On 18 November 2019, the Finnish Competition and Consumer Authority (FCCA) submitted four proposals to the Market Court on the imposition of penalty payments against the Hospital District of Helsinki and Uusimaa (HUS) for its violation of the Act on Public Procurement and Concession Contracts. According to the investigations conducted by the FCCA, HUS has paid millions of euros for goods and services without putting them out to tender. The total amount of the penalty payments proposed by the FCCA is 160,000 euros.
The FCCA began investigating the procurements on its own initiative in May 2019. The direct procurements that are subject to the penalty payments proposed by the FCCA concern negative-pressure wound therapy, tissue paper and garbage bag products as well as DNA analysis services. The annual value of the purchase of these products and services amounts to millions of euros.
According to the investigations, HUS has ordered its DNA analysis services and negative-pressure wound therapy products directly from their suppliers, and these goods and services were never put out to tender. HUS did put its tissue paper and garbage bag product contracts out to tender in 2013 and 2014, but after the contract periods ended, HUS has primarily purchased these products directly from the suppliers that were selected in the previous tendering rounds, even though these contracts should have been put out to tender again.
In several cases, HUS signed off on the orders by email without ever drafting and signing any official procurement contracts.
“It is evident that HUS’ contract management and procurement organisation processes contained systemic deficiencies. Contract management in public procurements is absolutely vital, as it allows procurement units to, say, monitor when any tendered contracts are about to expire,” explains Head of Research Max Jansson from the Procurement Supervision Unit.
The purpose of the Act on Public Procurement and Concession Contracts is to increase the efficiency of how public funds are used. By carrying direct procurements that are in violation of the Act, a procurement unit will fail to maximise the benefits that can be achieved through corporate competition. Direct procurements do not guarantee that a procurement unit will receive the best quality or procurement price. It is in everyone’s interests to have all procurement procedures be carried out in a manner that is open, non-discriminatory and that utilises public funds in the most efficient way possible.
FCCA proposal to the Market Court (DNA analysis services) (in Finnish)
FCCA proposal to the Market Court (negative-pressure wound therapy products) (in Finnish)
FCCA proposal to the Market Court (tissue paper products) (in Finnish)
FCCA proposal to the Market Court (garbage bag products) (in Finnish)
Head of Research Max Jansson, tel. +358 29 505 3688
Under section 139 of the Act on Public Procurement and Concession Contracts (1397/2016), the Finnish Competition and Consumer Authority is tasked with supervising compliance with the legislation on public procurements. For a detected violation, the FCCA can issue an admonition to the contracting entity or provide the contracting entity with other form of administrative guidance referred to in section 53c of the Administrative Procedure Act (434/2003). With regard to illegal direct awards, the FCCA can, by virtue of section 140 of the Act on Public Procurement and Concession Contracts, prohibit the implementation of the procurement decision. In the case of direct awards exceeding the EU threshold values, the FCCA can also submit a proposal to the Market Court to impose sanctions such as a penalty fine, shortening of the contract period or quashing of the procurement decision. The same provisions apply also to service procurements and concession contracts referred to in schedule E to the Act on Public Procurement and Concession Contracts, which exceed the national threshold values and have been concluded as direct awards without justification provided by law. However, a proposal to the Market Court cannot be made if the contracting entity has submitted a direct procurement notice of the procurement as referred to in section 131 of the Act on Public Procurement and Concession Contracts.