5.2.2024

The Government wants to increase companies’ interest in public procurement by strengthening competition

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Public Procurement

There are still difficult times ahead for the state’s finances, and the need to cut expenditure is growing. One of the ways in which the Government will try to achieve savings in the coming years is making public procurement more effective. According to Johanna Lähde, the key to well-functioning public procurement is skilled management of procurements and active dialogue with market players.

‘In financially challenging times, procurements become increasingly significant, as the use of public funds is considered carefully and, at the same time, it is difficult for many companies to increase their business. The Government aims to make public procurement more effective and strengthen the attractiveness during this term, among other things, by regulative amendments,’ says Johanna Lähde, head of C&S’s Procurement service.

The objective of public procurement has always been to provide companies with equal opportunities to participate in the public procurement procedure. According to a comprehensive review by the Finnish Competition and Consumer Authority published in December, the competitive situation in public procurement is, however, poor: on average only two tenders are submitted in competitive tender processes. A significant number of competitive tender processes, 14.5%, only receive one tender. The Government is therefore planning to reform the Act on Public Contracts during this term in such a way that the tender process would have to be renewed if only one tender has been submitted.

‘The small number of tenders is alarming. Low competition does not promote cost-efficient use of tax money. There are a lot of expectations for public procurement as the aim with procurements is to promote various sustainability and responsibility goals and innovations, for example. If public procurement does not interest companies, it is clear that the practical impact of procurements cannot be optimal. Increasing competition benefits both parties because it gives the procurer more choice and companies a realistic opportunity to succeed in competition’, says Johanna.

Market dialogue is an integral part of procurement process

Due to legislation, it is characteristic of public procurement that the requirements of procurement are defined well in advance. It is difficult to change the requirements afterwards without starting the project from the beginning. Companies can also not market alternative solutions successfully while the competitive tender process is ongoing. According to Lähde, the key to successful and effective procurement lies in management and market understanding.

‘A good procurement process is made up of several different factors. I want to encourage procurers to have an active dialogue with the market players. It is a good idea to discuss with companies already at an early stage of the procurement process. Well-functioning interaction plays a key role in getting the contracting entities and companies on the same page with respect to the market and the service to be offered.’