1. 18.10.2011 1 November 20131 Gothenburg CopenhagenMalmöMoscowWarsawRigaHelsinkiMinskTallinnOsloStockholmBerlinKaunasVilniusKiev FINNISH PUBLIC PROCUREMENT PROCESS - WITH FOCUS ON IT Juha Taipale, Partner, Magnusson Helsinki

2. 18.10.2011 2 November 20132 The Baltic Sea Region Law Firm PUBLIC PROCUREMENT IN FINLAND Public Procurement in Finland 2011 (department of statistics) –10.933 procurement notices by municipalities –1.613 by governmental organizations –6.214 by other entities subject to public procurement legislation –Slight decrease in these numbers during 2012 Annual volumes of purchases through public procurement processes –17,36 billion € for municipalities –About 1 billion € of ICT The entities subject to public procurement legislation are numerous, as public organizations carry on a broad scope of operations –Health care sector –Power and electricity and utilities –Harbours and railroads Hilma – database for public procurement notices

3. 18.10.2011 3 November 20133 The Baltic Sea Region Law Firm PROCESS ALTERNATIVES Open procedure means those procedures whereby any interested tenderer may submit a tender Negotiated procedure means those procedures whereby the contracting authorities consult the economic operators of their choosing and negotiate the terms of contract with one or more of these Competitive dialogue is a new procedure for awarding contracts. It is suitable for particularly complex procurements where the unit finds it objectively impossible to define the legal or financial terms of the contract, or the technical means beforehand, without negotiations with the tenderers Framework agreement is a procedure leading to the reaching of an agreement between procuring entity and three or more suppliers. As a main rule, the duration of the framework agreement may not exceed four years Direct assignment is only used in exceptional circumstances

4. 18.10.2011 4 November 20134 The Baltic Sea Region Law Firm SELECTION CRITERIA Minimum requirement –assessed only as pass or fail Comparison requirement –for the assessment of the most economically advantageous tenders –must be linked to the contract target –Must enable the impartial assessment of tenders. –Cannot act in favour of a certain tenderer, product or region. –Must be sufficiently defined The final selection criteria is public and all tenders are available for the participants, upon request. There are no clear rules on how the “grading” must be done, but it should be clear Often an unclear grading system results in the cancellation of the entire procurement process!

5. 18.10.2011 5 November 20135 The Baltic Sea Region Law Firm TYPICAL PROBLEMS Still lack of know-how and skills on both sides of the process Evaluation of bids should not be subjective – but it is difficult to avoid being subjective, especially in ICT sector Major public procurement projects can be matters of life and death for companies, which increase the threshold of lodging appeals Number of appeals has increased steadily, but still only about 20 appeals annually that relate to the ICT, half of them for over one million €. –Rejected 13 –Considered compensation payment in 4 –Reversed 7 –Not reviewed 2 There are very likely at least as many situations where the error has been clear but for relationship reasons no appeal has been lodged!

6. 18.10.2011 6 November 20136 The Baltic Sea Region Law Firm NATURE OF THE APPEALS Most of the appeals relate to the compliance with rules and formalities, not directly to any abuse of the rules or favoring of a bidder Typical Errors: –Unclarity of the request for bids –Non-compliance with the request –Comparison errors –Use of negotiation process –Exceptionally low price –Errors with notifications –Handling of support and maintenance issues and comparing them –Evaluation of expertise and experience Extremely difficult to create absolute criteria for ICT services and therefore there remains always room for appeals

7. 18.10.2011 7 November 20137 The Baltic Sea Region Law Firm RECENT STORIES National ICT project for helthcare ICT (KanTa) –Electronic prescription –Nationwide patient archive –Consent control system –Self review portal for clients –Framework that connects the local systems –Overall incurred cost between 2003 and 2012 over 200 million € ”Apotti” – project in Helsinki Region –Actual health care system for the region –Claims of certain suppliers having been favored –Costs have increased and schedules missed –Still not sure when this would be functional Ticketing system for the national railroads (Valtionrautatiet) –Expensive system was launched but did not work for some weeks resulting in huge amount of public negative attention to the public procurement processes

8. 18.10.2011 8 November 20138 The Baltic Sea Region Law Firm OUR RECENT CASES Copying services –Pricing different work categories Crane Modernization –”included in price” Rubberboats for the navy –Compliance with the request ICT Services –Transition project pricing for the existing supplier

9. 18.10.2011 9 November 20139 The Baltic Sea Region Law Firm FOREIGN BIDDER Possible limitations –Language, you may need a local partner –Location of data within Finland only – a growing trend –Travel may present a cost, unless remote work is possible Opportunities for a foreign bidder –Seek cooperation with Finnish primary bidders – learn the market! –Link to the entities that have existing long term Frame Agreements, especially in the area of software coding work and general ICT consulting services –Seek such bids where the price is the determining factor - if the price/quality ratio is right, the bids can be very competitive and get you started. To remember –Make sure that you clearly meet all the qualifications and respond to each and every detailed requirement – no errors in formalities –There are advisors and consultants that can help and link you to partners. All of the above apply quite well to every other industries as well

10. 18.10.2011 10 November 201310 The Baltic Sea Region Law Firm THANK YOU! Juha Taipale, Partner juha.taipale@magnussonlaw.com +358 45 635 2585

11. 18.10.2011 11 November 201311 MAGNUSSON HELSINKI ATTORNEYS-AT-LAW LTD. ALEKSANTERINKATU 15 B, 00100 HELSINKI, FINLAND HELSINKI@MAGNUSSONLAW.COM, WWW.MAGNUSSONLAW.COM BALTIC SEA REGION LAWFIRM The Baltic Sea Region Law Firm