As per two separate proposals made by the Finnish Competition and Consumer Authority (FCCA), the Market Court has imposed a total penalty payment of EUR 50,000 on the Helsinki and Uusimaa Hospital District (HUS) regarding the direct procurement of waste disposal bags and tissue paper products in violation of the Act on Public Contracts and Concession Contracts. The Market Court is yet to settle two further FCCA proposals on penalties relating to the HUS’s procurements.
In November 2019, the FCCA submitted four proposals to the Market Court to impose penalties for direct procurements in breach of the Act on Public Procurement and Concession Contracts. The proposals made by the FCCA concerned purchases of DNA analyses, vacuum-assisted wound treatment equipment and supplies, waste disposal bags, and tissue paper products. Penalty payments totalling EUR 160,000 were proposed.
The Market Court gave its decisions on the first two FCCA proposals on the 20th and 21st of August 2020. Both penalties were in line with the FCCA’s proposals. The Market Court imposed penalties of EUR 25,000 in both counts, respectively. The Court’s decisions are not yet legally valid.
A combined total of EUR 110,000 in penalty payments were proposed by the FCCA in relation to the procurement of DNA analyses and vacuum-assisted wound treatment equipment and supplies. Rulings remain to be issued on these proposals.
The annual value of waste bag and tissue paper procurements exceeds one million euros
The procurement of waste disposal bags and tissue paper products were put out to tender during the period of 2013-2014. The contract periods based on the competitive tendering ended in 2018. After this, purchasing from suppliers was continued without a tendering process that complied with the Act on Public Procurement and Concession Contracts. According to the information received, some suppliers agreed to extend the contract period by e-mail and the ordering of products from certain suppliers was simply continued as before. In both product categories, the annual value of illegal direct procurements exceeded EUR 500,000.
The Market Court found the HUS’s conduct to be a substantial modification in the terms of the tendered contract. According to the Market Court, the contractual changes were substantial, as the value of non-competitive purchases in both product groups exceeded the appropriate EU thresholds.
“By carrying out direct procurements that are in violation of the law, procurement units fail to maximise the benefits that can be achieved through competition. It is in all our interests that procurement procedures are carried out efficiently using public funds," says Max Jansson, Head of Research on Procurement Supervision.
FCCA proposes 160,000-euro penalty payment to HUS for illegal direct procurements, FCCA press release 18/11/2019
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.