We have been through a miserable economic cycle in recent years. For companies, this means that it has not been possible to collect references in the same way as before. In public projects, being left out of contract competitions due to a lack of references is nerve-wracking and makes us reflect on the purpose of the Procurement Act.
In calls to our legal advice, problems have been described, among other things, as follows:
"We have completed several large and demanding building projects. Now we cannot participate in the tender for a small daycare center because we have not done one for several years and it is required."
"Our municipality has an open call for tenders for a technically fairly standard project. However, the reference requirement has been set in such a way that, as far as we know, such projects have not been carried out in neighboring counties for years."
"Our company has a reference from a technically similar project, but for the private sector. According to the reference requirement, only projects completed for a public procurement entity will be considered."
"We have the required reference. However, the item was received five and a half years ago. According to the request for tender, the reference expired six months ago."
The question is, does the Procurement Act allow such restrictions?
Overly strict, unclear or discriminatory requirements can lead to a restriction of competition and therefore, according to the Procurement Act, the procurement decision may be annulled. The client should always consider what is essential and justified in terms of the procurement. The purpose of references should never be to limit the number of offers. This is certainly not an easy task for the client either.
In recent years, market law has provided solutions on the subject such as the following:
MAO:620/2023 – Disproportionate reference requirement for a lighting project
In the renovation of street lighting, it was required that the bidder have a previous contract for the delivery and installation of at least 50 LED smart luminaires with controllers combined with a remote management system. The Market Court found that the requirement was disproportionate to the size of the procurement and restricted competition. Competence could have been demonstrated in other ways. As a result, the procurement decision was overturned.
MAO:256/2018 – Discriminatory reference requirement in school transport
The school transport service required a transport contract that had been in force for at least 12 months and included at least 100 hours of passenger transport in the last three years as a reference. The Market Court found that the requirement was discriminatory and disproportionate, as there was no realistic possibility of gaining the required experience in the area. The procurement decision was annulled.
What if there are references from more than five years ago?
The general perception in the construction industry is that references could only be taken into account for a period of five years. However, according to Annex D of the Procurement Act, references can be allowed for a longer period if it is necessary to ensure competition. My own interpretation is that now, if ever, is the situation and clients can take into account references that are more than five years old.
The text has been published in the Näkökulma column of Rakennuslehti.
Kirsi Palviainen
TRT CEO, RT Deputy CEO
kirsi.palviainen@rt.fi + 358 50 548 1678Building Construction Industry Association
It's good that this is being brought up. I have worked in the civil engineering sector since the early 1980s. (Ins 1982). At the time, there was a sentence in the corresponding law. "references older than 5 years may not be required". The idea is probably not to discriminate against new entrepreneurs. Now this has been turned on its head, when long-term and diverse experience is not accepted. For example, in hydraulic engineering, jobs containing certain details are very rare. Examples from 40 years: Submersible well - three times and in each case the main contractor was the first time. "Installation of a district heating pipe in a water system" - 2 times. "Replacement of the turbulence planking of the support beam of a hydropower plant" - 1 time. I only know of one person who has ever done something similar. Many jobs have been lost here because of this 5-year requirement, the number of completed construction sites in my career is about 800 hydraulic engineering projects. One reason is the current competitive bidding process with low-priced contracts.
In the extreme, the demands can lead to discrimination and corruption.