On 12 September 2018, the Finnish Competition and Consumer Authority (FCCA) called on the Market Court to impose sanctions of EUR 25,000 against the Kainuu municipal federation for social welfare and health care services, for direct purchases, contrary to the Act on Public Contracts, exceeding the EU threshold value for competitive tendering.
On 24 January 2018, Kainuu's social welfare and health care services decided to acquire 3D imaging equipment for the Kainuu Central Hospital. Based on the procurement decision, the total value of the purchase is over EUR 340,000, which exceeds the EU threshold. No contract notice was published on the acquisition, because Kainuu's social welfare and health care services viewed the acquisition as part of a purchase by several health care districts in 2013.
However, the FCCA does not consider the acquisition by Kainuu's social welfare and health care services to be a procurement based on a framework agreement, or a joint procurement. Several companies were originally selected as equipment vendors, but no terms and conditions were set on how purchases from different vendors would be implemented. It was therefore left to the contracting authority to freely decide on the choice of supplier during the procurement period. In addition, the contracts tendered out by the joint procurement group had expired by the time the Kainuu social welfare and health care services made their procurement decision. According to the FCCA, the procurement by Kainuu's social welfare and health care services involved a direct award in violation of the Act on Public Contracts and the FCCA proposes that the Market Court impose a penalty fee of EUR 25,000 on them.
The FCCA decided to investigate the matter on its own initiative. Public healthcare services engage in large-scale expenditure on equipment and supplies. When procurement is carried out openly, in a non-discriminatory manner and making efficient use of public funds in compliance with the Act on Public Contracts, the result is higher quality, more alternatives and lower prices. The FCCA actively monitors procurements by social welfare and health care services and makes more detailed investigations of suspected infringements where necessary.
Niina Ruuskanen, Senior Research Officer, Tel. +358 29 505 3871
Maarit Taurula, Head of Research, tel +358 29 505 3381
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 award, the FCCA may forbid the implementation of a procurement decision on the basis of section 140 of the Act on Public Contracts. If direct awards 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 award without legal grounds. However, a motion cannot be put forward to the Market Court if the contracting authority has posted a direct award 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.