What Are the Most Common Topics in Market Court Cases in Finland? Part 3

This is the third and final part of our blog series in which we cover the most popular topics of public procurement appeals to the Market Court. In this blog, we address the third most common topic of appeal, namely tenderer’s suitability. You may read the previous blog posts from the links below:

• Part 1, tender’s compliance with the invitation to tender
• Part 2, unclear invitation to tender

Tenderer’s suitability relates to the requirements the tenderer must meet in order to qualify in a tendering competition. These suitability requirements are set by the contracting entity and often concern a tenderer’s financial situation or previous references from similar tenders. Typical grounds to appeal to the Market Court relate either to the claimant having been excluded from the tendering competition for not having been suitable enough or the claimant finding that the winner of the tendering competition had not in fact met the suitability requirement.

In a decision by the Supreme Administrative Court at the end of last year (KHO:2020:148), the Supreme Court had to decide whether the contracting entity had the right to exclude the tenderer from the tendering competition for not meeting the suitability requirement. The contracting entity had set a requirement according to which the tenderer had to have at least the credit rating (Rating Alfa or similar) “A” or equivalent. The tenderer had in its tender informed that it had an AA rating (Good) awarded by Bisnode Finland Oy. The contracting entity had, however, checked the tenderer’s Rating Alfa rating, which was B (Satisfactory). Because this did not meet the requirement, the tenderer was excluded from the tendering competition. Contrary to the Market Court’s view, the Supreme Court found that the contracting entity had the right to do this.

The Market Court decision (MAO:12/​21) concerned the question of whether the suitability requirement set by the contracting entity was in accordance with the public procurement legislation. The Market Court found that a requirement regarding minimum turnover was discriminatory as 90 percent of the tenderer’s turnover had to originate from Finnish customers within the real property sector. The Court also found that a requirement regarding minimum turnover should be for the purposes of ensuring that the tenderer has the necessary economic and financial means to carry out the delivery. Therefore, the country of origin of customers or their field of business from which the turnover originates cannot be of relevance. In addition, the requirement favoured operators that had focused exclusively on the Finnish real property sector as the requirement virtually meant that at most 10 percent of the tenderer’s overall turnover could originate from sectors other than the real property sector.

How to Avoid Appeals Concerning the Tenderer’s Suitability

Our tips for contracting entities: Suitability requirements should be set carefully. The requirements must be clear, reasonable, and non-discriminatory, and otherwise in accordance with the public procurement legislation. For example, the minimum turnover requirement cannot be more than twice the anticipated value of the delivery contract without a justified reason. It should also be noted that in procurements exceeding the EU threshold, the suitability requirements should be presented using the ESPD form and the contracting entity should principally refrain from requesting certificates related to suitability (see MAO:564/20 and MAO:127/21).

Our tips to the tenderers: If any suitability requirement seems, for example, disproportionate to the object of the procurement or if you cannot fulfil a certain suitability requirement, it is worth informing the contracting entity of it during the possible market survey or the Q&A phase at the latest (preferably with legal reasonings). The contracting entity may still after it has published the invitation to tender correct it or restart the tendering competition, for example, if the suitability requirements prove to be strict.

Before submitting your tender, make sure that you have answered to all the questions and requirements by the contracting entity in the requested form. The contracting entity may request the tenderer to specify matters pertaining to its suitability more flexibly than in other matters related to the tender, but this possibility has its limitations. It should, however, be noted that the contracting entity is not, in principle, obliged to ask for such specifications.

In summary, when it comes to the most common grounds of appeal, the importance of diligence in public procurements cannot be stressed enough. Tenders are, in principle, final and invitations to tender cannot be changed significantly without the suspension of the procurement and publishing a new invitation to tender.

We are happy to assist you if you need support for example with preparing or reviewing a tender or an invitation to tender, evaluating the correctness of the procurement procedure, or dealing with an appeal.