Direct Award
Direct award (suorahankinta) allows a contracting authority to procure goods, services, or works from a specific supplier without a competitive tendering process. This is an exceptional procedure that can only be used under strictly defined conditions in the Public Procurement Act. In Finland, direct awards represent a significant portion of procurement activity by volume but are closely scrutinized because they bypass the competitive process that lies at the heart of procurement law. The Finnish Competition and Consumer Authority (KKV) actively monitors direct awards and has the power to bring cases to the Market Court if it suspects unlawful use. For suppliers, understanding when and how direct award is legally permissible matters in two contexts: if you are the supplier receiving a direct award, you need to know that the legal basis is solid to avoid future challenges; if you are a competitor who was not given the opportunity to bid, you need to know your rights to challenge the decision. Direct awards are one of the most frequently litigated areas in Finnish procurement law.
Definition
Direct award is a procurement procedure where the contracting authority negotiates directly with one or more suppliers without publishing a contract notice or conducting a competitive tender. It is governed by Sections 40-41 of the Finnish Public Procurement Act (1397/2016), implementing Article 32 of EU Directive 2014/24/EU. The grounds for direct award are exhaustively listed and strictly interpreted. Section 40 permits direct award in the following situations: no suitable tenders, requests to participate, or applications were received in a prior open, restricted, or negotiated procedure, provided the original terms are not substantially altered; the goods, services, or works can only be supplied by a particular economic operator due to absence of competition for technical reasons, protection of exclusive rights (including intellectual property), or the creation of a unique work of art; extreme urgency caused by unforeseeable events that makes compliance with normal time limits impossible, where the urgency is not attributable to the contracting authority; supplies quoted on a commodity market; purchases of supplies or services on particularly advantageous terms from a supplier definitively winding up its business; or additional deliveries by the original supplier that are necessary for partial replacement or extension of existing supplies, where changing supplier would result in incompatible equipment. Section 41 adds grounds for additional works or services not included in the original contract but necessary due to unforeseen circumstances, provided the additional value does not exceed 50% of the original contract. The contracting authority may publish a voluntary transparency notice (Section 131) in Hilma to limit the challenge period to 14 days.
Practical Example
A Finnish municipality operates a wastewater treatment plant that uses a proprietary UV disinfection system manufactured by a single company. The system's control module fails, causing a partial shutdown. The municipality needs replacement parts and firmware updates that only the original manufacturer can provide due to proprietary technology and intellectual property rights. The estimated cost is EUR 85,000. The municipality's procurement team documents the technical exclusivity by confirming that no alternative supplier holds the necessary IP licenses or technical specifications, obtains a written statement from their engineering consultant confirming sole-source status, and prepares a procurement decision citing Section 40(2)(2) of the Procurement Act (technical exclusivity). To protect against challenges, the municipality publishes a voluntary transparency notice on Hilma describing the direct award and its legal basis. The 14-day challenge period passes without objections, and the contract is signed. The entire process takes approximately three weeks from the equipment failure to contract execution.
Common Mistake
Contracting authorities — and by extension the suppliers who benefit — frequently overuse direct award by interpreting the urgency ground too broadly. Section 40 requires that the urgency be caused by events genuinely unforeseeable by the authority and not attributable to the authority's own actions or failures to plan. A contract expiring because the authority started the new procurement too late does not qualify. Poor planning is not extreme urgency. The Market Court has repeatedly struck down direct awards based on self-created urgency. If you are a supplier receiving a direct award on urgency grounds, verify that the authority can demonstrate genuine unforeseeability — otherwise, you risk having the contract declared ineffective after the fact.
Frequently Asked Questions
Can a direct award be challenged?
Yes, and direct awards are among the most frequently challenged procurement decisions in Finland. Any party that would have had an interest in the contract can file an appeal with the Market Court. If the authority published a voluntary transparency notice on Hilma (Section 131), the challenge period is 14 days from publication. Without such a notice, the contract can be challenged within six months of the contract being concluded. The Market Court may declare the contract ineffective (tehottomuusseuraamus) under Section 156 — one of the most severe remedies available. The court may also impose a penalty fee or shorten the contract period. Since 2017, the Finnish Competition and Consumer Authority (KKV) also has standing to bring direct award cases to the Market Court on its own initiative, even without a complaint from a competitor.
What are the most common grounds for direct award?
In Finnish practice, the three most frequently invoked grounds are: technical exclusivity (Section 40(2)(2)), where only one supplier can provide the solution due to technical reasons or exclusive rights — common for proprietary software licenses, patented equipment spare parts, and specialized maintenance services; extreme urgency (Section 40(2)(4)), where unforeseeable events require immediate procurement — invoked for emergency repairs, natural disaster response, and pandemic-related purchases; and failed prior procedure (Section 40(1)), where a previous open or restricted procedure received no suitable tenders. Additional deliveries or services under Section 41 (extending existing contracts due to unforeseen needs) are also common. Each ground is strictly interpreted by the Market Court, and the burden of proof rests with the contracting authority.
Should the contracting authority publish a voluntary transparency notice?
Publishing a voluntary transparency notice (vapaaehtoinen avoimuusilmoitus) on Hilma is strongly recommended whenever a direct award is made, even though it is not legally required. The notice describes the procurement, the chosen supplier, and the legal basis for the direct award. Its primary benefit is reducing the challenge window from six months to just 14 days after publication. Without a transparency notice, competitors have up to six months to challenge the direct award, during which the contract may be declared ineffective. The notice also demonstrates good faith and procedural diligence, which can be relevant if the decision is later examined by the Market Court or KKV. The notice must be published before the contract is concluded to achieve the reduced challenge period.
Related Terms
Open Procedure
Learn how the open procedure works in Finnish public procurement. Any supplier can submit a tender without pre-qualification under hankintalaki 1397/2016.
Contract Notice
Learn about contract notices in Finnish public procurement. The official announcement published on Hilma and TED to invite tenders from suppliers.
Procurement Correction
Understand hankintaoikaisu (procurement correction) in Finnish law. How contracting authorities can self-correct procurement decisions.
Market Court Appeal
Learn about Market Court appeals in Finnish public procurement. How to challenge procurement decisions at markkinaoikeus under hankintalaki.
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