Reform of the act on openness – scope to be extended to contracting entities in more detail

A committee appointed by the Ministry of Justice published its report (available in Finnish) on the reform of the Act on the Openness of Government Activities on 12 December 2023. The current Act entered into force in 1999, and the need to update it has been apparent for some time. The committee’s proposal aims for a clearer and more practical general law governing public authorities that promotes societal transparency while meeting the needs of modern society.

According to the committee’s proposal, the Act would be called julkisuuslaki (the Act on Openness) going forward, meaning that the current short version of the name would become the official name of the Act. The committee proposes that the Act’s scope be extended so that it covers the performance of public duties more widely, even when this performance does not involve exercise of official authority. Going forward, the Act would also apply to a corporation or subsidiary controlled by a public corporation or a state enterprise to the extent that it engages in activities other than those carried out on the market in a competitive situation.

The committee report is currently being circulated for comments, and any comments are due to the Ministry of Justice by 16 February 2024.

The changes proposed by the committee would also affect public procurement. Below are some key highlights of the committee’s proposals.

More contracting entities within the scope of the Act on Openness

Currently, contracting entities only apply the Act on Openness in full if they are also public authorities. If this is not the case, contracting entities are only bound by the Act’s provisions concerning disclosure to the parties and the duty of non-disclosure.

Openness and transparency are important aspects of public procurement as public procurements involve a significant use of public funds. If the committee’s proposals entered into force, extending the scope of application of the Act on Openness to corporations and foundations controlled by public corporations with respect to their non-competitive activities, a large number of the contracting entities that currently apply only the provisions on disclosure to the parties would have to apply the Act on Openness in its entirety.  One of the committee’s justifications for extending the scope is that many procurements are made by incorporated contracting entities. According to the report, around 70% of public procurements are carried out by the municipal sector, and subsidiaries of local authority corporations, for example, have a major say in how public funds are spent. A transparent procurement procedure is effective in preventing corruption, among other things.

In addition, the committee proposes that private entities performing a public duty would apply the Act on Openness to this duty even when they do not exercise official authority.

In future, it is likely that many institutions subject to public law, in-house entities and central purchasing bodies under the Act on Public Procurement would fall within the scope of the Act on Openness, either because their activities are other than those carried out on the market in a competitive situation or because they perform a public duty. Extending the scope of application carries less significance for the utilities sector, as the activities in this sector typically involve engaging in activities carried out on the market.

While the Act on Openness is referred to in several other acts, the committee report does not include any proposals to amend such reference provisions. It would therefore be important that the reference provisions included in acts such as the Act on Public Procurements and the Act on Public Procurement in the Utilities Sector are revised in the course of further preparation so that the position of the various contracting entities under the Act on Openness is as clear as possible.

No major changes to the publicity of procurement documents

The committee’s proposals do not result in any major changes to the publicity of procurement documents. Procurement documents would become public at the latest when the procurement contract is concluded, unless the contracting entity decides to provide information on the documents earlier.

Tenderers would continue to have the right to access other tenders after the procurement decision, with the exception of trade secrets. The total price used to compare tenders cannot be deemed a trade secret. The report does not contain any proposals to amend the secrecy provisions included in section 24 of the Act on Openness, which means that tenderers cannot expect to receive more information on the tenders submitted by their competitors than they currently do.

Potentially slower responses to document requests

A request for information made to a contracting entity must be considered and the relevant documents provided without delay, in any event within 14 days from receiving the request. While the committee does not propose any changes to this deadline, it does propose that the two-week period should not include the time spent on the consultation process. Pursuant to the proposal, the Act on Openness would still not have a time limit for making an appealable decision.

For public procurement, the proposal could prove problematic. In order to ensure the protection of trade secrets, the contracting entity often needs to consult the tenderer whose tender information has been requested. However, the time limit for seeking review is only 14 days. In order to obtain the requested documents in good time before the expiry of the period for assessing the exercise of legal remedies, it is already necessary to submit a request for information immediately after the procurement decision is made. The reform may lead to more complaints having to be made with incomplete information for the sake of caution.