According to the decision of the Finnish Competition and Consumer Authority (FCCA) issued on 25 January 2018, the Länsi-Pohja Healthcare District did not act in compliance with the Act on Public Contracts when selecting contractors for the renovation of an outpatient clinic of internal medicine. The contracting authority had sent an invitation to tender to suppliers of its choice, without publishing a contract notice on the procurement in advance, for reasons of urgency of the procurement.
The Länsi Pohja Healthcare District selected a group of suppliers to whom it delivered an invitation to tender, dated 18 April 2017, on the structural work, and HVAC and electrical works needed for the renovation of the outpatient clinic of internal medicine at the Länsi Pohja Central Hospital. According to the statement provided to FCCA by the healthcare district, a contract notice had not been published on the procurement, since it had to be tendered urgently to ensure that the contracted work could be completed by the end of summer 2017. The decision-making process of the healthcare district board also affected the schedule. The statement also highlighted that the outpatient clinic of internal medicine had been waiting for renovation for many years.
Due to extreme urgency, tenders were requested from seven construction firms with sufficient resources and competence operating in the region. Tenders on HVAC and electrical works were requested from five companies. Since no contract notice in compliance with the Act on Public Contracts was published on the procurement, the procurement is regarded as direct award of contracts, even though the contracting authority sent the invitation to tender to several suppliers it deemed suitable.
In its decision, the FCCA estimated whether the healthcare district could have implemented the works as direct award on the grounds of extreme urgency. According to FCCA’s assessment, the facts related to scheduling highlighted by the contracting authority were not reasons independent of the contracting authorities as referred to in the Act on Public Contracts. The contracting authority had been aware of the need for renovation for a long time, so the grounds were not of extreme urgency nor were they brought about by events unforeseeable by the contracting authorities. Therefore, the contracting authority did not have the grounds for direct award of contracts pursuant to section 40, subsection 2(4) of the Act on Public Contracts. The value of the procurement exceeded the national thresholds for construction contracts and, therefore, the contracting authority would have been obliged to publish a contract notice on the procurement.
In its decision, the FCCA concluded that the Länsi Pohja Healthcare District did not comply with the Act on Public Contracts when selecting contractors for the renovation job, and issued an admonition to the contracting authority. The joint municipal authority of the healthcare district should have put up the selection of constructions firms for tender as required by the Act on Public Contracts.
Additional information: Senior Research Officer Emmi Silvo, tel. +358 (0)29 505 3878, 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 2017.29