Public procurement: a comprehensive guide for bidders

Public procurement refers to purchasing goods, services, and construction works with public funds. In Finland, the process is governed by the hankintalaki (Public Procurement Act 1397/2016), which is based on EU procurement directives and ensures equal treatment of bidders. For the bidder, the law is both an obligation and a safeguard: it sets requirements for tenders but also guarantees fair competition.

The four fundamental principles of the Procurement Act directly protect the bidder. Non-discrimination and equal treatment mean that all bidders must be treated equally regardless of location, company size, or prior relationships with the contracting authority. Transparency requires that procurements are publicly announced and the procedure is transparent. Proportionality demands that requirements are proportionate to the subject of the procurement — disproportionate eligibility requirements are unlawful. Competition means that the market must be utilized and unnecessary restriction of competition is prohibited.

A bidder should be familiar with three key laws: the hankintalaki (Public Procurement Act 1397/2016) for general public procurement, the erityisalojen hankintalaki (Utilities Procurement Act 1398/2016) for water, energy, transport, and postal services, and the PUTU-laki (Defence and Security Procurement Act 1531/2011) for defence and security procurement. Additionally, note that Hansel Oy serves as the central purchasing body for the state, and its tender competitions cover extensive product categories and services across the entire central government.

If the contracting authority violates these principles, the bidder has the right to appeal. This is a key difference from private sector sales: in public procurement, the process is statutory, and errors can be challenged in the Market Court. Bidders should know their rights, as they are a concrete tool for ensuring fair competition.

Thresholds determine which procedural rules apply to a procurement and what rights the bidder has. EU thresholds are updated every two years, and as of the beginning of 2024, the values are: goods and services €143,000 (central government authorities) or €221,000 (other contracting entities), construction works €5,538,000, social and health services €400,000, and utilities sector goods and services €443,000.

National thresholds are significantly lower: goods and services €60,000, construction works €150,000, and social and health services €400,000. Below the national threshold, the contracting authority can purchase freely and the bidder has no right of appeal to the Market Court. National-level procurements must be announced on HILMA, but the procedure is lighter. EU-level procurements are subject to the strictest procedures, the notice is also published on the TED portal, and the bidder has the broadest rights, including the ESPD form and longer tender periods.

From the bidder's perspective, a higher threshold means broader rights and stricter process requirements for the contracting authority. In above-EU-threshold procurements, the bidder can, for example, demand the removal of non-compliant requirements, and the Market Court can impose broader sanctions such as contract ineffectiveness or a penalty payment.

Knowing the thresholds helps bidders allocate their resources. Small national-level procurements can serve as good practice, but EU-level procurements have more safeguards and typically larger contract values. Always check the current thresholds on HILMA.

The open procedure is the most common and lowest-barrier option for bidders: anyone interested can submit a tender. In EU-level procurements, the minimum tender period is 30 days, with a prior information notice 15 days, and electronic submission allows a five-day reduction. In national procurements, the law does not specify a minimum period, but the time must be reasonable. In an open procedure, speed is an advantage: maintain an up-to-date reference list and ESPD template.

The restricted procedure is a two-stage process. First, a request to participate is submitted, based on which the contracting authority selects at least five candidates. The deadline for participation requests in EU procurements is at least 30 days, and the actual tender period is 25 days. The participation request is the decisive stage — the selection and presentation of references determines whether you get to tender at all. Highlight the references that best match the specific subject matter of the procurement.

The negotiated procedure and competitive dialogue are more demanding procedures that give bidders an opportunity to influence the shaping of the solution. In the negotiated procedure, the contracting authority selects at least three candidates for negotiations. Minimum requirements cannot be negotiated, but evaluation criteria can be refined. Competitive dialogue is for particularly complex procurements where bidders develop solution proposals — this requires significant time and resource investment.

Innovation partnership combines R&D and procurement into a single contract, which is particularly interesting for technology companies. In framework agreements, the key is getting into the framework, as without it you cannot bid on call-offs within the arrangement. A Dynamic Purchasing System (DPS) differs fundamentally from a framework agreement: you can join at any time during its validity period, and each individual procurement is competed separately.

HILMA (hankintailmoitukset.fi) is Finland's official procurement notice channel, where all national and EU-threshold procurements are published. For bidders, HILMA is the single most important tool for finding tender competitions. The alert function allows you to set email notifications based on CPV codes or keywords, so new procurements come directly to your inbox.

Beyond just monitoring requests for tenders, it pays to use prior information notices, which signal upcoming procurements often months in advance. Direct award notices reveal markets where contracting authorities purchase without competition — if you believe you could supply an equivalent product or service, you can file an appeal with the Market Court within 14 days of the notice for above-EU-threshold procurements.

TED (Tenders Electronic Daily) is the EU's official procurement notice portal, publishing above-EU-threshold procurements from all EU and EEA countries. It is useful when you want to bid on public procurements in other EU member states. Hansel's (the state's central purchasing body) tender competitions are published on HILMA and Hansel's own website — these are typically above the EU threshold and cover significant contract packages across the entire central government.

The State Treasury's Tutki hankintoja (Explore Procurements) service shows completed procurements and financial flows, which helps in understanding market price levels. Contracting authorities' own websites can also provide additional information. Active monitoring of procurement notices is the foundation of bidding — a tender competition you miss is a tender competition you cannot participate in.

The ESPD (European Single Procurement Document) is a bidder's self-declaration that it meets the eligibility conditions of the tender competition. It replaces separate certificates and statements at the tender stage, significantly reducing the burden of bidding. Only the winning bidder is required to submit actual certificates and documentation.

The ESPD process proceeds in three stages: the contracting authority creates the ESPD request and defines the exclusion grounds and eligibility criteria, the bidder completes the ESPD response declaring that it meets the conditions, and finally the winner must present the actual certificates. Mandatory exclusion grounds relate to convictions for offences such as bribery, tax fraud, money laundering, and human trafficking — these apply to both the company and its senior management.

Discretionary exclusion grounds give the contracting authority the option to exclude a bidder based on, for example, bankruptcy, serious professional misconduct, tax defaults, or prior significant contract breaches. If a bidder has a discretionary exclusion ground, a self-cleaning procedure is possible: openly disclose in the ESPD what happened and what corrective measures have been taken.

The ESPD is a self-certifying declaration, and completing it carefully and honestly is critical. A false declaration can lead to rejection of the tender and, in the worst case, criminal liability. When tendering as a consortium, each member completes their own ESPD, and when relying on a subcontractor, the subcontractor must also complete its own ESPD requirements.

Tenders are always evaluated on the basis of best value for money (kokonaistaloudellinen edullisuus). In practice, this means one of three approaches: lowest price, best price-quality ratio, or lowest cost (life-cycle costs). It is critical for the bidder to understand which model is used, as it determines the entire bid strategy.

The most common price scoring formula is relative: the cheapest tender receives maximum points and others are scored using the formula (lowest price / own price) x maximum points. For example, if the cheapest is €100,000 and your price is €120,000 with a maximum of 60 points, you get 50 points. Another common model is the cheapest-to-most-expensive range formula, and a third is a fixed point deduction per additional euro.

Quality scoring is typically evaluated on a 0–5 scale, with the evaluation criteria described in the request for tenders. Weightings vary significantly: if the price weighting is over 70%, price competitiveness is decisive and margins must be minimized. If the weighting is 40–70%, a balance is needed. If the price share is below 40%, investing in quality points pays off the most. Bidders should always carefully analyze the weightings and scoring formula before choosing a bid strategy.

A practical sensitivity analysis helps optimize the tender. For example, with a 60% price weighting and the formula (cheapest/own) x 60: if your price is 5% above the cheapest, you lose 2.9 price points and need 7.3% more quality points to compensate. If your price is 20% higher, you lose 10 points, meaning you need 25% more quality points — practically impossible.

A consortium (ryhmittymä) is an effective way to participate in procurements that a single company cannot handle alone. Bidding as a consortium does not require a separate legal entity — it is sufficient for members to submit a joint tender and designate a lead bidder. This is particularly useful when a single company does not meet all eligibility requirements or the procurement requires broader expertise and resources.

Consortium members bear joint and several liability for fulfilling the contract, which is important to understand before forming a consortium. Each member completes their own ESPD, and eligibility requirements can be met by combining members' resources. A liability distribution agreement among consortium members is recommended, even though the law does not require it.

Relying on a subcontractor is another option for meeting eligibility requirements. The bidder can use a subcontractor's resources, but the subcontractor must meet its own ESPD requirements and the bidder must demonstrate that the subcontractor's resources are genuinely available. The contracting authority may require that certain critical parts are carried out by the bidder itself.

For SMEs, mastering consortium and subcontractor strategies is often a decisive factor in competitiveness. In above-EU-threshold procurements, the contracting authority must divide the procurement into lots or justify why it does not — this enables SMEs to participate in individual lots without having to deliver the entire package.

A bidder has three legal remedies: a request for rectification (hankintaoikaisu), an appeal to the Market Court, and a damages claim in district court. A request for rectification is the fastest and lightest remedy — a written request to the contracting authority within 14 days of the procurement decision. It is free of charge, and the contracting authority can annul its decision, correct an erroneous evaluation, or reject a non-compliant tender.

An appeal to the Market Court is the most effective remedy and must be filed within 14 days of the procurement decision. The Market Court filing fee is €4,240 (2024), and proceedings typically take 6–12 months. In above-EU-threshold procurements, the Market Court can annul the procurement decision, declare a contract ineffective, shorten the contract period, impose a penalty payment, or award a compensation payment (1–10% of the procurement value). In national procurements, the available remedies are more limited.

Critical rule of thumb: always file both a request for rectification and a Market Court appeal simultaneously if you are considering an appeal. Waiting for the rectification outcome does not extend the Market Court appeal deadline, so filing only a rectification request may result in losing the right to appeal. Always request an interim measure from the Market Court prohibiting the conclusion of the contract during proceedings.

A damages claim is the last resort, allowing the bidder to claim compensation in district court for lost profits and tender preparation costs. The claim has a three-year statute of limitations. An appeal is worth considering when the error is clear (scoring error, breach of eligibility requirements), the bidder would have won without the error, and the procurement value is sufficiently large relative to legal costs.

Market consultation (markkinavuoropuhelu) is an interaction between the contracting authority and potential suppliers before the actual tender competition. It is a procedure permitted and recommended by law, offering bidders a concrete opportunity to influence. During the consultation, you can highlight the strengths of your solution and influence the definition of the procurement before the request for tenders is published.

Participating in a market consultation does not obligate you to bid and does not guarantee better opportunities in the tender competition. The contracting authority must ensure fairness of competition: all information obtained during the consultation must be shared with all bidders. Nevertheless, participation is valuable for the bidder, as it provides advance information about the upcoming procurement and an opportunity to build relationships with the contracting authority.

Hansel Oy is the state's central purchasing body, which runs tender competitions for framework agreements on behalf of government organizations. Hansel's tender competitions are significant because they cover extensive product categories and services across the entire central government. Procurement notices are published on HILMA and Hansel's own website, and suppliers selected for framework agreements receive orders throughout the contract period.

When participating in Hansel's tender competitions, it is important to thoroughly review the request for tenders and draft contract, ask questions actively, and take volumes into account — the total value of a framework agreement can be very significant. However, merely getting into a framework agreement does not guarantee sales, as you must differentiate yourself from other framework suppliers in mini-competitions.