How performance security works in Brazilian public contracts: seguro-garantia, bank guarantees, the 5/10/30% caps and insurer step-in under Law 14.133.
Education only. This page summarizes Brazilian federal law and regulation as published on official sources on the date above. Statutes, decrees and SUSEP rules change, and each tender notice (edital) sets its own terms. Verify at the source and with Brazilian counsel. This is not legal, insurance or financial advice. Portuguese quotations are from the official text; English renderings are our own translation.
Start here: Surety 101 · Surety glossary · Surety vs insurance and indemnity
Brazil's 2021 procurement law replaced older federal statutes, including Lei nº 8.666/1993, and rewrote the rules on contract guarantees. Two features stand out for anyone who works with performance bonds elsewhere. Brazil wrote an insurer completion obligation into a general procurement statute, with rights to match. And its percentages are low by US standards, with the higher tier tied to that step-in clause. A 30% guarantee with a duty to complete is a different product from a 100% bond that may be paid out or performed.
A 2026 federal legal opinion described the step-in model as "inspirada no modelo internacional do performance bond" (inspired by the international performance bond model). Readers who know North American contract surety will find the vocabulary familiar, but the mechanics differ in ways that matter for underwriting, wording and claims.
Two scope points before the detail:
Article 96 is the gateway. The guarantee is optional for the authority but, once required in the notice, the contractor picks the form. In the statute's words: "Caberá ao contratado optar por uma das seguintes modalidades de garantia" (it is for the contractor to choose one of the following forms of guarantee).
| Form (art. 96 §1) | Who provides it | Points to know |
|---|---|---|
| I. Caução em dinheiro ou em títulos da dívida pública (cash or government securities) | The contractor, from its own resources | Securities must be book-entry, registered in a Banco Central-authorized settlement and custody system, and valued at economic value. Cash is returned with monetary adjustment (art. 100). |
| II. Seguro-garantia (guarantee insurance) | An insurer, under SUSEP rules | The only form that can carry the art. 102 step-in clause and the 30% tier. Stays in force even if the contractor misses premium payments (art. 97). |
| III. Fiança bancária (bank guarantee) | "banco ou instituição financeira devidamente autorizada a operar no País pelo Banco Central do Brasil" | A bank guarantee from an institution not authorized in Brazil does not meet the text. |
| IV. Título de capitalização (capitalization bond) | "custeado por pagamento único, com resgate pelo valor total" (paid by a single payment, redeemable at full value) | Added by Lei nº 14.770/2023. |
Amendment check, November 1, 2026. We reviewed the current consolidated text of Lei 14.133 for changes to articles 96 to 102. The only change is Lei nº 14.770, de 22 de dezembro de 2023, which added item IV (capitalization bonds) to art. 96 §1. Later amending laws do not touch the guarantee chapter. Article 6 XXII's grande vulto value is updated each year by decree rather than by amendment (see below).
Two timing rules in article 96 help contractors:
| Tier (each on the initial contract value) | Statutory text | Form |
|---|---|---|
| Ordinary (art. 98) | "até 5% (cinco por cento) do valor inicial do contrato" | Any art. 96 form |
| Raised (art. 98) | "para até 10% (dez por cento), desde que justificada mediante análise da complexidade técnica e dos riscos envolvidos" | Any art. 96 form |
| Grande vulto works and engineering services (art. 99) | "até 30% (trinta por cento) do valor inicial do contrato" | Seguro-garantia with the art. 102 step-in clause |
These are ceilings, not defaults. The authority sets the percentage in the notice. For continuing service and supply contracts lasting more than one year, the art. 98 percentages apply to the annual contract value (art. 98, sole paragraph).
Threshold check, November 1, 2026. Article 6 XXII defines grande vulto contracts as those with an estimated value above R$ 200,000,000.00. Article 182 requires the federal executive to update the law's values every January 1 by the IPCA-E index. Decreto nº 12.807/2025, in force from January 1, 2026, sets the 2026 figure at R$ 261,968,421.04 and delegates future updates to the head of the Ministério da Gestão e da Inovação em Serviços Públicos. A new figure is expected for January 1, 2027. Check the current value on the date of the notice.
The higher 30% tier is only available through a policy whose insurer has agreed in advance to finish the job.
The law defines seguro-garantia in one line (art. 6 LIV): "seguro que garante o fiel cumprimento das obrigações assumidas pelo contratado" (insurance that guarantees faithful performance of the contractor's obligations). Article 97 sets its scope as including "as multas, os prejuízos e as indenizações decorrentes de inadimplemento" (fines, losses and damages arising from default).
The product itself is regulated by the insurance supervisor, the Superintendência de Seguros Privados (SUSEP), through Circular SUSEP nº 662/2022, which came into force on May 2, 2022 and became mandatory for new policies from January 1, 2023. SUSEP's January 2023 notice on the end of the transition period described it as fully aligned with the new procurement law.
The vocabulary maps onto surety terms:
| Seguro-garantia term | Surety equivalent | Note |
|---|---|---|
| Tomador | Principal | The debtor of the guaranteed obligation, and the party that pays the premium (art. 16) |
| Segurado | Obligee | The creditor: here, the public authority |
| Seguradora | Surety | An insurer authorized by SUSEP |
| Objeto principal | Underlying contract | The policy is "vinculado" (tied) to it and must respect its terms (Circular 662, art. 4) |
| Valor da garantia | Penal sum | Set by the obligee (art. 6) |
| Sinistro | Claim event / default | Default, "quando comprovada" (once proven) (art. 18) |
| Contragarantia | Indemnity agreement | Freely negotiated, cannot affect the obligee's rights, outside SUSEP's remit (art. 32) |
Several Circular 662 rules shape how a Brazilian public-works policy behaves in practice:
Two contrasts with North American practice stand out. First, a Brazilian claim turns on proven default under the contract, which places seguro-garantia closer to a conditional surety bond than to an on-demand instrument. Our note on on-demand bonds vs conditional surety explains why that line matters to an obligee. Second, the policy wording is the insurer's to draft, but it must follow the underlying contract's legislation "e/ou de acordo com o modelo de clausulado exigido pelo segurado" (and/or the wording model the insured requires) (art. 27, sole paragraph). Public owners can set their own wording rules.
Article 102 is the provision most foreign readers ask about. For works and engineering services, the notice may require seguro-garantia and "prever a obrigação de a seguradora, em caso de inadimplemento pelo contratado, assumir a execução e concluir o objeto do contrato" (provide for the insurer's obligation, if the contractor defaults, to take over and complete the contract).
When the notice includes it, the law gives the insurer a defined role:
| Element | What article 102 says |
|---|---|
| Party to the contract | The insurer signs the contract and its amendments "como interveniente anuente" (as a consenting intervening party) |
| Monitoring rights | Free access to the sites; monitoring of execution; access to technical and accounting audits; requests for clarification from the contractor's technical lead |
| Payment on takeover | The budget commitment (empenho) can be issued in the name of the insurer or its nominee, if fiscal good standing is shown |
| Subcontracting | The insurer may subcontract completion in whole or in part |
| If it completes | It is released from paying the insured amount |
| If it does not take over | It "pagará a integralidade da importância segurada indicada na apólice" (pays the full insured amount on the policy) |
Article 139 III ties this to default. It lists, among the consequences of termination by unilateral act of the authority, enforcement of the contract guarantee to require "a assunção da execução e da conclusão do objeto do contrato pela seguradora, quando cabível" (the insurer's takeover and completion, where applicable).
For underwriters, the binary outcome is the point: if the insurer does not take over the work, it pays the full insured amount. The monitoring rights let the insurer see trouble coming and decide early.
Federal legal opinion, April 14, 2026. The Advocacia-Geral da União's engineering advisory unit answered a question from the Ministério da Gestão e da Inovação em Serviços Públicos (its shared-services secretariat) about policy wordings offered to federal agencies. Parecer nº 00075/2026/CJENG-BSB/SCGP/CGU/AGU concluded that "É nula a cláusula securitária que afasta a 'cláusula de retomada' prevista no art. 102" (a policy clause that excludes the article 102 step-in clause is void). It also concluded that the insurer cannot condition the policy's validity on the absence of a step-in clause where the terms of reference (termo de referência) or the contract for grande vulto works provides for one. The opinion guides federal agencies. It is not a court decision, and states and municipalities have their own legal advisers.
An insurer that accepts a step-in obligation needs a credible completion plan before it signs. The megaproject performance security guide covers similar capacity questions in North America, including co-surety structures.
Bid guarantee (art. 58). The notice may require proof of a bid guarantee as a pre-qualification requirement when the proposal is submitted. The rules:
Dedicated-labour service contracts (art. 121 §3). For services with exclusive dedication of labour, the authority may, among other measures, "exigir caução, fiança bancária ou contratação de seguro-garantia com cobertura para verbas rescisórias inadimplidas" (require a cash deposit, bank guarantee or seguro-garantia covering unpaid severance amounts). On termination by the authority, article 139 III also allows the guarantee to be enforced to pay labour, FGTS (the employee severance fund) and social security amounts, where applicable.
Release (art. 100). The guarantee is released after faithful performance, or after termination exclusively attributable to the authority.
Lei 14.133 admits foreign bidders, with specific conditions.
Bidding. Public agents may not treat Brazilian and foreign companies differently, "inclusive no que se refere a moeda, modalidade e local de pagamento" (including currency, form and place of payment) (art. 9 II). In international tenders, the notice may not set qualification, classification or award conditions that are barriers to foreign bidders, apart from permitted domestic-preference margins (art. 52 §6). Foreign companies that do not operate in Brazil present equivalent qualification documents under federal regulation (art. 70, sole paragraph), and file for Brazilian professional registration at contract signing (art. 67 §7).
The guarantee itself. Three practical points follow from the text:
Reinsurance capacity. Large policies commonly rely on reinsurance, and Lei Complementar 126/2007 sets the framework:
| Category (LC 126, art. 4) | What it is |
|---|---|
| Ressegurador local | A reinsurer headquartered in Brazil, organized as a corporation dedicated to reinsurance |
| Ressegurador admitido | A reinsurer headquartered abroad, with a representative office in Brazil, registered with SUSEP |
| Ressegurador eventual | A foreign reinsurer without a Brazilian office, registered with SUSEP |
Other LC 126 rules matter to international markets such as London and Zurich:
For brokers, the result is a two-layer placement: a Brazilian insurer issues the seguro-garantia to the public authority, and the reinsurance behind it must fit LC 126's categories and the local-offer rule. How much of grande vulto capacity is placed offshore is not publicly disclosed in aggregate on the official sources reviewed, as of November 1, 2026.
Regulatory pipeline, November 1, 2026. Three items to watch: 1. Insurance contract law. Lei nº 15.040/2024 entered into force on December 11, 2025. SUSEP has said that where an existing infralegal rule conflicts with it, the law prevails. 2. Circular 662 revision. SUSEP's Regulatory Plan for 2026, as amended by Resolução Susep nº 91/2026 (Official Gazette, August 20, 2026), still lists "Revisão da Circular Susep nº 662/2022 (Seguro Garantia)" to adapt the rule to Lei 15.040/2024, with a draft to be submitted to SUSEP's board. As of November 1, 2026, Circular 662 remains the rule in force. We found no replacement circular published. 3. Infrastructure insurance working group. Portaria SUSEP nº 8.593/2026 (Official Gazette, October 1, 2026) set up a consultative working group on infrastructure insurance. It replaced a September 2026 ordinance. SUSEP said the work could cover seguro-garantia, engineering risks, reinsurance and project finance, with a first meeting scheduled for October 2, 2026. The ordinance gives the group 60 days from its first meeting, extendable once, to produce a final report, which may include a draft regulation. SUSEP's page for the group listed it as in progress on November 1, 2026, and gives the deadline as 60 days from the ordinance's date, so check both. It does not change any rule by itself.
| Feature | Brazil (Lei 14.133) | United States (federal) and Canada (typical public works) |
|---|---|---|
| Typical performance security | Up to 5%, or 10% with justification | US: 100% of the original contract price unless the contracting officer sets less. Canada: about 50% is common practice, set by the owner's documents |
| Large-project tier | Up to 30%, seguro-garantia with step-in, for grande vulto works | US: no separate tier; 100% plus 100% of increases. Canada: owner-specific |
| Who picks the instrument | The contractor, among four forms | US: bonds, with listed alternatives. Canada: the owner's tender documents |
| Payment protection | The guarantee chapter provides no separate subcontractor payment bond; on termination, the guarantee can be enforced to pay labour amounts (art. 139 III) | US: separate 100% payment bond. Canada: labour and material payment bond, often 50% |
| Completion | Insurer completes or pays the full insured amount when the step-in clause is used | US: surety options under the bond form and applicable law. Canada: surety options under the bond form (for example CCDC 221) |
United States, briefly. FAR 28.102-2 sets federal performance and payment bonds for contracts over $150,000 at 100% of the original contract price, plus 100% of any increase, unless the contracting officer determines a lesser amount is adequate (or, for payment bonds, makes a written finding that the amount is impractical). Our Miller Act and little Miller Act guide covers the federal and state rules.
Canada, briefly. There is no single national rule. Owners' tender documents commonly call for 50% performance and 50% labour and material payment bonds on standard CCDC forms. Provincial statutes and public owners set their own floors and triggers.
A lower percentage is not necessarily a weaker guarantee: Brazil's 30% step-in policy puts more of the completion burden on the insurer, while a 100% US bond gives the surety more ways to settle. Wordings show these differences better than percentages; see our public bond wording specimens.
The tender
The instrument
Placement
Does Brazil require performance bonds on public contracts? Not automatically. Article 96 lets the authority require a guarantee case by case, through the tender notice. If it does, the contractor chooses among cash or government securities, seguro-garantia, a Brazilian-authorized bank guarantee or a single-payment capitalization bond.
Is seguro-garantia the same as a surety bond? It plays the same role: a third party guarantees the contractor's performance to the owner. Legally, it is an insurance policy regulated by SUSEP. The contractor is the tomador, the public owner is the segurado, and the insurer's recourse against the contractor rests on a separate counter-guarantee.
What is the 30% step-in guarantee? For grande vulto works and engineering services, the notice may require seguro-garantia at up to 30% of the initial contract value with a clause obliging the insurer to take over and complete the work if the contractor defaults. If the insurer does not take over the work, it pays the full insured amount.
Can a foreign contractor use a bank guarantee from its home bank? Article 96 §1 III requires the bank to be authorized to operate in Brazil by the Banco Central do Brasil. A foreign bank without that authorization does not meet the text, so contractors usually work through a Brazilian-authorized institution or use another form.
Can London or Zurich reinsurers back a Brazilian seguro-garantia? Yes, through Brazil's reinsurance framework. Foreign reinsurers can take cessions as admitted or occasional reinsurers registered with SUSEP. The ceding insurer must offer at least 40% of its cessions preferentially to local reinsurers, under the regulator's rules.
Is Circular SUSEP 662/2022 still in force? Yes, as of November 1, 2026. SUSEP's 2026 Regulatory Plan includes a revision to align it with Lei 15.040/2024, the insurance contract law in force since December 11, 2025. Check SUSEP's normative database before relying on it.
All sources below were re-checked on November 1, 2026 (PT).
