09/02/2018

Too Many Public Procurement Disputes in Finland

About 480 appeals on public procurement decisions were filed before the Market Court in Finland in 2017. This is approximately 60 appeals more than during 2016. It seems that the slight decrease in the number of cases in 2016—possibly caused by the introduction of increased court fees (up to 6,000 euros)—was only temporary.

The average handling time for cases was over 8 months. This is obviously far too long considering the interests of both contracting entities and bidders.

So, what could be done to decrease the number of disputes? Here are a few ideas for contracting entities:

  1. Know what you want to buy. The technical dialogue could and should be used more, as the contracting entities have very limited possibilities to make changes during the procedure.  

  2. Describe the present state and your goals in the procurement. This is valuable information that will help the bidders draft better tenders.

  3. If the bidders point out an inaccuracy, react, correct and communicate. For example, if bidders find an inaccuracy in the invitation to tender and ask for clarification, don’t just repeat the unclear text.  

  4. Give reasons. Many disputes are caused due to unnecessary feelings of injustice. Bidders not understanding why their bid was rejected or why the points were low often leads to unnecessary court proceedings. Receiving clear grounds makes it easier to accept defeat even if this has significant economic consequences for the bidder. A feedback session with the non-winning bidders is a good idea in major projects.

    Bidders have room for improvement as well:

  5. Read the documents and instructions. I’m sorry to have to say this, but all too often bidders do not really study the invitation to tender documents. Why offer a brand new and expensive product if the contracting entity was really looking for a cheaper solution? Find out exactly what level of quality the contracting entity has in mind.

  6. Make sure you have the right person in charge of writing the bid. This may not be your topsales manager— it may rather be someone with the qualities of a bookkeeper. Make sure to dot your i’s and cross your t’s, and do not make reservations in the bid. 

  7. Don’t promise things you can’t deliver. Although the contracting entity is entitled to rely on what was written in the bid, expect problems if you can’t deliver. Competitors may take the case to the Market Court and invoke automatic suspension. Bids are binding under Finnish contract law, and withdrawing from the bid may lead to the obligation to pay damages.

Currently, appellants win approximately 20% of the appeals before the Market Court. Thus, the vast majority of appeals are rejected and many appeals could be avoided. This would shorten the handling times and allow the Market Court to concentrate on the right cases.