Brazil's Federal District cancels health PPP project

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Brazil's Federal District cancels health PPP project

Brazil's Federal District, through the State Department of Health (SES), has canceled a tender process for a health administrative concession contract due to issues raised by the Audit Court of the Federal District (Tribunal de Contas do Distrito Federal - TCDF).

The TCDF determined that several aspects of the tender documents were controversial and the process could not move on. Among others, the following aspects were questioned: capital expenditure and maintenance costs, weighted average cost of capital (WACC) and technical qualification criteria.

The project involved the construction, operation and maintenance of a new Trauma center of the Base Hospital (Hospital de Base), Gamma hospital (Hospital do Gama), and examination units and a reports center.

Now the State Department of Health (SES) will send clarifications to the TCDF and a new bidding process is expected to start soon.

The estimated total value (revenues) of the contract was R$6 billion (US$2.5 billion) and the concession was for a period of 20 years.

Feasibility studies were prepared by Andrade Gutierrez S.A., Kitmed Distribuidora Sociedade Empresarial Ltda. and Accenture do Brasil Ltda.

The winning bidder was to be the one that submitted the best technical offer and the lowest annual payment. The maximum annual payment was not to exceed R$336 million (US$141 million).

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