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Legal alerts / 12 Jul 2016

Legal Alert – Government Proposal for New Finnish Legislation on Public Procurement – Are You Prepared?

The Government proposal on the implementation of EU Procurement Directives was released on 22 June 2016. Although the proposal is largely based directly on the EU Procurement Directives it has certain interesting national features and amendments to the Finnish legislation on public procurement, for example, in terms of threshold values, public contracts, supervision and publicity. We discuss the most important features in the following.

National Thresholds

The national thresholds stipulate the scope of application of the Finnish public procurement legislation. Under the proposal, the national threshold value for the procurement of goods and services will be raised from the current EUR 30,000 to EUR 60,000 and the national threshold for the procurement of health, social, and other specific services from EUR 100,000 to EUR 400,000. The national threshold value for public works contract will remain at the current level of EUR 150,000.

Activities of In-House Unit

The Finnish and EU procurement legislation is not applied to public contracts which contracting authorities award to their independent in-house units. One of the requirements set on the in-house units is the activity requirement under which an in-house unit must carry out the essential part of its activities with its controlling authorities.

The EU Procurement Directives require that over 80% of the activities of the in-house unit be carried out in the performance of tasks entrusted to it by the controlling contracting authority. The current Finnish Act on Public Contracts stipulates only that an in-house unit carries out the essential part of its activities with its controlling authorities, but under the Finnish case-law the requirement is approximately 90% of the activities of the in-house unit.

The proposed activity requirement is stricter than the provisions set out in the EU Procurement Directives. The Government proposes that in-house units may carry out less than 5% and less than EUR 500,000 of its activities with other than its controlling contracting authorities or their controlled entities.

Provisions on Amendments to Public Contracts

Under this proposal, the scope of application of the Finnish public procurement legislation will be extended to public contracts. Currently the public procurement legislation covers only the contract award procedure and does not include any provisions on the contractual relationship between a contracting authority and a supplier.

The proposed act on public contracts provides for the different types of amendments that can be made to public contracts and determines which of these are treated as essential and forbidden amendments.

Supervision

The Government proposes that the Finnish Competition and Consumer Authority (FCCA) be given new supervisory tasks in the field of public procurement law. Under the proposal, the FCCA may investigate, from its own initiative or upon request, any infringement of public procurement legislation. A request to investigate may be filed by anyone who has noticed a possible infringement of public procurement law. A request to investigate will be made as provided in Chapter 8 a of the Finnish Administrative Procedure Act.

In addition, the FCCA would have the right to prohibit the implementation of a direct award when the direct award is made without a basis in law. The FCCA may also propose to the Market Court that the court would impose an ineffectiveness sanction on the contracting authority, order the contracting authority to pay the state an infringement fine, reduce the contract term, and/or cancel a decision by the contracting authority.

Publicity of Public Procurement Documents

In Finland, the main principle of public access is provided in Section 11(6) of the Act on the Openness of Government Activities has been challenging to interpret in practice. Therefore the Government proposes to simplify it to only stipulate that a party shall not have the right to access information relating to a business or professional secret of another tenderer or candidate. This amendment is very important since there has been plenty of discussion on whether the old provision grants a right also to information containing business or professional secrets of another tenderer or candidate if the information is used for comparing the tenders.

What happens next?

The Finnish Parliament will next handle the proposal. The objective of the Ministry of Employment and the Economy is that the new public procurement legislation will enter into force as soon as possible since the due date for implementing the EU Procurement Directives has already passed this spring.

Before the proposed legislation enters into force, the contracting authorities and potential tenderers are recommended to take the proposal into account when planning procurement or tendering of goods, services or works.

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