22.2.2018

Procurement Law of specific industries in a Nutshell

The procurement law of specific industries applies to the procurement of water, energy, transport and postal services. The application of the law depends primarily on the nature of the contracting entity’s activity, not the object of the acquisition.

The contracting entities covered by this Act are:

  • contracting authorities, such as state and municipal authorities, public bodies and state-owned enterprises
  • public undertakings, which are entities that are directly or indirectly controlled by authorities through ownership, financial participation or business rules
  • entities operating under the special or exclusive control of the Authority.

If a unit falls into one of the categories defined by law and carries out activities falling within the scope of the law, its procurement related to this activity shall be subject to the procedures of the Procurement Law of specific industries.

Which law does not apply

The Procurement Law of specific industries does not apply to any procurement below the EU threshold. The EU thresholds for the specific industries can be found in Section 13 of the Act.

-> the contracting entities’ own instructions will be applied to acquisitions undercutting the EU threshold.

Procurement Law of specific industries does not apply to the purchase of goods for resale unless the sale is exclusive and other entities may sell or lease it under the same conditions as contracting entities. Other actions than mentioned in the Procurement Law of specific industries, will be excluded from the regulation.
The law does not apply to procurements made by a contracting entity from an affiliated company or by a joint venture from an affiliated company of the procurement unit.

-> The application requires that at least 80% of the average turnover of supplies, services or works of the affiliated company for the last three years consists of deliveries to the contracting entities or other entities to which it has an affiliation.

Procurement procedure

Contracting entities operating in specific sectors are free to choose whether they are using an open, restricted or negotiated procedure.

Supplier Register

For the purpose of obtaining public procurement, the procuring entity may have a supplier register.

The Register of Suppliers is a register established by the contracting entity or several contracting entities or a list of suppliers meeting the pre-requisites who have indicated their willingness to make an offer in particular types of procurements.

The contracting entity may directly ask for tenders from the tenderers included in the supplier register.

Neutral and clear purchasing criteria

The call for tenders, the invitation to negotiate and their appendices must be so clear that they can provide comparable offers. Procurement documents must be available from the date on which the contract notice was published.

The contracting entity may require specific evidence in the description of the acquisition, in the criteria of the defined overall economic advantage or in the conditions for the performance of the contract that the subject of the procurement meets the required environmental characteristics, social characteristics or other features.
The contracting entity must select the candidates and tenderers in accordance with objective and in advance mentioned criteria. The contracting entity must exclude tenderers or candidates who do not meet these conditions.

The decision must be justified in writing

The most economically advantageous tender must be opted. The most economically advantageous tender is the one which is the cheapest by price, most cost-effective or best according to the price-quality ratio.

The procurement entity must prepare a written decision on the facts affecting the candidates and tenderers and on the tendering procedure, which must be grounded.

-> Decisions or related documents shall indicate the factors which have affected on the decision making, including the reasons for rejecting candidates or a tender, and the main criteria for the comparison of accepted tenders.

How does the Procurement law of specific industries differ from Procurement Act?

Public procurement refers to procurement of goods, services and works by state, municipalities and joint municipal boards, state-owned enterprises and other contracting entities specified in procurement act, which they outside their own organization.
Public procurement must be carried out in accordance with the procedures laid down in Procurement Act. Public procurement is governed by public procurement and licensing law.

The special law on procurement is more flexible

The procurement law for specific industries mainly corresponds to the provisions of the Procurement Act.

However, the procurement law of specific industries is more flexible in relation to the Procurement Act, for example regarding framework agreements and procurement procedures.

Freedom to use different procedures

Contracting entities operating in specific sectors are free to choose whether they are using an open, restricted or negotiated procedure.

The negotiated procedure may also be used without prior open or restricted procedure if a procurement notice is published for the negotiated procedure.

There are no special conditions for the use of the negotiated procedure and no need to justify its use. Implementation of framework agreements is also more flexible than the provisions of the Procurement Act.

Higher thresholds

Unlike the Procurement Act, the Law on Special Industries does not separately contain provisions applicable to national procurement or national thresholds.

The threshold is relevant to the extent to which the procurements are announced and, moreover, it has an impact on the content of the contract notice and certain matters of form.

Section 25 of the Procurement Act regulates national thresholds and, accordingly, Section 26 regulates EU thresholds.
The Procurement law of specific industries will only apply to procurement of certain specific sectors that exceed thresholds based on EU directives. These thresholds are significantly higher than in the Procurement Act.

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