold to the private sector.
The concession, therefore, represents the extension of the provision of public services to the private market, and for that, the regulation of the terms through a selective bidding process. This process must be organized, publicly accessible and must observe the specificities related to its publication time.
How is a concession organized?
When the Union gives private initiative the right to provide public services in its place, it is first necessary to set out certain points: what are the rules, validity, deadlines and, in particular, the values of services which the company will charge user. This information is required within the bidding process for services.
A bidding can take place in five modalities: as competition, price-making, invitation, auction, tender or even the trading session. The invitation to tender includes the information and regulations that the State delimits for the provision of the service and, in response to this announcement, the company provides a service proposal with specific characteristics, such as services to be provided, values and calculations of tariff increases.
Several companies from the works, electricity, telephony and transportation sectors provide services through public concession. To participate in a bidding it is necessary that the company meets the requirements of the bidding document and is able to comply with the proposals submitted. In this sense, the consultancy assists in the feasibility of the project or the accounts.
What are the benefits of counseling with a consultant?
If the company generates goods and services and wishes to bid for public concession, it is very important that it is prepared to act in accordance with the bidding rules. More than that, managers must be aware of the feasibility of providing the service, maintaining the conditions in response to the bid, and also the best way to deal with the bureaucratic process itself.
It is also very important to know the feasibility of the business well before participating in a bid. For this, the indicated is a financial economic viability study. Through it, is possible to know the acceptance of the clients and to understand the region where the business will be implemented. From this, it is possible to make a financial diagnosis about the investment the company will make to enter the bidding and the forecast of returns of this investment.
Likewise, Maciel Group‘s legal counsel assists in complying with rules and laws and helps the company that will compete for the bid to prepare for the process within the required legalities and specificities – from the search for the right notice to the bidding process. The Maciel Group, in this sense, provides consulting and advisory services to companies that seek to leverage their services through participation in bidding processes, trade shows, public announcements and concessions.
CEO Maciel Group