What is the relevant legislation regulating the award of public contracts?
Public procurement in Finland is regulated by the Act on Public Contracts and Concessions (1397/2016, as amended, the Public Procurement Act), implementing the Public Contracts Directive (2014/24/EC) and the Directive on the award of concession contracts (2014/23/EC). (See question 2.)
The Market Court is a special court, hearing, among other things, public procurement cases in the first instance. A petition can be submitted to the Market Court by whomever the case concerns and in particular situations by certain authorities. Typically, an unsuccessful bidder or a potential bidder submits the petition. Market Court rulings in public procurement cases are subject to appeal to the Supreme Administrative Court.
In addition, as of 1 January 2017, the Finnish Competition and Consumer Authority (FCCA) supervises compliance with the public procurement legislation, with a particular focus on illegal direct procurement. The FCCA may issue reminders to procurement units if it observes unlawful conduct, and, in the case of illegal direct procurement, may prohibit the implementation of a procurement decision. The agency may also propose that the Market Court impose sanctions, such as penalty payments, shortening of a contract, or the annulment of a procurement decision. Anyone can submit a request for action to the FCCA regarding a procurement unit that has breached the public procurement legislation. The FCCA may also investigate unlawful conduct on its own initiative.
Is there any sector-specific procurement legislation supplementing the general regime?
The Act on Public Contracts and Concessions by Contracting Authorities in Water, Energy, Transport and Postal Services Sectors (1398/2016, as amended, the Public Procurement Act for Special Sectors), implementing the Public Contracts Directive in Special Sectors (2014/25/EC), and the directive on the award of concession contracts (2014/23/EC), applies to procurement in the fields of water, energy, transport and postal services.
The Act on Public Contracts in the Fields of Defence and Security (1531/2011, as amended, the Public Procurement Act for the Defence Sector), implementing the Defence and Security Procurement Directive (2009/81/EC), applies to procurements in the fields of defence and security.
The Act on Services for Transportation (320/2017), in turn, will be applied in services concessions concerning public road transportation (buses) and public transportation by rail other than railway transportation (trams) and in any procurement concerning railway transport including service concessions.
In which respect does the relevant legislation supplement the EU procurement directives or the GPA?
The Public Procurement Act and the Public Procurement Act for the Defence Sector include special national thresholds that extend the use of mandatory competitive bidding procedures to public procurements below the EU thresholds. The procedures that apply to the procurements exceeding national, but not EU, thresholds are less stringent than rules under the EU Procurement Directives.
Are there proposals to change the legislation?
Yes. The government proposal (57/2017) related to regional government, health and social services reform suggests amendments to the definitions of contracting entities due to suggested changes in regional government organisation introducing counties. The proposal is under consideration in Parliament. In March 2019 it came evident that the present Parliament does not have time to handle the proposal before the new Parliament election, which will be held on 14 April 2019. Therefore, the proposal will lapse.
Applicability of procurement law
Which, or what kinds of, entities have been ruled not to constitute contracting authorities?
The procurement acts define the authorities and entities that constitute the contracting authorities. There is little case law on this issue. For example, listed companies in which the state continues to have a substantial shareholding of strategic importance connected by a common interest, but which engage in normal commercial or industrial activities in the market have not been considered as contracting entities. In a recent case, a company operating in the field of tourism wholly owned by a municipality was not considered a contracting entity, as the nature of operations was commercial and because the loan granted by the municipality to the company, even if it constituted over half of the value of the procurement, was granted on market terms. In another case, a similar company was not considered a contracting entity as the nature of operations was commercial, and therefore it was not considered to have been established for the purposes of serving the common interest without any industrial or commercial interest. In addition, a foundation established for civil aviation and operating an aviation centre providing, for example, training, was not considered a contracting entity since it was not considered to have been established for the purposes of serving the common interest without any industrial or commercial interest. A road cooperative, which is a body responsible for maintenance of a private road representing persons owning real estate with a permanent right to use that private road and enterprises that have a right to utilise that private road, were also not considered as contracting entities.
In addition, the European Commission has, since 19 June 2006, exempted energy companies from the applicability of the Public Procurement Act for Special Sectors for procurements related to the production and sale of electricity.
Are contracts under a certain value excluded from the scope of procurement law? What are these threshold values?
Contracts under an applicable national threshold value are generally excluded from the scope of procurement law in Finland. The values are specified in the relevant acts.
The national threshold values in the Public Procurement Act are the following (as applicable in March 2019):
- €60,000 for goods and services contracts;
- €500,000 for service concessions;
- €400,000 for healthcare and social services contracts;
- €300,000 for certain services;
- €150,000 for building contracts;
- €500,000 for building contract concessions; and
- €60,000 for design contests.
Under the Public Procurement Act for the Defence Sector, the national threshold values are the following (as applicable in March 2019):
- €100,000 for goods and services; and
- €500,000 for building contracts.
The Public Procurement Act for Special Sectors does not include lower national thresholds and therefore procurement rules do not apply to procurements below EU thresholds.
Essentially, the threshold values are calculated by applying the equivalent rules of the Public Contracts Directives. Accordingly, the value is generally calculated on the basis of the estimated aggregated value of the contract (ie, the maximum total compensation under the contract, excluding VAT and including possible options, extensions and costs paid to the tenderers during the procedure). In the case of a joint procurement by several contracting authorities this would be the aggregate value of the procurement of all such parties. All income should be included in the value, whether paid by a procurement unit or a third party. In the case of a building contract the value of goods necessary to perform the building services specified by the contracting authority shall be included in the estimated value. For contracting authorities that consist of separate operational units, the estimated value shall normally consist of the aggregate value of all units.
There are also special rules concerning calculating values for concessions for certain services (such as insurance and banking services and design contests), leasing, rental or instalment purchase.
For services contracts valid for a certain contract period (up to a maximum of 48 months) the estimated value is calculated from the entire period, and for services contracts valid in excess of 48 months or for an indefinite period a monthly fee multiplied by 48.
Amendment of concluded contracts
Does the legislation permit the amendment of a concluded contract without a new procurement procedure?
As of 1 January 2017, the procurement acts include rules for modification of contracts and framework agreements during their term without the need for a new procurement procedure. An essential change is not allowed without a new procurement procedure. The rules specify cases where such modifications are allowed, for example:
- where modifications have been provided for in the initial procurement documents containing review clauses which are clear, exact and unambiguous;
- where additional works, services or supplies have become necessary and a change of contractor cannot be made for economic or technical reasons and would cause significant inconvenience or substantial duplication of costs, provided that the price increase shall not exceed 50 per cent of the value of the original contract;
- the value of the modification is below the relevant thresholds and only brings no more than a 10 or 15 per cent increase in the initial contract value (depending on contract type); or
- where there are changes in contractor as a result of an unambiguous review clause in the initial contract or due to merger and acquisition operations, company restructuring or change of control, or insolvency proceedings, which are generally allowed, provided that the legal or other successor fulfils the initial qualitative selection criteria and that this does not entail other substantial modifications of the contract nor circumventing the application of the directive.
Where an amendment is made to the contract, which would also have allowed other candidates to participate in the tendering procedure or would have resulted in other candidates participating, or if another tenderer had been awarded the tender, or which would mean the contract will be more beneficial to the contract party in a way that was not determined initially, or which extends the scope of the contract essentially or the contract party is replaced with another (and none of the above allowance grounds apply), the contracting authority has the right to terminate the contract forthwith in order to avoid the risk of a direct award based on an essential change in the contract.
Has there been any case law clarifying the application of the legislation in relation to amendments to concluded contracts?
The European Court of Justice (ECJ) issued at least a few relevant decisions - C-496/99 P Succhi di Frutta, C-454/06 Pressetext, C-91/08 Wall, C-549/14 and Finn Frogne A/S - before specific rules were included in the Directives.
Currently there are a couple of decisions based on the new legislation (see question 7). As an example, the FCCA made its first proposal to the Market Court regarding an alleged unlawful direct award on 16 February 2018 and proposed indemnity payments of €20,000 payable by a contracting entity based on essential change of a contract related to change in the scope of the procurement. The Market Court ordered the indemnity payment to be paid by the contracting entity in February 2019 (not final yet) as the change was considered to be essential from the perspective of the operators in the field of business: if the amended terms had been used initially, other candidates could have participated, or another tenderer could have been awarded. The tender for the number of deliveries had decreased to half, and only on two days a week instead of the initial five; deliveries were transferred from noon to afternoon; and the unit prices had been amended upwards. The Market Court considered that none of the allowance grounds applied in this case: the existing terms on changes of delivery times and routes were not clear enough to give the right to these changes; in addition, the decrease in value of the contract was approximately 12 per cent, exceeding the threshold for minor changes of 10 per cent.
In which circumstances do privatisations require a procurement procedure?
Procurement law does not include a definition of ‘privatisation’, nor does procurement law directly regulate privatisation. Here, mixed or partnership contracts that procurement legislation does not separately define may be relevant. Such arrangements must be assessed against definitions of public sector services and building contracts and concessions related thereto, taking into account the main character of the contract and determining whether the contract includes procurement.
If the privatisation includes procurement for the contracting authority (eg, the contracting authority simultaneously concludes a (long-term) contract under which it acquires services to be provided by the privatised entity) it will require a procurement procedure.
In which circumstances does the setting up of a public-private partnership (PPP) require a procurement procedure?
Each arrangement setting up a PPP needs to be assessed as a whole on a case-by-case basis in relation to the purpose and contents of the arrangement.
Where an essential part of the arrangement falls under the Public Procurement Act (eg, a school or a childcare centre for the municipality is acquired) and even if some transactions of the arrangement fall outside the Act, a procurement procedure is required. Therefore, provided that a procurement contract is an essential and inseparable part of the arrangement, procurement rules may apply to the whole arrangement and require a procurement procedure.
Advertisement and selection
In which publications must regulated procurement contracts be advertised?
Contract notices regarding procurements exceeding the national thresholds (but below the EU threshold) shall be made publicly available online on the Ministry of Employment and the Economy’s HILMA website.
With regard to procurements below the national threshold, the contracting authority may, at its own discretion, decide to publish the notice on the HILMA system. With regard to procurements exceeding the EU threshold, the contract notice shall be made publicly available in the Tenders Electronic Daily (the online version of the Supplement to the Official Journal of the EU (OJEU), dedicated to European public procurement) and on the HILMA system.
After the contract notice has been published in the HILMA system, the contracting authority may also publish it in a newspaper or on its own website. The authority may also send the notice directly to potential tenderers.
Are there limitations on the ability of contracting authorities to set criteria or other conditions to assess whether an interested party is qualified to participate in a tender procedure?
Yes. The procurement acts include rules on which criteria the contracting authority may set. The criteria must be in connection with the object of the procurement and they must be proportionate to the nature, use and scope of the procurement. As for the details in EU procurements, if there are criteria for the minimum net sales of interested parties, the requirement for net sales may be at most twice the estimated value of the procurement if no special grounds exist to exceed this maximum.
In addition, the fundamental principles for tender procedures must always be complied with: contracting entities must make use of the existing competitive conditions and ensure equality and non-discriminatory treatment among all participants in the procurement procedure, and act in a transparent way while meeting the requirements of proportionality.
Is it possible to limit the number of bidders that can participate in a tender procedure?
Yes. The contracting authority must invite an adequate number of bidders to ensure competition. The minimum and, if needed, the maximum number of bidders to be accepted must be stated in the contract notice.
In a restricted procedure the minimum number of bidders to be accepted is five and in the competitive procedure with negotiation, the competitive dialogue, and the new innovative partnership procedure, the number is three, unless there are fewer bidders meeting the criteria. The selection of bidders shall be made based on the minimum suitability requirement and the selection criteria set for the bidders in the contract notice.
The procurement procedure related to procurements below EU thresholds, but over the national threshold, and related to social and health services, is more flexible and no set rules exist on the number of bidders allowed to participate.
Regaining status following exclusion
How can a bidder that would have to be excluded from a tender procedure because of past irregularities regain the status of a suitable and reliable bidder? Is the concept of ‘self-cleaning’ an established and recognised way of regaining suitability and reliability?
As of 1 January 2017, national legislation has included the concept of ‘self-cleaning’ in line with the EU directives. A bidder to which certain exclusion grounds would be applicable may provide evidence on its reliability showing:
- that it has compensated, or committed to compensate, all the damages resulting from punishable deed, fault or neglect;
- active cooperation with the investigating authority; and
- that it has executed concrete technical, organisational and personnel-related actions which are able to prevent new punishable actions, defaults and neglects.
If such evidence and the entity’s reliability are considered sufficient, the bidder concerned will not be excluded from the procurement procedure.
The procurement procedures
Does the relevant legislation specifically state or restate the fundamental principles for tender procedures: equal treatment, transparency and competition?
Yes. The Public Procurement Act and the Public Procurement Act for Special Sectors state that the contracting entities must make use of the existing competitive conditions and ensure equality and non-discriminatory treatment among all participants in the procurement procedure, and act in a transparent way while meeting the requirements of proportionality.
These principles also apply to defence and security procurements, unless a derogation is necessary for the protection of essential security interests of the state as indicated in article 346(1)(b) of the Treaty on the Functioning of the European Union (TFEU).
Independence and impartiality
Does the relevant legislation or the case law require the contracting authority to be independent and impartial?
The public procurement legislation requires that when an entity owned by the contracting authority, or another contracting authority, participates in a tendering procedure, the contracting authority must treat that entity and other bidders equally.
In addition, the comparison criteria of bids must relate to the object of the procurement and enable the impartial assessment of the bids.
Decisions made in the tender procedure must be duly justified and the contracting authority is required to provide a written decision. In addition, authorities must act equally and impartially according to administrative law. (See question 15.)
Conflicts of interest
How are conflicts of interest dealt with?
Finnish administrative law generally governs potential conflicts of interest with regard to persons who are officials.
As a general rule, an official who may have a conflict of interest (eg, due to participation in the procedure of a company led, operated or owned by an official or a relative of an official) should not take part in the award of the contract. Should such an official decide on the award of a contract or otherwise be (actively) involved with the procedure, the parties to the procurement procedure would have the option of raising claims against the contracting authority for non-compliance with the obligations relating to equal treatment of bidders.
With regard to persons who are not officials, potential conflicts of interest should be prevented through organisational and personnel-related arrangements as suggested in the preparatory works of the procurement legislation.
Finally, taking into consideration the proportionality principle, the exclusion of a bidder should be an exceptional action, and a last resort.
Bidder involvement in preparation
How is the involvement of a bidder in the preparation of a tender procedure dealt with?
As of 1 January 2017, the procurement acts include an express provision, implementing the EU directives, which imposes an obligation on the contracting authority to ensure that participation in the preparation of procurement by a candidate, bidder or related company does not distort competition. Among the measures referred to in the government proposal implementing EU directives are communication to the other candidates and tenderers of relevant information exchanged in the context of, or resulting from, the involvement of the candidate or tenderer in the preparation of the procurement procedure, and the fixing of adequate time limits for the receipt of tenders.
What is the prevailing type of procurement procedure used by contracting authorities?
The most commonly used procurement procedure in Finland is the open procedure. The prevailing type of procurement procedure does, however, vary depending on the object of the procurement.
Separate bids in one procedure
Can related bidders submit separate bids in one procurement procedure?
The public procurement legislation does not regulate this. Therefore, related bidders may generally submit separate bids. The competition law, however, includes rules on forbidden exchange of information between competitors, among others. In addition, it has been considered possible for the contracting entity to prohibit, for example, separate bidders from appointing the same subcontractor in the tender documentation.
The ECJ has issued one decision - C-425/14, Impresa Esilux Srl - where it was found to be against the proportionality principle to set a requirement on the candidates and bidders that their relationship to other candidates and bidders does not include any control or association or that they have not concluded, or intend to conclude, any contracts with other candidates and bidders.
Negotiations with bidders
Is the use of procedures involving negotiations with bidders subject to any special conditions?
Yes. With regard to contracts exceeding EU thresholds, the requirements for the use of the competitive procedure with negotiation and for competitive dialogue are the same and in line with the requirements set forth by the EU directives. Accordingly, the following conditions apply:
- the needs of the contracting authority cannot be met without the adaptation of readily available solutions;
- the contracts include design or innovative solutions;
- the contract cannot be awarded without prior negotiations because of specific circumstances related to the nature, the complexity or the legal and financial make-up or because of the risks attaching to them;
- the specifications of procurement cannot be established with sufficient precision by the contracting authority with reference to a standard, European Technical Assessment, common technical specification or technical reference; or
- if in response to an open or a restricted procedure, only irregular or unacceptable tenders are submitted.
A new kind of procedure - the innovation partnership - may be used if the needs of a contracting authority cannot be satisfied with goods, services or construction contracts already existing in the market.
If the legislation provides for more than one procedure that permits negotiations with bidders, which one is used more regularly in practice and why?
Of the two applicable procedures, competitive procedure with negotiation is used more regularly as it has been seen to allow more flexibility. The innovation partnership is a new procedure, but by its nature is not expected to become more commonly used than the two existing procedures.
What are the requirements for the conclusion of a framework agreement?
A contracting authority may decide to conclude a framework agreement. There are two types of framework agreement:
- those in which all terms have been agreed on so that the sub-orders can be made without further agreement; and
- those that do not include all relevant terms (in this case, sub-orders generally require a new competitive procedure between the selected participants based on the selection criteria set in a contract notice, invitation to negotiations or request for tender).
Any of the competitive bidding procedures may be used (provided the requirements for the use of such a procedure are met) to choose a supplier or suppliers for the framework arrangement. The contract period should not normally exceed four years (or in special sectors, eight years).
May a framework agreement with several suppliers be concluded?
Yes, a framework agreement may be concluded with one or more suppliers, in which case the minimum number of suppliers to be elected is generally three, although this is not limited by law. The number of suppliers to be selected must be stated in a contract notice, invitation to negotiations or a request to tender. If not all the terms and conditions of sub-orders are specified in the framework agreement, the award of subcontracts under the framework agreement usually requires an additional competitive procedure (mini-competition) between the already selected suppliers.
Changing members of a bidding consortium
Under which conditions may the members of a bidding consortium be changed in the course of a procurement procedure?
There are no statutory provisions on this issue. As of 1 January 2017, according to an express provision implementing the EU directives, the contracting authority shall require that the candidate or bidder (eg, bidding consortium) replaces a constituent entity whose capacities it has relied upon, but which does not meet a relevant selection criterion, or in respect of which there are compulsory grounds for exclusion. The contracting authority may also require that a candidate or bidder substitutes an entity in respect of which there are non-compulsory grounds for exclusion.
If the entity is not replaced, the contracting authority could exclude the candidate or bidder. It is usually prohibited in the invitation to tender to change or remove members of the bidding consortium, once accepted, to participate in the procedure, as acceptance into the procedure is often determined based on references and the experience of the bidders.
Regarding rules on modifications during the term of contract, see question 7.
Participation of small and medium-sized enterprises
Are there specific mechanisms to further the participation of small and medium-sized enterprises in the procurement procedure? Are there any rules on the division of a contract into lots? Are there rules or is there case law limiting the number of lots single bidders can be awarded?
There is a specific rule allowing groups of suppliers to submit bids or put themselves forward as candidates. A candidate or tenderer or a consortium may rely on the capacities of other entities, regardless of the legal nature of its connections with them. A group may rely, for example, on the abilities of members of group companies or on other entities to perform the services and construction contracts that the persons named in the contract are responsible for undertaking, if the partner companies’ competence and experience have been assessed. A candidate or tenderer must prove that the capacities referred to will be in use.
The Public Procurement Act and the Public Procurement Act for Special Sectors also include a prohibition to artificially subdivide contracts or combine contracts in order to avoid applicability or procurement rules.
In addition, the contracting authorities may decide to award a contract in the form of separate lots and may determine the size and subject matter of such lots. Contracting authorities shall provide an indication of the main reasons for their decision not to subdivide into lots. Contracting authorities shall indicate, in the contract notice or in the invitation to confirm interest, whether tenders may be submitted for one, several or all of the lots.
Contracting authorities may, even where tenders may be submitted for several or all of the lots, limit the number of lots that may be awarded to one tenderer, provided that the maximum number of lots per tenderer is stated in the contract notice. Contracting authorities shall indicate in the contract notice or request for tender the objective and non-discriminatory criteria or rules they intend to apply for determining which lots will be awarded where the application of the award criteria would result in one tenderer being awarded more lots than the maximum number.
What are the requirements for the admissibility of variant bids?
Contracting authorities may accept variant bids (alternative solutions), provided that the contract notice indicates that alternative bids are allowed. Furthermore, the alternative tender must satisfy the minimum requirements set for the object of the tender and the requirements for presenting alternatives. Contracting authorities may also require tenderers to submit variants.
Must a contracting authority take variant bids into account?
The contracting authority must only take variant bids into account if it has expressly allowed variants in the contract notice.
Another concept is parallel bidding, which means a situation where the same bidder submits several parallel bids (eg, based on several different brands that it resells). Contracting authorities may not reject parallel bids, unless this prerogative is indicated in the request for tender.
Changes to tender specifications
What are the consequences if bidders change the tender specifications or submit their own standard terms of business?
The contracting authority is normally obliged by law to exclude bids that are not in line with the terms and conditions of the request for tender. This conformity must be checked before executing the comparison of bids. If the bidders change the tender specifications or submit their own standard terms and conditions in their bids, and they are not in line with the invitation to tender, the bids must normally be excluded in order to ensure equal and non-discriminatory treatment of all participants. Such a tender would not be comparable to other tenders fulfilling the requirements.
The new procurement legislation includes wider possibilities for the contracting authorities to ask for clarification or complements from the bidders, to enable the correction of omissions, discrepancies or errors. Where the information or documentation submitted is incomplete or erroneous or where specific documents or information are missing, contracting authorities may, but are not obliged to, request the candidates or bidders concerned to submit, supplement, clarify or complete the relevant information or documentation within an appropriate time limit, provided that such requests are made in full compliance with the principles of equal treatment and transparency.
It would be possible, according to the government proposal related to the new legislation, to ask for clarification on non-compliance that is not material to the tender, such as payment terms. Therefore, depending on the non-compliance with procurement documents, the contracting authority may, at its discretion, following the principle of equal treatment, give the tenderer a chance to correct such discrepancy in specifications or in standard terms and conditions. If such discrepancies, however, are material, the bid must be excluded.
What are the award criteria provided for in the relevant legislation?
The contract shall be awarded either to the bidder of the tender with best price-quality ratio (which is the most commonly used criterion) in accordance with the comparison criteria, or to the bidder of the tender with the lowest price or the lowest costs.
The criteria for selecting the most economically advantageous offer must be objective and non-discriminatory and relevant in relation to the object of the contract without conferring an unrestricted freedom of choice on the contracting authority. The criteria may comprise:
- quality aspects, which may include:
- technical merit;
- aesthetic and functional characteristics;
- operating costs;
- after-sales service and technical support;
- delivery date and other delivery terms; and
- applicability and experience of personnel, if this would result in a notable effect in performance;
- price aspects;
- social aspects;
- environmental aspects; or
- innovative characteristics.
Abnormally low bids
What constitutes an ‘abnormally low’ bid?
A bid may be deemed ‘abnormally low’ in relation to the quality and scope of the contract provided that the tenderer cannot credibly show that it is capable of supplying the goods or providing the service pursuant to the procurement. The contracting authority is entitled to consider a possible rejection if it considers that the acceptance of the bid would create a risk of omissions or defects.
What is the required process for dealing with abnormally low bids?
According to a new regulation the contracting authority must always, not only if it is considering rejecting the bid, ask the bidder to explain the price or costs in the tender if the bid seems to be abnormally low. The request may relate to, for example, production method, chosen economic and technical solutions, exceptionally favourable conditions, compliance of environmental, social or employment obligations, subcontracts or possible state aid received by the bidder.
A contracting authority may reject a tender if the information and evidence supplied by the bidder does not satisfactorily account for the low level of price or costs proposed. It shall reject the bid if the abnormally low price or costs are due to non-compliance with environmental, social or employment obligations. A bid that is assumed to be abnormally low because of suspected illegal state aid obtained by the bidder can only be rejected after the bidder has been given sufficient time to prove that the state aid in question was granted legally.
Which authorities may rule on review applications? Is it possible to appeal against review decisions and, if so, how?
The contracting authority can set aside a faulty decision and decide to re-award a public contract on its own initiative or at the request of a party to the procurement procedure. This is called the ‘correction procedure’. It is not possible to appeal against the review decision of the contracting authority, which rejects a request for correction.
An unsuccessful tenderer may also simultaneously submit a written petition to the Market Court, with a request for correction. The decision of the Market Court can be appealed to the Supreme Administrative Court.
The FCCA supervises compliance with the public procurement legislation, with a particular focus on illegal direct procurement. Provided no appeal has been submitted by a party concerned and no notification of a direct award has been made by the procurement entity, the FCCA may propose to the Market Court that the Market Court imposes sanctions, such as ineffectiveness, penalty payments, shortening of the duration of the contract, or the cancellation of a procurement decision. Anyone can submit a request for action to the FCCA regarding a procurement entity that has breached the public procurement legislation. The FCCA may also investigate unlawful conduct on its own initiative.
If more than one authority may rule on a review application, do these authorities have the power to grant different remedies?
Yes. The contracting authority can only set aside a faulty award decision or cancel other decisions made during the procurement process and decide on the re-awarding of a public contract.
The Market Court may, in addition to cancelling the decision wholly or partly:
- forbid the contracting authority from applying a section in a tender document or otherwise to pursue an incorrect procedure;
- require the contracting authority to rectify an incorrect procedure;
- order the contracting authority to pay a compensation payment;
- order ineffectiveness of the procurement contract;
- order an indemnity payment to the state; or
- shorten the term of the procurement contract.
Timeframe and admissibility requirements
How long do administrative or judicial proceedings for the review of procurement decisions generally take?
There are no exact statutory time limits. Judicial proceedings in the Market Court last on average 7½ months (in 2018), while in the Supreme Administrative Court they last, on average, 15 months (in 2017).
The procurement entity has 90 days from the date of the decision to take the initiative to implement corrections. A correction procedure by the procurement entity usually lasts at least a few weeks.
What are the admissibility requirements?
A condition for the correction request to be accepted is that there has been an error in the application of law in the procurement procedure or if new information on the matter has emerged that may have an effect on the decision or prerequisites for concluding the procurement contract.
A concerned party, typically a bidder or a potential bidder, may submit an appeal to the Market Court. The appeal can be made against a decision made by the contracting authority or another measure taken by the contracting authority affecting the petitioner’s position and the outcome of the procurement procedure.
Preparatory actions made by a procurement entity as well as decisions and actions made by it with regard to the division of procurement contracts into lots and using only price or costs as the basis for the most economically advantageous tender cannot, however, be brought to the Market Court.
See also question 33 on the competence of the FCCA.
If the appeal concerns a decision within an existing framework agreement or acceptance to a dynamic procurement system, a review of the appeal to the Market Court is only possible if the court grants a permission to appeal. Such permission is also needed for appeal on procurement decisions within the fields of defence and security made under article 346(1)(b) TFEU.
What are the time limits in which applications for review of a procurement decision must be made?
A party to the procurement procedure may demand that the contracting authority correct the procurement decision. The correction procedure needs to be initiated no later than 14 days from the date on which the tenderer was informed of the procurement decision. The contracting authority may initiate the correction procedure no later than 90 days from the making of the decision. This allows the contracting authority to correct errors even if the matter has been brought before the Market Court. The correction procedure is not possible after the procurement contract has been concluded. Delivering the correction request to the procurement entity does not prevent the party from referring the decision to the Market Court.
An appeal by the party to the procurement procedure needs to be submitted in writing to the Market Court no later than 14 days from the date on which the tenderer was informed of the procurement decision. Where a contract notice for direct award or contract notice of a change of procurement contract has been published, an appeal needs to be submitted in writing to the Market Court no later than 14 days from the date such notice was published. The fact that the contracting authority and the successful tenderer have signed the procurement contract does not prevent an appeal that has been made within the deadline from being considered.
Extended deadlines apply if the appeal instructions provided to the unsuccessful bidder or the procurement decision have been essentially deficient, or the contracting authority has not followed the mandatory standstill period, or if a contract notice has not been published with regard to a direct award. (See question 45.)
Provided no appeal has been submitted by a party concerned and no notification of a direct award has been made, the FCCA may propose to the Market Court that the Market Court imposes sanctions, such as penalty payments, shortening of the contract, or the annulment of a procurement decision (see question 33). The FCCA may submit the matter to the Market Court within six months from the date of the procurement contract.
An appeal against the Market Court’s decision to the Supreme Administrative Court must be filed no later than 30 days from the date of which the tenderer was informed of the decision and review of the appeal is subject to the Supreme Market Court granting permission to appeal, except if an indemnity payment to the state has been ordered in which case no permit is needed.
Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure or the conclusion of the contract?
Submitting a correction request to the procurement entity does not have an automatic suspensive effect.
If the value of a contract exceeds the EU thresholds or, with regard to health and social and certain other services contracts and concessions, the national threshold, an appeal to the Market Court has an automatic suspensive effect blocking the conclusion of the contract. The Market Court may, upon request, allow the continuation of the procurement procedure or conclusion of the contract. In other cases, the suspension on conclusion of the contract is not automatic, but a concerned party may claim suspension from the Market Court.
An appeal on the Market Court’s decision to the Supreme Administrative Court does not have an automatic suspensive effect.
Approximately what percentage of applications for the lifting of an automatic suspension are successful in a typical year?
There are no statistics available in Finland with regard to applications for the lifting of an automatic suspension.
Notification of unsuccessful bidders
Must unsuccessful bidders be notified before the contract with the successful bidder is concluded and, if so, when?
The contracting authority must inform all the participants to the procurement process on the procurement decision.
If the contract exceeds EU thresholds or - with regard to health and social and certain other service contracts and concessions - the national threshold, the contract with the successful bidder can be concluded only after 14 days from the day that the participants have been informed of the procurement decision (mandatory standstill period). With regard to the period when a petition has been filed in the Market Court, see question 38. However, other than provided above, in the event that the value of the contract falls below the EU thresholds and with regard to direct awards, there is no mandatory standstill period and the contract can be concluded immediately after the decision. However, the procurement entity may publish a contract notice with regard to a direct award of a contract exceeding the EU threshold as well as exceeding the national threshold. In such cases, the contract with the successful bidder can be concluded only after 14 days from the publishing of the notice.
If the procurement has been carried out by using the dynamic purchase system or on the basis of a framework arrangement and the value of the contract exceeds the EU thresholds or, with regard to health and social and certain other service contracts and concessions, the national threshold, the above-mentioned standstill period is 10 days. There is no standstill period for individual subcontracts that are made under an existing framework arrangement or within the dynamic purchase system or if there is only one bidder left.
Access to procurement file
Is access to the procurement file granted to an applicant?
The publicity of the procurement documents is normally governed by the Act on the Openness of Government Activities. A participant to the procurement procedure (party concerned) has the right of access to the documents submitted to the contracting authority as soon as the decision on the award of contract has been made. Access is not granted to the business and trade secrets of other bidders, except for the comparison price.
The public, including enterprises that have not taken part in the competitive bidding, but wish to obtain information, have a right of access to the public information and documents submitted to the contracting authority (not to business and trade secrets) as soon as the contract has been concluded. However, if the contracting authority is not considered to be an authority defined in the said Act, the procurement documents will not be eligible for public access.
Is it customary for disadvantaged bidders to file review applications?
Considering the aggregate amount of public contracts made annually, only a small number end up in review and appeal proceedings. However, there are significant differences between different business sectors. Between 2011 and 2014, approximately 15,000 contract notices were issued annually. In 2018, 413 public procurement cases were submitted to the Market Court (compared with 484 in 2017, 426 in 2016 and 542 in 2015).
Violations of procurement law
If a violation of procurement law is established in review proceedings, can disadvantaged bidders claim damages?
Yes. If an appeal is filed in the Market Court after a contract has been signed and a violation of procurement law is established, the Market Court may order the contracting authority to pay compensation to a party who would have had an actual chance of winning the contract if the procedure had been correct. The amount of the compensation payment may not exceed 10 per cent of the total value of the contract, unless there is a particular reason for exceeding this amount.
In addition, a claim for compensation for damages can be brought before a district court if an infringement of public procurement regulations has caused damage to the applicant. If the request concerns only compensation for the costs incurred in the competitive bidding, the applicant must show that it would have had a genuine possibility of winning, in addition to infringement of regulations. In addition, if other compensation for damages is required, the applicant must prove that if the regulations had been complied with, it would have been awarded the contract.
May a concluded contract be cancelled or terminated following a review application of an unsuccessful bidder if the procurement procedure that led to its conclusion violated procurement law?
The Market Court may order the contract to be ineffective in the case of an illegal direct award of a contract of which no notice has been published or, provided that the contracting authority has made another error affecting the chances of an applicant being awarded the contract, in the event that the contracting authority has concluded the contract without applying the mandatory standstill period or has concluded the contract during proceedings in the Market Court even if it should not have pursuant to law (see question 38). Only the contractual obligations that have not yet been fulfilled can be ordered to be ineffective. This remedy is available only in procurements exceeding EU thresholds or, with regard to health and social and certain other service contracts and concessions, the national threshold. If there are imperative reasons relating to public interest, the Market Court may decide not to order ineffectiveness of the contract. The Market Court may also shorten the duration of the contract. However, for procurements made under article 346(1)(b) TFEU, the only remedies are compensation payments.
Is legal protection available to parties interested in the contract in case of an award without any procurement procedure?
Yes. If the value of the contract exceeds the EU threshold or, with regard to health and social and certain other service contracts and concessions, the national threshold, the Market Court can order the contract to be ineffective in the case of an illegal direct award of a contract and when the contracting authority has not published a contract notice informing of the direct award of the contract before the conclusion of the contract. The petition needs to be submitted to the Market Court no later than six months from the conclusion of the contract. However, if the contracting authority has voluntarily published such a contract notice before the conclusion of the contract, the petition must be submitted no later than 14 days from the publication of the notice. If the contracting authority has only published a notice after the conclusion of the contract, the petition needs to be submitted no later than 30 days from the publication of the notice.
Further, provided no appeal has been submitted by a party concerned to the Market Court and no notification of a direct award has been made, the FCCA may propose to the Market Court that the Market Court imposes sanctions, such as ineffectiveness, penalty payments, shortening of the duration of the contract, or the cancellation of a procurement decision. The FCCA may submit the matter to the Market Court within six months from the date of the procurement contract.
What are the typical costs of making an application for the review of a procurement decision?
The correction procedure does not incur any processing fees to the applicant (unsuccessful bidder).
The party initiating the review process in the Market Court is liable for the processing fees of the Market Court. The fee is €2,050. However, in cases where the value of the procurement contract exceeds €1 million, the fee is €4,100 and if the value exceeds €10 million, the fee is €6,140. Natural persons are liable to pay a processing fee of €510, which applies also if the matter is not handled by the Market Court, for example if the application is withdrawn.
The same fees are applicable as to any appeal on the Market Court’s decision to the Supreme Administrative Court.