Procurement procedure

Ministry of Employment and Economy is currently preparing a Government bill to the Parliament concerning new procurement legislation, which would replace i.a. the Procurement Act of the year 2007. This article is about the forthcoming changes.

The aim is to simplify and clarify the provisions and to make them more flexible than they are now.

• Especially the use of procedures including negotiations shall be broadened to correspond to the practical procurements.
• On the other hand the provisions regulating them would be more accurate and the more equal treatment of the bidders would be more efficiently secured.
• In addition to that the purpose is to clarify the procedures to be more applicable in practice.

The new act more equitable and explicit

The goal is

• to make the use of public funds more efficient,
• to simplify the procurement procedure,
• to clarify the essential concept of the law and
• to make participating to competitive providing easier for small and middle-sized companies.
• try to improve environmental and social considerations, as well as
• to offer every bidder equal and non-discriminatory treatment in all public procurements.

Competitive bidding procedures

The content, nature and type of the procurement are crucial in what kind of procedure the procurement unit is using.  Choosing of procedure will also be depending on the fact, if the procedure exceeds or falls short of threshold value.

According to the Procurement Act the present minimum in national thresholds is 30 000 euros. The new national thresholds would be a bit higher in goods as well service procurements.

In procurement should primarily be used so called open or restricted procedure, but possible procedures in certain situations are as well negotiation procedure, competitive negotiation procedure or planning competition.

Also electric auction can be used a part of bidding.

So called open procedure will be commonly used. In it the invitation for bids is given to all the willing bidders. The procedure is suitable e.g. for single goods or service procurements, where the product or service can be clearly defined.

The use of procedures including negotiations is planned to be broadened. Two new procedures will be added to procedure alternatives:

1. i.e. so called innovation partnership
2. procurements through e-catalogues in framework agreements and dynamic purchasing systems.

These reforms might improve the goods and service innovations of the companies in situations, where the procurement unit is not yet able to define its procurement accurately.

Status of small and middle-sized companies in public procurements

One of the central goals in easing the national procedures is to improve the position of small and middle-sized companies.

This should be implemented by simplifying clarification measures of the bidders and the candidates. When the procedure becomes simpler and more flexible, it will be possible for the procurement units to take more efficiently the conditions of smaller bidders also into account.

Guidelines

In the background there are the principles of the European Community i.e. non-discrimination, equality, transparency and relativity.

The procurement unit is supposed to utilize existing competition circumstances, treat bidders equally and non-discriminatory as well act taking into account the requirements of openness and relativity.

The final purpose of Procurement Acts of EU and the national procurement legislation basing on them is to secure the fair rules: of the procurements shall be informed openly to all companies and to every corporate shall be given an equal possibility to offer their services and products.

The Directives make it possible to take those points into account, but they do not force the vendor necessarily to acquire certain quality. Measuring and defining quality might be challenging: the volume of the procurement is varying and a single procurement might include several factors and their sub-criteria which determine the quality.

In the Directives there will be emphasized the political aims of the EU e.g. promoting innovations, emphasizing quality as well taking notice of social and environmental factors.

Omitting bidding procedure

The procurement unit shall have a cogent reason not to arrange an invitation to bid. In addition to that the Procurement Act has to include an exhaustive list when a direct acquisition is allowed to be made.

The procurements exceeding the threshold shall always be invited to tender.

Macro economically most advantageous bid

One has to choose the macro economically most advantageous bid among all the bids according to the standards of comparison of procurement or the one, which is lowest at the price.

As standards of comparison in macro economically most advantageous offer can be used i.a:

• quality,
• price,
• technical data,
• ethical and functional features,
• non-pollution,
• running costs,
• cost effectiveness,
• service and support after procurement,
• maintenance,
• delivery time
• lifespan costs.

The procurement unit is also allowed to take into account economic, quality and environmental grounds relating to the needs of the public in concern, if these grounds are measurable and connecting with the object of the procurement. On the same presumption the procurement unit can take into account the needs of the especially poor and weak population if these kinds of factors are determined in technical specifications.

If the selection criteria is the macro economically most advantageous offer the standards of comparison and their relative weighting has to be told in the bidding invitation documents.

The standards of comparison may not be discriminating and they need to be sufficiently linked with the object of procurement.

In a competitive negotiation procedure the corresponding information shall be included in the procurement notice or description. The weighting can also be determined by announcing reasonable range. In case the relative weighting grounds for standards of comparison cannot with good reason be determined, they can be put in order of importance.

For example in a Finding of the Supreme Administrative Court, KHO 12.12.2003 deposit copy 3202 (2003:89), procurement unit proceeded incorrectly because it did not draw sufficient distinction between scrutinizing the qualifications of the bidders and evaluation of macro economical advantageous of the biddings.

The best bid will be determined by comparison criteria, which shall be defined according to the discretion of the procurement unit.

The new Procurement Act starts from the assumption that the procurement unit chooses and tells the standards of comparison, according to which the macro economically most advantageous bid can be chosen.

However, the standards themselves shall be objective. The procurement units must be able to justify the acceptability of their standards of comparison.