Experiences of procurement procedures in the EU funded development projects in Finnland

1. HUNGARIAN OFFICIAL PUBLIC PROCUREMENT ADVISORS’ ASSOCIATION (HOPPAA)PROCUREMENT CONFERENCE 2006”Procurement in theory and practice in the European Union and Hungary” Experiences of procurement procedures in the EU funded development projects in Finnland Ms Camilla Engman Legal Counsel Public Procurement Advisory Unit (Ministry of Trade and Commerce/The Association of Finnish Local and Regional Authorities)

2. The Finnish legislation on Public Procurement • The Public Procurement Act (1505/1992) • Decree on public supply contracts concerning the procurement of goods and services, and on works contracts exceeding given threshold values (380/1998) (hereafter Procurement Decree 380/1998) • (Decree on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors 381/1998) • (Some special provisions)

3. The Finnish legislation on public procurement • has been drawn out to be consistent with the EU directives on public procurement • applies to all public procurement regardless of the value – also to contracts with a value below the threshold and to so called secondary services  flexible regulations for contracts that fall outside the scope of the directives • applies to State authorities, municipal authorities and to some legal persons governed public law,all contracts concluded by any entity for which the state, municipalities or some other contracting entities have granted aid that covers more than 50 per cent of the value of the contract

4. New legislation on public procurement • The implementing of the aims specified in the new Directive (2004/18/EC) is in progress in the Parliament of Finland • The new Act on Public Procurement is expected to come into force in 2007 • The main changes: - National thresholds (15.000 public supply and service contracts, 50.000 health and social services and 100.000 public work contracts) - Advertising procedure also for contracts with a value below the threshold; transparency

5. Appeals on Public Procurement • The Market Court – independent Special Court - Appeals on the grounds that the decision is contrary to the Public Procurement Act - An appeal of the Market Court ruling can be made to the Supreme Administrative Court • Courts of general jurisdiction  compensation for damages

6. The European Commission • Financing authority (Paying authority) • Ministry of the Interior • Ministry of Labour • Ministry of Agriculture and Forestry • Central administration (Intermediate body) • Ministry of Trade and Industry • Ministry of Education • Ministry of Agriculture and Forestry • Ministry of Transport and Communications • Ministry of Social Affairs and Health • Ministry of Labour • Ministry of Environment • Ministry of the Interior Distributing of the Funds + Monitoring Reporting • Regional government (Final Beneficiary) • Employment and Economic Development Centres (TE Centres) • (Ministry of Trade and Industry) • Regional Councils (Ministry of Interior) • State Provincial Offices (Ministry of Education) • Regional Road administration (Ministry of Transport and • Communications) • Regional Environment Centres (Ministry of Environment) Tendering process Project Project Project Project (Final Recipient) Tendering process

7. Organisation of ESF activities 1.3.2001 Ministry of Labour Objective 3 - Single programming document - Programme complement ESF Objectives 2 & 1 Monitoring Committee European Commission MINISTRY OF LABOUR Managing authority Paying authority Co-ordination group Finnish Government Managing Groupof Sructural Funds(MoL) Implementation ministries MoL MTI MA&F ME MS&H MI Provincial state offices NationalBoard ofEducation T&E centres Regional councils Employment Enterprice Rural DepartmentDep. Dep. Employment offices PROJECTS • ESF-regulation, Article 4.2 • Other organisations PROJECT APPLICANTS

8. Regional Government Regional Government

9. Public Procurement Instructions for the Projects • The aid decision consists an obligation to comply with the public procurement legislation • The authorities have and give instructions for public procurement • The authorities organize training and general guidance to entities awarded with the project

10. Monitoring system • The Regional Authorities (Final Beneficiary) audit the certification of the expenditure before disbursing the funds • The Central Administration (Intermediate body) make detailed checks on 5 % of the expenditure under each program:  on-the-spot checks and financial audits • The Paying Authorities report to the European Commission (13 Article) • Monitoring by the EU organs

11. Experiences • The procurement procedure are mostly followed in the EU-founded projects • However, breaches of the procurement legislation is the main reason why the expenses are discarded or why further clarification is needed • Problems and experiences vary depending on what kind of project is financed, who is the financing authority and in what part of Finland the project takes place

12. Problems • The main problem is usually illegal purchasing without competition Reasons: • Attitudes of the project leaders/receivers and the authorities • Lack of knowledge about the procedures or obligations • Misinterpretations of the procurement legislation • “There is only one suitable tenderer” • “The Public Procurement Act does not apply to us this kind of procurements” • ”The innovator gets the contract/project without competition” • “Tendering procedure is difficult or takes too much time”

13. The Public Procurement Advisory Unit in Finland • A joint project of the Ministry of Trade and Industry and the Association of Finnish Local and Regional Authorities • The object of the project is to promote knowledge of the public procurement rules and policies • Opened for service at the beginning of 2004; scheduled to continue activities until the end of 2007 • An independent, neutral unit • Provides its services to both public and private entities: municipal and State authorities, other public procurement units, enterprises and entrepreneurs • Services are free of charge

14. Personnel and further information • Manager, Public Procurement Advisory Unit, Ms. Leena Piekkola, • Chief Legal Counsel, Ms. Terhi Kauti, • Legal Counsel Ms. Camilla Engman, • Senior Adviser, Mr. Carl-Johan Nordberg, • Adviser Ms. Ilona Lundström, • e-mail: hankinnat@kuntaliitto.fi,