FCCA draws the attention of the Finnish Environment Institute to compliance with the Act on Public Contracts

On 27 March 2018, the Finnish Competition and Consumer Authority (FCCA) concluded that the Finnish Environment Institute (SYKE) had not complied with the Act on Public Contracts when tendering out the renovation of the marine research vessel, the Aranda. During the finalisation of the contract, changes deviating from the tender documentation were made to the scope and terms and conditions of the procurement. The FCCA drew SYKE’s attention to the legal guidelines for amending procurement contracts and compliance with the principles of the Act on Public Contracts during the procurement procedure.

On 2 November 2016, the Finnish Environment Institute made an EU procurement notice for the renovation of a marine research vessel, the Aranda, through an open procedure via the HILMA notification channel. SYKE made a procurement decision on 19 January 2017 and the contract was signed on 8 May 2017. After the award of the procurement contract, during the contract finalisation phase, changes were made to the subject and terms and conditions of the contract that deviated from the tender documents. The scope of the procurement was reduced by EUR 1,000,000, which is equivalent to 6.8% of the total value of the contract. In addition, the terms and conditions of liability for damages were made much less stringent.

According to an FCCA assessment, the possibility cannot be ruled out that the reduction in the scope of the procurement might have attracted other tenderers to the tendering process. In addition, the more stringent liability for damages presented in the tender documents may have affected the willingness of potential tenderers to participate, or had an impact on the prices they quoted. The FCCA was of the view that substantial modifications without legal grounds had been made to the contract. Since the procurement had not been re-tendered, the contracting authority had, in fact, made an illegal direct award.

The FCCA considered it necessary to draw the attention of the contracting authority to the legal provisions governing the modification of procurement contracts, particularly Section 136 of the Act on Public Contracts, and the principles set out in Section 3 of the same act.

The FCCA points out that the subject of a procurement contract and the terms and conditions of the procurement procedure should be clearly, accurately and unambiguously set out in the procurement notice or tender documents. Amendments and clarifications made to the contract during the finalisation stage must not be of a fundamental nature, nor may they jeopardise the neutral and equal status of candidates and tenderers.

Further information: 

  • Research Officer Elisa Aalto, tel. +358 (0)29 505 3683, email firstname.lastname@kkv.fi

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.

The FCCA’s supervisory powers apply to procurement initiated after the Act on Public Contracts entered into force, that is, 1 January 2017.