FCCA giving its first decision about the supervision of public procurement

As of 1 January 2017, the Finnish Competition and Consumer Authority (FCCA) has been supervising adherence to the Act on Public Contracts, especially illegal direct award. The Authority has drawn the attention of Central Ostrobothnia’s joint municipal authority dealing with social welfare and health care matters (Soite) with regard to the objectives and implementation of principles referred to in the Act on Public Contracts.

A contract notice for the tendering of Soite’s senior telemedicine physician services was published in HILMA, an electronic channel for public procurements, on 9 January 2017. According to a request for action sent to the FCCA, the comparison criteria in the call for bids in practice favours one service provider on the market, excluding other potential parties and service providers.

Based on its findings, the FCCA’s view is that owing to the weighting of the comparison criteria, probably only one provider has a realistic chance of winning. This is why there probably will be no competition, and one supplier can in practice set the price for its services as it wishes. The comparison criteria in the call for bids may lead to a situation in which competition enabled by the market situation is not in fact utilised in the tender process between the actors in the market.

In its decision dated 18 April 2017, the FCCA drew the procurement unit’s attention to the objectives (section 2) and principles (section 3) of the Act on Public Contracts. The purpose of the Act on Public Contracts is to optimise the use of public funds and to create genuine competition between market actors. Participants to a procurement process must be treated equally and without prejudice. Contracting authorities must also act openly, taking into account the demands of proportionality.

The FCCA’s view is that the contracting authority should have carried out the call for bids concerning senior telemedicine physician services and set comparison criteria in a way to enable a genuine competitive situation between various health care providers but without compromising service quality.

Further information: Senior Research Officer Keijo Ranta, tel. +358 (0)29 505 3365, 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. 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.