FINNISH PUBLIC PROCUREMENT PROCESS - WITH FOCUS ON IT

1. FINNISH PUBLIC PROCUREMENT PROCESS- WITH FOCUS ON IT Juha Taipale, Partner, Magnusson Helsinki

2. PUBLIC PROCUREMENT IN FINLAND • Public Procurement in Finland 2011 (department of statistics) • 10.933 procurementnoticesbymunicipalities • 1.613 bygovernmentalorganizations • 6.214 byotherentitiessubject to publicprocurementlegislation • Slightdecrease in thesenumbersduring 2012 • Annualvolumes of purchasesthroughpublicprocurementprocesses • 17,36 billion € for municipalities • About 1 billion € of ICT • Theentitiessubject to publicprocurementlegislationarenumerous, as publicorganizationscarry on a broadscope of operations • Health caresector • Power and electricity and utilities • Harbours and railroads • Hilma – database for publicprocurementnotices

3. PROCESS ALTERNATIVES • Open procedure means those procedures whereby any interested tenderer may submit a tender • Negotiated procedure means those procedures whereby the contracting authorities consult the economic operators of their choosing and negotiate the terms of contract with one or more of these • Competitive dialogue is a new procedure for awarding contracts. It is suitable for particularly complex procurements where the unit finds it objectively impossible to define the legal or financial terms of the contract, or the technical means beforehand, without negotiations with the tenderers • Framework agreement is a procedure leading to the reaching of an agreement between procuring entity and three or more suppliers. As a main rule, the duration of the framework agreement may not exceed four years • Direct assignment is only used in exceptional circumstances

4. SELECTION CRITERIA • Minimum requirement • assessed only as pass or fail • Comparison requirement • for the assessment of the most economically advantageous tenders • must be linked to the contract target • Must enable the impartial assessment of tenders. • Cannot act in favour of a certain tenderer, product or region. • Must be sufficiently defined • The final selection criteria is public and all tenders are available for the participants, upon request. • There are no clear rules on how the “grading” must be done, but it should be clear • Often an unclear grading system results in the cancellation of the entire procurement process!

5. TYPICAL PROBLEMS • Still lack of know-how and skills on bothsides of theprocess • Evaluation of bidsshouldnotbesubjective – but it is difficult to avoidbeingsubjective, especially in ICT sector • Major publicprocurementprojectscanbematters of life and death for companies, whichincreasethethreshold of lodgingappeals • Number of appealshasincreasedsteadily, butstillonlyabout 20 appealsannuallythatrelate to the ICT, half of them for overonemillion €. • Rejected 13 • Consideredcompensationpayment in 4 • Reversed 7 • Notreviewed 2 • Thereareverylikely at least as manysituationswheretheerrorhasbeenclearbut for relationshipreasons no appealhasbeenlodged!

6. NATURE OF THE APPEALS • Most of theappealsrelate to thecompliancewithrules and formalities, notdirectly to anyabuse of therulesorfavoring of a bidder • TypicalErrors: • Unclarity of therequest for bids • Non-compliancewiththerequest • Comparisonerrors • Use of negotiationprocess • Exceptionallylowprice • Errorswithnotifications • Handling of support and maintenanceissues and comparingthem • Evaluation of expertise and experience • Extremelydifficult to createabsolutecriteria for ICT services and thereforethereremainsalwaysroom for appeals

7. RECENT STORIES • National ICT project for helthcare ICT (KanTa) • Electronic prescription • Nationwide patientarchive • Consentcontrolsystem • Selfreviewportal for clients • Framework thatconnectsthelocalsystems • Overallincurredcostbetween 2003 and 2012 over 200 million € • ”Apotti” – project in Helsinki Region • Actualhealthcaresystem for theregion • Claims of certainsuppliershavingbeenfavored • Costshaveincreased and schedulesmissed • Still not sure whenthiswouldbefunctional • Ticketingsystem for thenationalrailroads (Valtionrautatiet) • Expensivesystemwaslaunchedbutdidnotwork for someweeksresulting in hugeamount of publicnegativeattention to thepublicprocurementprocesses

8. OUR RECENT CASES • Copyingservices • Pricingdifferentworkcategories • CraneModernization • ”included in price” • Rubberboats for thenavy • Compliancewiththerequest • ICT Services • Transitionprojectpricing for theexistingsupplier

9. FOREIGN BIDDER • Possiblelimitations • Language, youmayneed a localpartner • Location of data within Finland only – a growingtrend • Travel maypresent a cost, unlessremotework is possible • Opportunities for a foreignbidder • SeekcooperationwithFinnishprimarybidders – learnthe market! • Link to theentitiesthathaveexisting long termFrameAgreements, especially in thearea of software codingwork and general ICT consultingservices • Seeksuchbidswheretheprice is thedeterminingfactor - iftheprice/qualityratio is right, thebidscanbeverycompetitive and getyoustarted. • To remember • Make sure thatyouclearlymeetallthequalifications and respond to each and everydetailedrequirement – no errors in formalities • Thereareadvisors and consultantsthatcan help and linkyou to partners. • All of theaboveapplyquitewell to everyotherindustries as well

10. THANK YOU! Juha Taipale, Partner juha.taipale@magnussonlaw.com +358 45 635 2585