Public Procurement in Finland

Attorneys at law MK-Law Ltd offers a wide range of legal services related to public procurement, including:

  • assisting contracting authorities in reviewing and drawing up contract notices, procurement contracts, sample contracts as well as other procurement documentation
  • assisting companies who are interested in bidding in procurement procedures, especially in Finland
  • assisting contracting authorities in reviewing offers and making procurement decisions
  • assisting in contract negotiations
  • assisting in review proceedings, i.e. Market Court appeals and applications to the contracting authority itself for rectification of the decision
  • assisting with other procurement related issues

Public Procurement in Finland

In general, all purchases of goods and services as well as construction projects made by the Finnish state, municipal authorities, joint municipal authorities, the Church, state enterprises and bodies governed by public law from external suppliers and contractors have to be procured in accordance with Finnish procurement legislation. Provisions on public procurement in Finland are mainly enacted in the Public Procurement Act (1397/2016) and the Act on Procurement Procedures of Entities Operating in the Water, Energy, Transport and Postal Services Sectors (1398/2016), which both are based on the European Community directives on public procurement.

The economic importance of public procurement in Finland is considerable: about 20 billion euros is spent annually on the procurement of goods, services and public works, which amounts to about 15 % of Finland’s GDP. Due to the fact that public money is spent when purchases are made by the public sector or companies wholly or partly owned and governed by municipal bodies or the government, all purchases must generally be made through a public and transparent tender process ensuring fair and non-discriminatory conditions of competition for suppliers. The tender process is strictly regulated and thorough planning and careful completion of the different procurement steps is essential for a successful execution of a tender process in Finland. Special emphasis must be put on the transparency and clarity of the tender and selection process, in order to avoid legal problems later. For example, an unclear contract notice or an error in the tender process may lead to failure of the entire procurement and termination of the tender process, to cancellation of the procurement decision by the Finnish Market Court or ultimately to the liability to pay compensation to unsuccessful bidders.

The Public Procurement Act is applicable to all purchases exceeding the so-called national threshold value. The threshold value refers to the estimated value, net of VAT, of the purchase. If the purchase exceeds the so-called EU-threshold, stricter procedure rules are applied to the procurement. The threshold values in Finland (as of 2017) are as follows:

National threshold values:

  • Public supply and service contracts, design contests and service concessions 60 000 €
  • Public works contracts (constructions) 150 000 €
  • Health care and social services (“Annex E paragraph 1-4 ”) 400 000 €
  • Other specific services (“Annex E paragraph 5-15 ”) 300 000 €
  • Concessions 500 000 €

EU-threshold values:

  • Public supply and service contracts and design contests 207 000 €
  • (purchases made by central government authorities) (134 000 €)

  • Public works contracts (construction) 5 186 000 €

Thresholds for the special sectors (Procurement Act for Special Sectors (1398/2016):

  • Public supply and service contracts and design contests 414 000 €
  • Health care and social services ("Annex C") 1 000 000 €
  • Public works contracts and concessions (construction) 5 186 000 €

All procurements exceeding the national and the EU-thresholds must be publicly advertised. The notice is published in the HILMA electronic notification system maintained by the Ministry of Employment and the Economy at: www.hankintailmoitukset.fi Procurement in excess of the EU threshold value is advertised in the entire European Union and notices are published in the Official Journal of the European Union and in the Tenders Electronic Daily (TED) database at: http://ted.europa.eu/TED/main/HomePage.do. In the HILMA system contracting authorities also publish other procurement related notices, such as prior information notices and contract award notices. Advertising the procurement of supply and service contracts as well as public works is mandatory and failure to comply with the requirement might even lead to the Finnish Market Court cancelling the procurement decision.

Public procurement provides companies with an excellent business opportunity; for example, the quantities of the public sector purchases can be significant and the public sector usually has a very good ability to pay bills on time. However, bidding (making a tender) in an open and transparent tender process differs from doing business in the private sector, for example because of the principle of finality of the offer. In other words, after the tender has been submitted there is, generally, no opportunity for altering the price or negotiating on other conditions with the contracting authority. The bidder (tenderer) therefore has to pay special attention to all the terms and conditions as well as the formal requirements specified in the contract notice, as a tender which does not comply with the requirements of the contract notice must generally always be excluded from the competition – even though the tender from a business perspective could be considered reasonable and inexpensive.