11.10.2018
According to a decision made by the Finnish Competition and Consumer Authority (FCCA) on 10 October 2018, the City of Akaa did not follow the Act on Public Contracts in the procurement of schools’ indoor air and condition surveys. The contracting authority justified direct procurement with lack of competition owing to a technical reason. However, the contracting partner chosen by the contracting authority was not the only service provider as per the Act on Public Contracts that was technically capable of implementing the required service.
The City of Akaa published a direct procurement notice on 20 June 2018 concerning the procurement of indoor air and building condition surveys of schools. The contracting party selected was Kiwa Inspecta (Inspecta Oy), and the procurement’s total value was reported to be 82,500 euros (VAT 0%). A technical reason was given as the justification for selecting direct procurement in accordance with the Act on Public Contracts. The contracting authority justified the technical reason among other things by the service provider’s impartiality, know-how and reliability. According to the contracting authority, there is no one else on the market that could carry out the procurement.
The FCCA’s view is that the justification provided by the contracting authority for the technical reason does not fulfil the application requirements of the Act on Public Contracts. The contracting authority could not demonstrate that they had discovered it was technically almost impossible for any other service provider to carry out the procurement in question. Neither did the contracting authority have the grounds as specified in the Act on Public Contracts for direct procurement owing to an urgent timetable. The FCCA admonished the City of Akaa, because the contracting authority applied the direct procurement grounds listed in the Act on Public Contracts in a way that was clearly incorrect.
The FCCA would like to remind that direct procurement is an exception to the obligation to call for tenders and that the circumstances justifying direct procurement have been exhaustively listed in the Act on Public Contracts. Direct procurement must be expressly based on the grounds listed in the Act on Public Contracts. Referring to a technical reason requires that the contracting authority assess the market situation carefully to prove that the alleged lack of competition is actual.
The Finnish Competition and Consumer Authority began to investigate the procurement in question on the basis of a request for action and tip-offs received. Requests for action and tip-offs are indeed important sources of input for the FCCA in the supervision of procurements. The FCCA is happy to receive tip-offs especially of suspected violations regarding direct procurement. Tip-offs can be emailed to hankintavalvonta@kkv.fi or anonymously using our tip-off link.
Further information: Research Officer Elisa Aalto, tel. +358 (0)29 505 3683, email firstname.lastname@kkv.fi.
Section 139 of the Act on Public Procurement and Concession Contracts (Act no. 1397 of 2016; “Act on Public Contracts”) mandates the Finnish Competition and Consumer Authority to supervise compliance with public contracts legislation. If it encounters illegalities, the FCCA may caution a contracting authority or provide other administrative guidance referred to in section 53 c of the Administrative Procedure Act (Act no. 434 of 2003). In case of illegal direct procurement, the FCCA may forbid the implementation of a procurement decision on the basis of section 140 of the Act on Public Contracts. If direct procurements exceed EU thresholds, the FCCA may also propose that the Market Court impose sanctions, such as penalty payments, shortening of the contract, or the annulment of a procurement decision. The same applies to service acquisitions exceeding national threshold levels referred to in Appendix E of the Act on Public Contracts, carried out as direct procurement without legal grounds. However, a motion cannot be put forward to the Market Court if the contracting authority has posted a direct procurement notice regarding the procurement as per section 131 of the Act on Public Contracts.
The FCCA’s supervisory powers apply to procurement initiated after the Act on Public Contracts entered into force, that is, 1 January 2017.