Peter Jaspers

Participation in award procedures for Finnish infrastructure projects

Major infrastructure projects are contracted out almost exclusively by governmental bodies or parties that are treated as such. Contracts are therefore awarded subject to the strict requirements of public procurement law. The application of these rules results in a noticeable opening up of the market to international providers.

Contracts which exceed certain branch-specific thresholds (e.g. EUR 5,186,000 for construction contracts), and which are therefore of particular interest for cross-border tenders, are published in the Official Journal of the EU. These calls for tender can be found in the TED database (ted.europa.eu).

Public calls for tender that remain below the threshold are published exclusively in the Finnish HILMA database (www.hankintailmoitukset.fi). However, providers from all countries can also participate in these calls.

Call for tender specifications as a benchmark

Providers of infrastructure products and services must set aside their business instincts when participating in public procurement procedures. The procurement procedure is strictly organised in order to ensure equal opportunities for all providers. Therefore, tenders may not deviate from the specifications defined in the call for tender in any respect.

In practice, this means that tenders which are in fact competitive are repeatedly disregarded, because the tender submitted deviates from the call for tender. In the case of complex, technology-intensive projects in particular, companies find it difficult to resist the temptation of offering products that are even better than those requested by the contracting entity.

Such errors may be encouraged by the fact that, as a general rule, the decisive award criterion defined in Finnish calls for tender is the “most economically advantageous tender” criterion instead of a simple price comparison. However, this criterion should not be taken to mean that the provider may throw all of their own product’s assets into the ring. The evaluation criteria are, in fact, specifically defined in the call for tender using an objective points system. It is not possible to compensate for deficits under the defined criteria with other merits.

Finnish procurement law does permit deviations from the prescribed technical standards if the resulting technical characteristics correspond. In practice, however, tenders that deviate in such a way are often condemned to failure. Award decisions have increasingly become the subject of (often successful) lawsuits over the past few years. Contracting authorities are therefore reluctant to enter into grey areas with their award decisions and risking the decision being legally repealed later on.

Prequalification and negotiated procedure

The standard award procedure takes the form of an open call for tender for a defined service, open to an unlimited number of providers. In the case of infrastructure projects, contracting entities usually resort to more complex procedures in order to open up their options regarding the choice of providers and specification of the service to be tendered.

The most common of these procedures is the negotiated procedure. In this procedure, a circle of providers is first qualified. Negotiations are held with these providers, during which the details of the technical and commercial solutions to be tendered are drawn up.

It is occasionally the case with calls for tender using the negotiated procedure that providers allow themselves to be lulled into a state of nonchalance when drafting the preliminary tender preceding the negotiations. This leads to glitches in the procedure and, in the worst case scenario, to prequalification being refused. Despite being called negotiations, these are not in fact free commercial negotiations.

During the negotiations, providers can submit proposals to the contracting entity, suggesting how changes to details of the call for tender could result in a tender that is of greater benefit to the economy as a whole. However, the preliminary tender still remains binding. Changes can later be made, but only to the extent that the contractor modifies the call for tender in comparison to the preliminary call for tender. Therefore, the preliminary tender must meet all of the criteria of the call for tender, and must be structured in such a way that the provider is prepared to execute the contract under the conditions offered.

Tender specifications for technology-intensive projects

In the field of smart infrastructure and traffic projects, appeals are often made against award decisions. This is mostly due to the fact that, on the one hand, procurement law lays down clear award criteria which apply to all providers, yet on the other, it is rare for two products to be fully comparable in this very fast-developing area.

In order to meet the requirements of procurement law, contracting entities are forced to resort to drawing up very abstract descriptions of products and services. This is often unsuccessful because the authorities in question do not have sufficient resources available, and because technical concepts and notions can often be interpreted differently.

Providers can make a significant contribution to clearing up ambiguities and to making the future award decision less susceptible to appeal. In all award procedures, providers are permitted to ask questions to which they receive responses. The responses are made available to all providers and form a basis for the process of drawing up the tenders.

Through careful and targeted questions, providers can at the same time counteract their competitors’ hidden competitive advantages. Ambiguities in the call for tender can, for example, mean that tenders with worse technical characteristics may be evaluated as equally good, and therefore have to be awarded.