The legislation on public procurement procedures, which had been refined for a long time, came into force quickly after the final spurt. The revised legislation applies to acquisitions announced after the turn of the year.
Text: Risto Pesonen Picture: RT's image bank
DEVELOPMENT OF PROCUREMENT LAW Hannes Snellman Oy's lawyer followed closely Mika Pohjonen emphasizes that the law on public procurement is now completely new.
The municipality's procurement unit can now decide on its tendering procedure itself, as long as it discloses the principles it applies in the tender in advance.
"Compared to before, the law enables significantly more flexibility and new procedures. I saw this especially in contracts whose value falls below the EU threshold for the construction sector, EUR 5", Pohjonen estimates.
"In procurement, for example, a negotiation procedure is always available. Not all subscribers have yet had time to consider these possibilities".
Restrictions come into effect in 2019
The competitive situation is significantly changed by the operating restrictions of public sector production companies in the free market.
Affiliated units of municipalities can take a maximum of a five percent slice of their turnover from the free competition market, but no more than 500 euros.
The restriction will enter into force at the beginning of 2019. Until then, the limit is 10 percent of turnover.
Waste management has its own transition period; this year the limit is 15 percent, next year 10 percent and from the beginning of 2019 5 percent. A different schedule is related to the waste legislation that is being renewed.
In the new Procurement Act, the conditions for the operation of the municipality's affiliated unit were outlined differently than in the EU directives. Katariina Huikko, the leading lawyer of the municipal association, estimates that this will lead to a significant restriction on the sale of the affiliated unit to non-owners.
"This, in turn, can lead to the fact that in some areas in Finland, companies, municipalities, parishes, foundations or organizations may be left without services," says Huikko.
"When discussing related entities, it is also forgotten that the state and other procurement entities also have related entities. The effects of the restriction therefore do not extend only to the municipal sector."
Threshold values higher
The threshold values for national procurement of goods and services increased. Purchases with a value of less than 60 euros remain outside the scope of the law. Previously, their threshold was 000 euros. The national threshold for construction contracts remained at the current 30 euros.
With the increase in the threshold values, the number of small procurements falling outside procurement regulation will increase.
"For suppliers, the situation is improved by the fact that before starting the procurement procedure, the procurement unit can conduct a market survey and provide suppliers with information about their plans and requirements for future procurement. The recommendation passed into law aims to improve the quality of the preparation", representative of Talonrakennusteollisuus ry Juha Terho says.
INFRA ry considers the tightening restrictions to be good and the proposed changes to the law successful. For example, municipal waste plants have had a monopoly on the processing of waste generated in the housing of their owner municipalities.
"The Procurement Act enables private companies to operate more widely, for example in a field where municipal companies have long distorted competition. The opportunities for small and medium-sized local companies in particular to get involved in waste management are improving. Companies are waiting for the changes in the Procurement Act with a positive attitude", CEO of INFRA ry Paavo Syrjö says.
Official supervision alert
Supervision of the municipalities' affiliate unit operations, like the municipality's other operations, is normal owner and group control.
Compliance with the Procurement Act is supervised by the Finnish Competition and Consumer Authority KKV. The agency focuses especially on monitoring illegal direct procurement. Anyone can make a request for action to the agency about a procurement unit that has proceeded illegally. The agency can also investigate and investigate cases on its own initiative.
"It's good that the contacts are starting to come. The central goal of the agency is already in the beginning to find out in which direction and in what form problems may appear in the future. These contacts and our own investigations help us to prepare and later to direct self-initiated supervision where it is necessary", the general manager of the area of competition responsibility Timo Mattila evaluate.
Operating limitations of affiliated units are calculated as a three-year average, which is monitored. The affiliated unit itself must supervise staying within the given limits.
"The applicant does not have to be a participant in the tender or even an entrepreneur working in the field. Under the law, KKV is able to find out where the turnover of a related entity comes from, and which part of it is made to the owners and which to the free market," reminds Mika Pohjonen from Hannes Snellman Oy.
Counseling available
The Association of Municipalities instructs its members about the law change with a general letter and training.
"We prepared a recommendation for municipalities on the tendering of national, social security and small procurements, as well as appeals instruction models. The joint Public Procurement Advisory Unit of the Municipal Corporation and TEM advises procurement units in accordance with the Procurement Act on compliance with the new law," says Municipal Corporation's Huikko.
The advisory unit maintains websites www.hankinnat.fi, the content of which has been updated to comply with the new Procurement Act.
INFRA ry members can turn to INFRA's legal department for problems related to legal matters.
***** * ***** * *****
What does the municipality's affiliated unit mean? The affiliated unit is an independent unit that is formally separate from the municipality's procurement unit. Typically, the procurement unit or units are owners in relation to the related unit and exercise decision-making power in them and supervise their operations. The affiliated unit must offer services mainly to the procurement units under its control. An example of a related entity is a limited company owned by the municipality.