The reform of the Act on Public Contracts – the Finnish legislation is delayed

The Directives of the European Parliament and the Council on public procurement and concessions were adopted in February 2014. The objective of the Directives is, inter alia, to simplify the regulation on public procurement and to improve the position of SMEs in the procurement procedures. The EU Member States are obligated to bring the provisions of the Directives into force by 18 April 2016. In Finland, national enforcement of the Directives was delayed because national legislation on public procurement is still unfinished.

Until the completion of national legislation on public procurement in Finland, an intermediate state is in effect. During this interim period, some of the articles of the Directives are already in force and applied, even though the national legislation, in accordance with the new Directives, has not entered into force yet. This is based on the principle of direct effect, included in EU law, which gives persons the right to invoke a provision of EU law, such as a directive, in courts, even though the national legislation is not in force.

In order to invoke the direct effect, the following conditions must be fulfilled: (i) the provisions of the directive are unconditional and sufficiently clear and precise, and (ii) the Member State has not implemented the directive by the deadline appointed to it.

Because the national legislation on public procurement was not entered into force before the 18 April 2016 deadline, contracting authorities shall take into account the unconditional, clear and precise provisions of the new Directives, notwithstanding the delay of the national legislation. The Ministry of Employment and the Economy has in its bulletin, published 3 March 2016, listed those provisions of the Directives that are unconditional, clear and precise such that they, according to the ministry, fall within the scope of direct effect and that contracting authorities should apply already during the intermediate state. Insofar as the legislation on public procurement in force does not contradict the above-mentioned provisions, contracting authorities shall also apply the legislation on public procurement in force at the moment.

These unconditional, sufficiently clear and precise provisions of the Directives shall thus be applied to procurement procedures that commence on or after 18 April 2016. Primarily, the demand concerns procurements of which the contract notice is published on or after 18 April 2016. The provisions of the Directives concerning agreement changes shall be applied to agreement changes made as of 18 April 2016, even if the procurement procedure that led to the agreement would have commenced before 18 April 2016.

For instance, if a contracting authority requires that a tenderer’s turnover be three times the estimated value of the public contract, a tenderer can invoke Article 58(3) of the Directive. In future, the annual turnover required from a candidate or a tenderer may according to the Directive be at most twice the estimated value of the public contract, with the exception of justified special cases. The national legislation, as currently in force, leaves the amount of turnover to the discretion of the contracting authority, as long as the amount of turnover is in proportion to the subject-matter, purpose and scope of the contract.

According to the bulletin of the Ministry of Employment and the Economy published 3 March 2016, the Government bill will be introduced to the Parliament no later than in June 2016. The objective is that the new legislation will enter into force as soon as possible at the end of 2016.