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International Transactions
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BERGMANN
Attorneys at Law
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Public Procurement Procedures in Finland – Some Basic Rules for Your Success |
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In recent years, foreign enterprises have participated in tenders for public procurement in Finland with increasing success. The new Public Procurement Act, scheduled to enter into force in summer 2007, will further improve the possibilities for participation in public tenders across borders. However, in order for a foreign enterprise to succeed in Finnish award procedures, the tender must be carefully prepared with the special features of the Finnish market firmly in mind.
Under the new Public Procurement Act, the information notice for the award of public contracts has to be published in the national HILMA database (rocedure has to be announced in the EU Official Journal S series if its estimated value exceeds the applicable EU thresholds (for example €5,278,000 for construction contracts). Potential suppliers can consult the TED database (
Naturally, whether your tender will be successful in the award procedure will primarily depend on the quality of your offer and the competitiveness of your price. However, at the same time you should ensure that the legal and cultural particularities of procurement in Finland are not a hindrance to success. In the following sections we touch on some issues that are essential for delivering a tender that is on target.
Successful participation in public procurement procedures requires that your tender corresponds in every particular to the requirements defined in the invitation to tender. No specifications required by the invitation may be left open. Even if your tender is otherwise highly competitive, it will be disqualified if it lacks, for example, a technical description or a list of unit prices.
Finnish public procurement law does allow the submission of alternative bids to a certain extent. In practice, however, such offers are often doomed to failure. In recent years, contract award decisions have increasingly become subject to court appeal, and many of these appeals have been successful. Awarding authorities are therefore hesitant nowadays to enter grey areas in their award decisions and thereby to create the risk of having the decision overturned by a court. Of course, it is also in the interest of the bidder to avoid such risk.
The invitation to tender usually contains more or less concrete statements concerning the contract terms to be applied in the awarded contract. A possible negotiation phase may be used for establishing more precise terms. It is obvious that many of these contract terms will have a direct effect on your costing. Since Finnish law will usually be applicable to the awarded contract, you should ensure that you have all the information necessary to understand the effects of the contract terms involved.
In Finland, the use of standardised contract terms is prevalent in many industries, and invitations to tender usually refer to such terms. Such terms are often substantially different from each other in their material content. For example, the KSE terms for planning and consulting stipulate that total liability of the provider may not exceed the total contract price while, on the other hand, the YSE terms for construction contracts provide for unlimited liability even for consequential damages.
Finnish law contains provisions with direct price relevance in many other areas as well. We would like to mention a few examples here:
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Labour law: For almost all relevant industries in Finland, there are collective agreements in place that have been declared to be generally binding. You must apply the minimum standards defined in these agreements, including wages, to your employees, regardless of whether they are posted from within the EU or not. •
Effect of climate conditions: Extreme cold is accepted as an obstacle to outdoor work even in Finland. However, the law expects the supplier to cope with considerable cold without work being interrupted. The higher the latitude of the site, the lower the temperatures that the supplier is required to be prepared for. This certainly has consequences with respect to the cost involved in putting in place the measures necessary to make work possible. •
Public permissions and supervision: Public authorities exert intensive supervision of many technical matters in Finland. The core areas of supervision are working security, product safety, and radiation safety. It may take considerable time to work through the necessary licensing procedures, thus impacting upon your delivery schedule. The relevant industry codes and standards are now largely unified in Europe. In many industries, however, industrial associations set additional standards. These are in the nature of recommendations and thus do not, in formal terms, have direct legal effect. Nonetheless, the necessity of following such recommendations is generally regarded as self-evident in Finland. Where certain parts of your technical solution are of decisive importance for your costing, you should acquaint yourself with the applicable standards.
If you want to submit a competitive tender, you should have a clear picture of the mechanisms that are used under Finnish law in order to determine price adjustments for increases or deceases in quantities.
In industrial construction projects, Finnish law does not usually expect the supplier to reveal its cost calculations in order to be able to demand price increases. Such increases are determined relative to the actual additional cost. In addition, the practice of Finnish courts often enables suppliers to demand additional payment in cases where quantity estimates are mentioned in the invitation to tender, if such estimations turn out to be insufficient – even if the supplier had been given all the information necessary to perform a correct price calculation.
These and other issues have the effect that Finnish enterprises sometimes make surprisingly good offers, in reliance on the possibility to make price adjustments later on if necessary. For the foreign enterprise to avoid disadvantages, it is necessary to be aware of which data in the invitation to tender may be relied upon in the process of costing.
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