Open vs. Closed Bidding Modes under Law 14,133: Differences and When to Use Them in Engineering Procurement

Understand the differences among open, closed and combined bidding modes under Law 14,133, the prohibitions in art. 56 and how to choose the procedure for engineering procurement.

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Law 14,133/2021 allows open and closed bidding modes, either separately or in combination. In the open mode, bidders submit public and successive bids; in the closed mode, proposals remain confidential until the date and time defined for opening. The choice is not unrestricted: art. 56 prohibits the closed mode used alone when the award criterion is lowest price or highest discount, and prohibits the open mode when the criterion is technique and price.

In engineering procurement, therefore, the correct decision starts with the scope and the award criterion. A public work or service evaluated by lowest price may use the open mode or a combination of modes, subject to the applicable regulation. A procurement evaluated by technique and price — common in intellectual services and special engineering works and services when technical quality is material — must use the closed mode. The bidding mode is only one part of the procurement architecture: it should not be confused with procurement procedure, award criterion or electronic/in-person format.

The practical consequence is significant. Choosing an unsuitable mode may reduce competition, encourage unfeasible bids, prevent the intended technical comparison or even create direct incompatibility with the Law. The preparatory phase should justify how the procurement procedure, criterion, bidding mode and format combine to produce the most advantageous proposal.

What are the open and closed bidding modes?

Art. 56 of Law 14,133 defines two basic models. In the open mode, participants follow the competitive evolution of the procurement and may submit public and successive bids. Depending on the criterion, bids may decrease or increase. In the closed mode, each bidder submits its proposal without following competitors’ proposals; the content remains confidential until the time established for disclosure.

The difference is not merely operational. Each mode changes bidders’ economic behavior, the way the market reveals prices and the risk of opportunistic strategies.

Aspect	Open mode	Closed mode
Dynamics	successive bids	single proposal kept confidential until opening
Information during bidding	participants follow the best bid	competing proposals are not known before opening
Competitive price pressure	high and dynamic	concentrated in the initial proposal
Use with lowest price	allowed	cannot be used alone
Use with highest discount	allowed	cannot be used alone
Use with technique and price	prohibited	required as the bidding logic
Typical risk	excessive race to the lowest price	less dynamic price discovery

The Preliminary Technical Study should record why the procurement architecture is consistent with the public need. In engineering, the bidding mode should not be selected simply by repeating the previous procurement notice.

Art. 56 establishes prohibitions that change the choice

Two rules need to be remembered because they eliminate combinations that might otherwise appear possible.

The first is in §1 of art. 56: the closed mode may not be used alone when the criterion is lowest price or highest discount. This means the Administration cannot simply receive sealed prices, open them all and declare the lowest one the winner when the applicable legal architecture requires the possibility of a competitive stage. Under these criteria, there must be an open mode or a regulated combination that includes an open stage.

The second is in §2: the open mode may not be used when the criterion is technique and price. Here the logic is the opposite. The competition should not become a successive price auction because classification depends on the weighting of a previously structured technical proposal and its corresponding economic proposal.

This rule connects directly with the content on best technique vs. technique and price. When technique and price is the selected criterion, bidders need to submit comparable proposals evaluated according to criteria and weights defined before the competition. There is no open bidding round to successively change the economic component.

Open mode: when competition through successive bids makes sense

The open mode is appropriate when the Administration can define the scope sufficiently and intends to use dynamic competition to reveal prices or discounts. It is typical of scopes whose economic comparison can be made objectively after minimum requirements have been established.

In public works and engineering services evaluated by lowest price, this may be appropriate when the Basic Design, quantities, specifications, measurement conditions and risk allocation matrix reduce proposal heterogeneity to a level at which price can take the predominant role.

The logic is simple: one company offers R$ 8.0 million, another R$ 7.8 million and another R$ 7.6 million. During the open stage, companies can successively revise their prices. Competition reveals how far each participant is willing to reduce its offer.

But competitive pressure does not replace feasibility analysis. In engineering, aggressive discounts can produce bids unable to absorb actual labor, equipment, mobilization, BDI, risk and productivity costs. The fact that a bid is the lowest does not automatically make it acceptable.

The risk of racing toward the lowest number

The procurement design must prevent open bidding from encouraging price reductions without corresponding execution capability. Points that must remain under control include:

• technically structured reference budget;
• feasibility criteria;
• consistent quantities and cost compositions;
• BDI and social charges;
• proportionate technical qualification;
• risk allocation matrix;
• price adjustment and rebalancing conditions;
• physical-financial schedule.

Art. 56, §5 adds a specific rule for public works and engineering services: after the award, the winner must revise and electronically submit the spreadsheets with quantities, unit costs, BDI and Social Charges adjusted to the final value of the winning proposal. This preserves a detailed basis for contract management and any adjustments permitted by law.

Closed mode: what changes in practice

In the closed mode, there are no public and successive bids. Each participant must formulate its best proposal before knowing competitors’ offers. Proposals remain confidential until the time established for disclosure.

This does not mean there is no competition. Competition occurs during proposal preparation: each bidder estimates which combination of price, technical quality, methodology, team and risk maximizes its chance of ranking without knowing the strategies of others.

For technique and price, this characteristic is essential. If a company knew that its technical score was already high and could then follow competitors’ prices in real time, the economic stage could artificially alter an evaluation that should reflect an integrated proposal.

SEGES/MGI Normative Instruction No. 2/2023, applicable to Brazil’s direct federal Public Administration, agencies and foundations, regulates this logic by requiring the closed mode for technique and price. Technical and price proposals remain confidential until the session, are evaluated and are then combined according to the weighting defined in the procurement notice.

Closed mode is not the same as a confidential budget

It is important to separate the concepts. Closed mode concerns the temporary confidentiality of bidders’ proposals. A confidential budget concerns the timing of disclosure of the Administration’s estimated budget, which is governed by separate provisions of the Law.

A procurement may use the closed bidding mode with a public budget. There may also be circumstances in which disclosure of the Administration’s budget is deferred. These are different decisions and require their own justification.

Technique and price requires the closed mode

This is the most relevant consequence for engineering consulting procurement and services with greater intellectual content.

When the criterion is technique and price, art. 56, §2 prohibits the open mode. At the federal level, SEGES/MGI Normative Instruction No. 2/2023 operationalizes the procedure: proposals remain confidential until the start of the public session, without successive bids.

This is consistent with the nature of the evaluation itself. The Administration first compares elements such as:

• understanding of the scope;
• methodology;
• work program;
• technical team;
• experience;
• products and deliverables;
• other objective criteria defined in the procurement notice.

It then combines the technical score and economic score according to the specified formula.

The consequence for the Terms of Reference is direct. If the Administration wants to use technique and price, it must first develop a Technical Proposal methodology capable of generating comparable responses. It is not enough to write “submit a technical proposal.” Without a matrix, scoring rubrics and response structure, the closed mode merely freezes heterogeneous proposals and transfers subjectivity to the evaluation committee.

The Technical Review of Procurement Notices and Attachments is particularly relevant at this stage because incompatibilities among award criterion, bidding mode and required documentation can compromise the entire procedure.

Combined modes: open-closed and closed-open

The Law allows the modes to be used jointly, but the specific mechanics depend on the applicable regulation. In Brazil’s federal Public Administration, SEGES/ME Normative Instruction No. 73/2022 regulates combinations for electronic procurement using lowest price or highest discount.

Open and closed

Under this design, there is initially a stage of public and successive bids. At the end, bidders classified within the range established by the regulation have an opportunity to submit a final closed bid.

The advantage is combining dynamic price discovery with a confidential final round. This makes it more difficult for a competitor to wait until the last moment simply to marginally undercut the best known bid.

Closed and open

Here the sequence is reversed. Everyone initially submits closed proposals. The best proposal and others within the regulatory range advance to an open bidding stage.

This design first filters the competitive field and concentrates open bidding among the closest offers.

Combined modes do not permit open bidding for technique and price

The existence of combinations does not change the prohibition in art. 56, §2. If the criterion is technique and price, the open mode remains prohibited. The combinations regulated by Normative Instruction 73/2022 belong to the lowest-price or highest-discount framework.

How to choose for public works and engineering services

The right question is not “which mode generates the biggest discount?” The Administration should ask which bidding architecture maximizes the chance of contracting the appropriate solution at a feasible price and with sufficient competition.

Situation	Design tendency	Reason
Well-defined public work, lowest price, broad market	open or combined	dynamic competition can reveal price
Common engineering service, lowest price	open or combined	requirements can be objectively compared
Intellectual executive design using technique and price	closed	art. 56 prohibits the open mode
Management/inspection using technique and price	closed	technical quality contributes to classification
Scope with variable technical solution and significant technical weighting	closed when using technique and price	proposal needs to remain integrated

The Terms of Reference for public works and engineering services should record the logic of this choice and translate the design into clear operational rules.

Procurement procedure, criterion, bidding mode and format are not synonyms

Many procurement-notice errors arise from mixing four different decisions.

Procurement procedure is the legal contracting procedure, such as competitive bidding or electronic auction.

Award criterion defines how the best proposal will be identified: lowest price, highest discount, best technique, technique and price, highest economic return or highest bid, as applicable.

Bidding mode defines the dynamics for submitting proposals and bids: open, closed or an allowed combination.

Format indicates, among other aspects, whether the procedure will be electronic or, exceptionally and with justification, in person.

A competitive-bidding procedure, for example, may use technique and price with the closed mode. Another procurement using the same legal procedure may use lowest price and the open mode. The procurement procedure is the same; the competitive design is completely different.

Recurring errors when choosing the bidding mode

Copying the mode from the previous procurement notice

Two engineering contracts may appear similar but have completely different levels of design maturity, risk and dependence on methodology. The choice must arise from the current scope.

Using the closed mode alone with lowest price

The prohibition in art. 56, §1 is express. If the award is based on lowest price or highest discount, the closed mode cannot be used alone.

Creating open bidding rounds for technique and price

This is also expressly prohibited. The economic proposal under technique and price does not enter an open round of successive bids.

Choosing open mode to “force savings”

Nominal savings are not synonymous with an advantageous proposal. In public works, a reduction incompatible with productivity, costs and risks may reappear as delay, default, claims or abandonment.

Failing to test the electronic system

The procurement notice may be legally correct and operationally incompatible with the platform used. Before publication, it is necessary to confirm that the system supports exactly the mode and criterion defined.

Practical example 1: public work using lowest price

Consider a public work with a mature Basic Design, a reference budget of R$ 15 million, defined quantities and a market with several capable contractors.

If the selected criterion is lowest price, the open mode may make sense. Bidders enter successive competition and the final price is submitted to acceptability and feasibility checks. The winner then adjusts its spreadsheets to the final value, pursuant to art. 56, §5.

The closed mode used alone would not be permitted in this case.

Practical example 2: highly complex executive design

Now consider procurement of a multidisciplinary executive design in which methodology, team, BIM coordination, risk analysis and document governance materially influence final quality.

If the procurement uses technique and price, there will be no open price bidding. Each company submits its technical and economic proposal in closed form. The evaluation committee applies the technical matrix, calculates the economic score and obtains the final weighted score.

Competition occurs through the combination of the best technical and commercial proposal, not through successive bids.

Practical example 3: common engineering service

Building maintenance with objectively standardized activities may be classified as a common engineering service. If the award is based on lowest price, open bidding may be appropriate.

The existence of engineering content does not require the closed mode. The design is determined by the combination of the nature of the scope and the award criterion.

How to document the decision in the preparatory phase

The justification should demonstrate a logical chain.

1. What is the public need?
2. Is the scope sufficiently defined?
3. Does quality above the minimum materially change the result?
4. Which award criterion best represents the advantageous proposal?
5. Which modes are legally compatible with that criterion?
6. Which mode promotes competition without increasing the risk of unfeasibility?
7. Does the electronic platform support the selected design?
8. Are the procurement documents consistent with this choice?

This analysis should appear in planning and be reflected in the procurement notice. Technical Support for Procurement and Proposal Analysis helps maintain the planning logic during selection and evaluation.

Quick checklist for reviewing a procurement notice

Before publication, verify:

• award criterion defined and justified;
• bidding mode compatible with art. 56;
• no closed mode used alone for lowest price/highest discount;
• no open mode for technique and price;
• applicable regulation identified;
• mechanics of combined modes described when used;
• compatible electronic system;
• feasibility criteria defined;
• consistent negotiation rules;
• spreadsheets for public works/engineering services required for final adjustment;
• session chronology without ambiguities;
• appeal rules aligned with the procedure.

How bidding mode connects to evaluation, feasibility and negotiation

Choosing among open, closed or combined modes does not complete the selection design. In public works and engineering services, the bidding mode determines how the market reaches final proposals, but the Administration still needs to verify whether the best offer is technically compliant, economically acceptable and feasible.

Art. 59 of Law 14,133 provides for disqualification of proposals with incurable defects, proposals inconsistent with the specifications in the procurement notice, above the applicable maximum budget or whose feasibility is not demonstrated when required. For public works and engineering services, evaluation of overpricing and feasibility must consider the total price, quantities and relevant unit prices. Therefore, a highly aggressive open competition does not eliminate the need to verify whether the final price still corresponds to an executable solution.

This point is especially important when a sequence of bids substantially reduces the initial proposal. The final amount must remain compatible with productivity, mobilization, labor, equipment, supplies, logistics, risks, charges and BDI. Competition is a price-formation mechanism; it is not authorization to accept any number produced by the bidding round.

After evaluation, art. 61 still allows the Administration to negotiate more advantageous conditions with the first-ranked bidder. If it remains above the maximum price and is disqualified, negotiation may proceed with the other bidders in ranking order. This means bidding mode and negotiation are distinct stages: the existence of successive bids does not eliminate subsequent negotiation, just as the closed mode does not prevent the Administration from negotiating with the first-ranked bidder after the evaluation result has been established.

Stage	Central question	Risk to control
Bidding	how will economic proposals be formed?	low competition or excessive reduction
Evaluation	which proposal ranks first?	incorrect application of the criterion
Compliance	does the proposal comply with the procurement notice and scope?	accepting a technically inadequate solution
Feasibility	does the price allow the scope to be executed?	unfeasible contract, delay or abandonment
Negotiation	is a more advantageous condition possible?	losing savings that remain available
Final spreadsheets	do unit costs, BDI and charges reflect the winning price?	inconsistent contractual basis

For public works and engineering services, §5 of art. 56 completes this chain by requiring the winner to revise the spreadsheets with quantities, unit costs, BDI and Social Charges adjusted to the final amount. This stage is relevant because a global discount obtained through competition needs to be translated into an economic structure consistent with execution and contract monitoring.

Minimum deadlines must also be compatible with the competitive design

Another recurring error is discussing the bidding mode without checking the time needed to prepare proposals. Art. 55 establishes different minimum deadlines depending on the scope, award criterion and, in some cases, execution regime. In engineering, this matters because an economic or technical proposal may require reviewing dozens of attachments, assessing risks, preparing cost compositions, mobilizing subcontractors and developing methodology.

Situation under art. 55	Minimum deadline
Common services and common public works/engineering services using lowest price or highest discount	10 business days
Special services and special public works/engineering services using lowest price or highest discount	25 business days
Semi-integrated contracting or other service and works cases not covered by the specific rules	35 business days
Integrated contracting	60 business days
Technique and price or best technique/artistic content	35 business days

These are legal minimums, not administrative targets. A complex project may require more time for the market to prepare serious proposals. Excessively shortening preparation tends to favor companies already familiar with the scope, reduce the number of participants capable of assembling complete proposals and increase generic assumptions or budgeting errors.

There is a direct relationship between time and quality of competition. If the procurement notice requires a detailed technical proposal, analytical budget, site visit, manufacturer inquiries, team composition and risk analysis, the deadline must be proportionate. Otherwise, a formally correct bidding mode may operate over poorly formed proposals.

Decision matrix for choosing the bidding mode in engineering

The choice can be structured as a decision matrix during the preparatory phase. The table below does not replace legal analysis or the applicable regulation, but organizes the questions that need to be answered before the procurement notice is published.

Condition of the scope	Implication for the design	Point of attention
Mature design and quantities	favor objective economic comparison	validate feasibility of bids
Market with many equivalent contractors	open stage may increase competitive pressure	do not reduce necessary minimum qualification
High sensitivity to methodology and team	may justify technique and price	open mode becomes prohibited
Common engineering scope	lowest price/highest discount may be suitable	closed mode alone is prohibited
Highly complex intellectual service	quality above the minimum may be decisive	structure the technical proposal and scoring rubrics
Budget with high uncertainty	competition does not correct planning deficiencies	review scope and estimate before procurement
Small number of suppliers	bidding rounds may produce little additional discovery	study the market and barriers to entry
Platform without support for the selected procedure	design becomes operationally unfeasible	test the tool before publication

The most robust decision documents not only the selected mode but also the alternatives rejected. If the Administration chooses open bidding, it should be able to explain why successive competition is appropriate for the scope. If it selects technique and price, it must demonstrate why technical quality above the minimum is material and consequently structure the closed mode required by law.

Stress-testing the procurement notice before publication

A practical way to review the design is to simulate the behavior of three or four hypothetical bidders before publication. The objective is not to predict prices, but to verify whether the rules produce coherent results under extreme scenarios.

1. Simulate a company with the lowest price and a highly compressed cost structure.
2. Simulate a technically strong company with a higher price.
3. Simulate a company that submits a high initial proposal and reduces it aggressively during bidding.
4. Simulate a tie or a very small difference between the best proposals.
5. Verify how the procurement notice handles feasibility, negotiation, tie-breaking and spreadsheet adjustment.
6. Confirm that the platform executes exactly the sequence described in the procurement notice.

For technique and price, the test should also include full application of the technical matrix and economic formula. Such simulations often reveal that a weight, formula or apparently reasonable criterion produces a disproportionate effect. Correcting this before publication is much easier than justifying the result after proposals are opened.

For lowest price, the test should verify what happens when the first-ranked bidder offers a discount far greater than the others. The team needs to know in advance what evidence it may request to analyze feasibility, which unit prices are relevant and how the final proposal will be adjusted.

This stress test turns the choice of bidding mode into an engineering decision for the procurement: the procedure stops being an isolated administrative configuration and is evaluated as a complete system, from planning through future contract execution.

Final considerations

Open and closed modes do not simply mean “procurement with bidding rounds” and “procurement without bidding rounds.” They are competitive-design mechanisms that need to be coordinated with the scope, award criterion and applicable regulation.

In engineering, the most important operational rule is clear: lowest price and highest discount do not allow the closed mode to be used alone; technique and price does not allow the open mode. From these prohibitions, the Administration must choose between the open mode and regulated combinations for economic competition, or properly structure the closed mode when technical quality is part of the ranking.

The best decision is one that arises from the preparatory phase and remains consistent through evaluation and contract execution. A well-designed procurement notice does not seek merely the lowest number: it seeks competition capable of producing a technically acceptable, economically advantageous and contractually executable proposal.

Technical references

[1] BRAZIL. Law No. 14,133, of April 1, 2021 — Public Procurement and Administrative Contracts Law. Available at: https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14133.htm.

[2] BRAZILIAN FEDERAL COURT OF ACCOUNTS. Procurement and Contracts Manual — 3.5 Bidding modes. Available at: https://licitacoesecontratos.tcu.gov.br/3-5-modos-de-disputa/.

[3] BRAZIL. MINISTRY OF THE ECONOMY. SEGES/ME Normative Instruction No. 73, of September 30, 2022. Available at: https://www.gov.br/compras/pt-br/acesso-a-informacao/legislacao/instrucoes-normativas/instrucao-normativa-seges-me-no-73-de-30-de-setembro-de-2022.

[4] BRAZIL. MINISTRY OF MANAGEMENT AND INNOVATION IN PUBLIC SERVICES. SEGES/MGI Normative Instruction No. 2, of February 7, 2023. Available at: https://www.gov.br/compras/pt-br/acesso-a-informacao/legislacao/instrucoes-normativas/instrucao-normativa-seges-mgi-no-2-de-7-de-fevereiro-de-2023.

[5] BRAZILIAN FEDERAL COURT OF ACCOUNTS. Procurement and Contracts Manual — Technique and price. Available at: https://licitacoesecontratos.tcu.gov.br/3-4-4-tecnica-e-preco-2/.

Frequently asked questions

What is the difference between open and closed bidding modes?

In the open mode, bidders submit public and successive bids. In the closed mode, proposals remain confidential until the date and time defined for opening, without the public dynamics of successive bids.

Can the closed mode be used in a lowest-price procurement?

Not by itself. Art. 56, §1 of Law 14,133 prohibits the closed mode from being used alone when the award criterion is lowest price or highest discount.

Can technique and price include open bids?

No. Art. 56, §2 prohibits the open bidding mode when the criterion is technique and price. In Brazil’s federal Public Administration, SEGES/MGI Normative Instruction No. 2/2023 regulates the procedure in closed mode.

Does closed mode mean a confidential budget?

No. Closed mode refers to temporary confidentiality of bidders’ proposals. A confidential or deferred-disclosure budget refers to the Administration’s estimated budget and is governed separately.

What is the open-and-closed mode?

It is a combination in which there is initially an open bidding stage and then a final closed stage for bidders classified under the applicable regulation.

What is the closed-and-open mode?

It is the combination in which proposals begin closed and only bidders classified within the specified range advance to an open bidding stage.

Which mode is best for public works?

There is no universally best mode. The choice depends on the scope, award criterion, design maturity, market, risks and the need to evaluate technical quality above minimum requirements.

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