Dynamic Purchasing Systems – Bringing Procurement into the Digital Age

Public procurements have to be carried out in compliance with statutory tendering procedures. One lesser-known alternative permitted by law is the dynamic purchasing system (DPS). The idea behind DPS is that it is open to all tenderers for the duration of its life cycle. Tenderers accepted into the system compete for contracts as the needs of the contracting entity arise.

A similar system was already available under the old Act on Public Contracts, but despite the name, it was far from dynamic. In a DPS, requests for tender and tenders are made electronically, so using a DPS requires a tendering system. The reform of the Act on Public Contracts removed the more burdensome aspects of the system and made the interface more streamlined and flexible. Now that tendering systems have become more commonplace, dynamic purchasing systems are also expected to be used more often.

From Orthodontics to Robotics

By law, contracting entities can use a DPS for customary procurements of goods and services. However, this expression shouldn’t be taken too narrowly, as the system is well suited to more than just the procurement of bulk products. Elsewhere in Europe, contracting entities and tenderers already have a great deal of experience of using dynamic purchasing systems, and the scope of contracts is extensive.

Among other things, these systems has been used to procure event services, occupational therapy equipment, orthodontics, taxi services, waste transport services and alarm systems. Finnish contracting entities have recently established dynamic purchasing systems for, e.g. coaching services, robotics and road surfacing contracts.

Establishing a DPS Published in HILMA, Individual Tender Processes Are Not

When a contracting entity establishes a DPS, it must publish a notice in HILMA. At this stage, the contracting entity can divide the system into classes for goods, services and construction contracts, so one system can serve several different types of procurement. For example, the contracting entity can divide transport services into different classes according to who the services are aimed at.

The actual tender processes are carried out in the system itself. The contracting entity drafts the request for tenders and sends it via the system. In other words, a company cannot participate in tender processes until it has been accepted into the system.

On the other hand, a DPS does not impose an obligation on companies to submit tenders. When the contracting entity publishes a request, the supplier can decide separately for each request whether it is able to submit a tender.

Flexible Participation for Companies

In order to join a dynamic purchasing system, tenderers must meet the contracting entity’s requirements. In this respect, a DPS is no different from other procurement processes. However, the contracting entity must accept all suitable companies. In other words, it cannot limit the number of tenderers. The law also requires that the contracting entity make decisions on accepting or rejecting companies within strict deadlines. Accepted companies must be entered into the system without delay.

What makes a DPS attractive is that companies can seek to join at any time while the system is in use. The law sets no limits the duration of a DPS, and the HILMA notification remains available for as long as the system in use. This means that even if a company does not fulfil the requirements at the time the procurement notice is published, it can remedy its shortcomings and seek to join later. Minor deficiencies do no lead to the same consequences as in, for example, framework contracts, in which purchases can only be made from suppliers originally accepted into the framework contract.

Dynamic Benefits

Dynamic purchasing systems have already been put to good use abroad and have proven to be an agile way of carrying out a wide range of procurements. These same benefits will find their way into Finland once these systems become a customary part of the competitive tendering landscape and both contracting entities and companies get used to using them. We have high hopes that contracting entities will seize this opportunity to take a fresh approach to public procurement.