On 24 September 2020, the Finnish Competition and Consumer Authority (FCCA) submitted a proposal to the Market Court to impose a penalty payment of 40,000 euros on the federation of municipalities in social and health services in the region of Kymenlaakso (Kymsote) for unlawful direct procurement. According to investigations by the FCCA, in spring 2020 Kymsote continued the partial outsourcing of its Ophthalmology Ward as a direct procurement even though it should have arranged a competitive tendering process in accordance with the Act on Public Procurement and Concession Contracts.
Kymsote outsourced most of the specialist medical services in ophthalmology to Coronaria Silmäklinikka Oy through direct procurement from the beginning of April 2019 to the end of March 2020. The direct procurement valued at EUR 1.5 million exceeded the threshold laid down in the Act on Public Procurement and Concession Contracts. In principle, contracts exceeding this threshold must be tendered out pursuant to the Act on Public Procurement and Concession Contracts. Kymsote justified the direct procurement with extreme urgency as provided in the Act on Public Procurement and Concession Contracts, which was based on changes in human resources prior to the direct procurement and the need to ensure adequate patient safety.
As Kymsote had submitted a direct procurement notice for this previous procurement, the FCCA had no competence to impose sanctions in connection to it. Consequently, the FCCAdid not assess the legality of the previous procurement.
However, on 14 February 2020, the FCCA requested a report from Kymsote on how the services would be organised from the beginning of April 2020 when the fixed-term contract period would come to an end. According to Kymsote's report, the procurement had not been put out to tender nor were the services produced by Kymsote independently even though Kymsote had stated in its direct procurement notice and decisions that it would do so. Instead, on 28 February 2020, Kymsote adopted a decision on a new direct procurement for the period 1 April - 30 September 2020. The value of the procurement is EUR 720,000.
The FCCA has proposed to the Market Court that a penalty fee of 40,000 euros be imposed on Kymsote for continuing partial outsourcing of its Ophthalmology Ward as a direct procurement in violation of the Act on Public Procurement and Concession Contracts starting on 1 April 2020.
"Direct procurement agreements may only be concluded on the basis of extreme urgency in the scope and for the period that are absolutely necessary," says Senior Specialist Emmi Silvo.
The objective of the Act on Public Procurement and Concession Contracts is the efficient use of public funds.
"By carrying out direct procurements, companies will not be able to compete with price and quality," says Max Jansson, Head of Research on Procurement Supervision.
Head of Research Max Jansson, tel. +358 29 505 3688
Senior Specialist Emmi Silvo, tel. +358 29 505 3878
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.
Additional information on the supervision of public procurement.