According to a decision by the Finnish Competition and Consumer Authority (FCCA) on 25 January 2018, the municipality of Liperi did not follow the Act on Public Contracts in the acquisition of temporary school centre premises when it failed to publish the contract notice required by law. The renting of temporary barracks does not fulfil the conditions for deviations concerning the purchase of immovable property specified in the Act on Public Contracts. Neither were the conditions in Liperi such as to enable direct award due to urgency.
The municipality of Liperi rented in late summer 2017 barracks elements from Cramo Finland Oy to provide temporary premises for Liperi school centre. The contracting authority did not publish the contract notice in the HILMA system. Instead, it had approached relevant companies by email to deliver temporary premises in order to have them ready by the time schools started in the autumn of 2017. The need for temporary premises was caused by symptoms attributed to poor indoor air, the reasons for which had been investigated by means of condition surveys and indoor air measurements.
According to the municipality of Liperi, the contract for temporary premises was not subjected to public tenders, because it was considered to be premises rental, which is not covered by the Act on Public Contracts. The FCCA decision stated that the contract for the delivery and renting of temporary premises is not a contract for immovable property or the acquisition of rights concerning immovable property listed as an exception that is not covered by the Act on Public Contracts. Furthermore, on the basis of investigations by the FCCA, the conditions in Liperi did not fulfil the requirements stated in the Act on Public Contracts for direct award in cases of extreme urgency.
The FCCA admonished the municipality of Liperi for failing to follow the Act on Public Contracts. The FCCA considered the matter from a wide perspective and took into account that the contracting authority had indeed requested tenders from more than one provider of temporary premises. However, except is cases listed in the Act on Public Contracts, the law requires contracting authorities to open tendering by publishing a contract notice.
The FCCA points out that direct award is an exception to the requirement of an open tendering process, and the circumstances in which direct award is allowed are listed exhaustively in the Act on Public Contracts. Direct award must be specifically based on the grounds stated in the Act on Public Contracts, and the contracting authority must be able to provide grounds for making such a decision.
Further information: Research Officer Johanna Kirveskoski, tel. +358 29 505 3710, email email@example.com.
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.