Government transition: the contracts new leaders inherit

In Brazil’s 2027 government transition, incoming leaders receive contracts already in motion: terms running, balances committed, oversight officers appointed by the previous administration, and open issues that were not always written down. Those contracts remain in force. And without a reliable contract inventory, the new administration answers for decisions it did not make and for risks it cannot yet see.

Brazil’s public works show what happens when contract continuity breaks. As of April 2025, the Federal Court of Accounts (TCU), the country’s federal audit body, had mapped 22,621 federally funded works, and 11,469 of them, or 50.7%, were stalled.^{Note 1} The most recent figure is the most worrying: of the 5,505 works started between April 2024 and April 2025, around 1,200 had already stopped.^{Note 1}

Continuous services, such as cleaning, security, building maintenance, IT systems, and transport, get less attention during a transition precisely because they never stop. They keep consuming budget, generating invoices, and requiring sign-offs while the chain of accountability changes hands, which leaves them exposed as one administration hands over to the next.

Four areas concentrate the risk in that legacy: the calendar, the cash, oversight, and the contracts’ institutional memory. Each calls for steps the transition team can take before inauguration.

Why Brazil’s 2027 government transition is different

In 2027, inauguration day changes. Constitutional Amendment 111 of 2021 moved the president’s inauguration to January 5 and the governors’ to January 6, starting with those elected in 2026. Current terms run until those dates.^{Note 2}

The change has a practical effect that gets little attention: fiscal year 2027 begins under the outgoing administration. For continuous service and supply contracts, Law 14,133/2021, Brazil’s public procurement and contracts law, requires the administration to confirm, at the start of each fiscal year, that budget appropriations exist and that keeping the contract remains advantageous.^{Note 3} The first days of the year fall to a team on its way out, and the following weeks to one still settling in. Without a shared record, that check may end up with no one responsible for it.

The framework for the handover exists. At the federal level, Law 10,609/2002 gives the president-elect’s transition team access to information on public accounts, programs, and projects.^{Note 4} States and municipalities follow their own rules. Following those rules takes organized information, which is not always in one place.

The transition takes place amid tight budgets and rising regulatory pressure, the conditions described in the era of convergence in public management. With little margin, an unplanned price adjustment or a renewal decided after its deadline weighs more on the year’s budget.

Who is accountable for a contract after inauguration?

The new administration. A contract is signed by the public body and remains valid after inauguration, whoever the official who signed it. From that day, the new administration is responsible for its execution: paying for what was delivered, overseeing what is under way, and deciding, within legal deadlines, on renewals and terminations.

In the first week, each contract arrives with its own deadline: a security services contract with an anniversary in February, a renewal to be decided in March, a rebalancing request filed months earlier and still unanswered. None of those deadlines waits for the new team to finish its assessment.

In practice, problems with a contract legacy tend to come from scattered information: the instrument in one system, the balance in another, incidents in the oversight officer’s log, and negotiations in messages exchanged over the years. There are four points where that fragmentation tends to turn into risk.

Four blind spots in the contract legacy

A calendar that ignores inauguration day

Continuous service and supply contracts can be signed for up to five years and renewed up to a ten-year limit, provided the renewal was foreseen in the tender and the competent authority certifies that terms and prices remain advantageous.^{Note 3} A significant share of the portfolio therefore spans more than one term of office.

The same law allows the administration to terminate a contract without penalty when appropriations run out or when it is no longer advantageous, but only on its next anniversary date and subject to a minimum period of two months counted from that date.^{Note 3} For incoming leaders, that creates narrow windows: decisions to continue or exit depend on dates fixed years earlier, which often no one has consolidated in a single place.

What to do: build a portfolio timeline covering the new administration’s first 180 days, with terms, anniversary dates, scheduled price adjustments, and renewals awaiting decision. Every date needs an owner and an internal deadline that comes before the legal one.

A budget that arrives already committed

Brazil’s Fiscal Responsibility Law forbids the head of a branch or body, in the last eight months of the term, from taking on spending obligations that cannot be fully met within the term, or that leave installments for the following year without sufficient cash available.^{Note 5} The rule protects the incoming team, and only the data show whether it was followed: which obligations were taken on, with what coverage, and how much of them carries into 2027.

Continuous contracts complicate the math because they mix what was delivered but not paid, what is in progress, and what has yet to be invoiced. Without separating them, unpaid commitments, unspent allocations, and future obligations show up as one sum, and the team cannot tell what to pay first.

What to do: reconcile, contract by contract, the amounts executed, committed, paid, and still to be executed, and compare the result with the 2027 budget forecast. Contracts with no identified coverage go on the agenda of the new team’s first meeting.

Oversight that changes hands

Law 14,133/2021 requires every contract to be monitored by specifically appointed oversight officers, who log incidents in a dedicated record and report to their superiors, in time for action, anything beyond their authority.^{Note 3} In a change of government, some of those officers and contract managers move to other roles or leave the agency, especially when they hold political appointments.

The effect shows up weeks later: in the first measurement left unsigned, the deduction never applied, the notice no one issued. The contract stays in execution, and the administration loses the ability to prove it monitored that execution.

What to do: map the manager, oversight officer, and alternate for every contract, and flag who is likely to leave with the change of appointments. Reassignments should be ready for the new administration’s first acts, with a documented handover between those leaving and those arriving.

Institutional memory outside the system

Contracts and amendments must be published on Brazil’s National Public Procurement Portal (PNCP), and publication is a condition for them to take effect.^{Note 3} The PNCP records what was contracted and amended. Execution stays outside it: incidents logged by the oversight officer, sanctions in progress, pending rebalancing requests, ongoing negotiations.

That history tends to sit in administrative files, spreadsheets, and the inboxes of people on their way out. When it is lost, the new administration inherits the contract without the context that explains its current state and decides with incomplete information.

What to do: compile, for every relevant contract, a minimum file with the instrument and amendments, balance, incidents, pending sanctions and claims, and the next milestones. Relevance should combine value, service criticality, and proximity of deadlines.

An inventory for the first 30 days

The table below summarizes what the transition team, and then the new administration, needs at hand for every active contract.

All of this information already exists within the agency. The transition’s task is to bring it together in one place, for every contract, before inauguration.

Conclusion

Brazil’s 2027 government transition begins with a fiscal year opened by the outgoing administration and a contract portfolio that spans both terms. The four blind spots call for the same step: a contract-by-contract inventory, with dates, balances, owners, and open issues, built before inauguration and handed to the incoming team. With it, the new administration knows its deadlines before they expire and can order its decisions by them.

Takter Converge CLM brings terms, balances, sign-offs, penalties, and each contract’s history together in a single base, with an audit trail. To build this inventory for your organization’s portfolio, talk to Takter.