Brazilian government establishes price reduction for Oracle contracts

A new agreement defines new pricing terms for products and services provided by the supplier.
Written by Angelica Mari, Contributing Writer

The Brazilian government has established a price reduction for products and services provided by Oracle as part of a broader exercise to rationalize technology spending in the federal administration.

The decrease in prices was set out in the latest corporate agreement between the federal government, represented by digital government secretary Luis Felipe Monteiro and Oracle account director for the federal government, Tony Gomes Tonete.

Valid for one year from July 13, 2021, the agreement establishes that the technology supplier must comply with the standard list of products and services and the corresponding amounts set out by the government.

The prices outlined in a catalog published alongside the agreement mean a reduction of 32% in spending by the federal government in relation to the prices defined in 2019, when catalogs were introduced to standardize and reduce IT spending in tenders across the federal administration. The first agreement with Oracle resulted in a price reduction of 31.59%, according to the Ministry of Economy.

The model is primarily used in the Executive branch of the federal government, but it is being adopted by other bodies of the administration, such as the state governments of Goiás and Minas Gerais.

In 2021, the Brazilian government negotiated prices with other suppliers including VMware, IBM and Red Hat, resulting in price reductions of up to 16%. In 2020, prices with other suppliers such as Microsoft and Adobe were also reduced under similar agreements.

Last year, the Federation of Associations of Brazilian Information Technology Companies (Assespro) warned that the move towards centralization and process renegotiations could lead to anti-competitive pricing by larger competitors and present an barrier for smaller companies to compete in government tenders.

Earlier this year, when announcing the expansion of the IT optimization model, Brazil's digital government secretary said renegotiated pricing and limits on what government bodies can spend on IT corrects an "imbalance": "Today, government ministries, foundations and public sector bodies that buy in smaller quantities get competitive prices, as do other government agencies that buy more", Monteiro said at the time.

"The buyer is always the federal government, regardless of the agency and the technology supplier," the secretary added. The Brazilian government's aim is to secure a reduction of 20% in all technology spend by 2022.

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