New ownership threshold for in-house companies, single-bid tenders must be re-run

Suomen Yrittäjät, the Finnish SME association, is extremely pleased with the new Public Procurement Act.

“The legislative change opens up public procurement and business opportunities to SMEs more widely than before. The tricks used to avoid competitive tendering will stop,” says Harri Jaskari, a Vice President at Suomen Yrittäjät.

In Finland, hundreds of publicly owned in-house companies operate in the same markets as private businesses. Municipalities and well-being service counties have been procuring services from their own companies without competitive tendering, even when their ownership stakes were very small. In future, the minimum ownership requirement will be 10%.

“The minimum ownership requirement for associated entities, set by Parliament, opens up procurement to SMEs and creates growth and jobs. This is what Finland needs. Bypassing competitive tendering through a small ownership stake will no longer be possible,” Jaskari says.

Suomen Yrittäjät considers Parliament’s Economic Affairs Committee’s report significant. The committee noted that the reform will increase competition, bringing considerable economic benefits.

“We now need a culture change in procurement. Hopefully people will understand that the aim of the legislative reform is to improve efficiency, create innovations and raise service quality through increased competition,” Jaskari says.

One tender no longer enough

Procurement processes run under the open procedure must in future be re-run if only one tender is received. In addition, contracts above EU thresholds should, as a rule, be divided into lots. Appeal opportunities will be increased.

“Companies have often declined to participate because procurements have been seen as tailored to specific operators,” Jaskari says.

Market consultation and market dialogue are central to successful, high-quality procurement. Under the new law, the obligation would apply only to contracts worth more than €10 million.

“The model now proposed would allow contracts of up to €9 million with no obligation to consult the market. That threshold is too high. On the positive side, the Economic Affairs Committee’s report states that businesses’ market access and cost savings will be monitored,” says Katja Rajala, a business policy expert at Suomen Yrittäjät.

Increasing interest

The Yrittäjägallup survey shows that a growing number of SMEs feel that publicly owned in-house companies are weakening their ability to offer services to the public sector.

As many as 24% of SME representatives in the April Yrittäjägallup said that in-house companies weaken their chances of providing services. In August, the figure was 21%.

If the Public Procurement Act opens up the market, SME interest in participating in competitive tendering will grow. The Yrittäjägallup shows that 55% of SMEs are interested in supplying the public sector, up from 51% in the previous survey. The figure is 68% in construction and 60% in industry.

“A well-designed Public Procurement Act can serve as a growth tool across the whole country,” Rajala says.

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