Competitive tendering in the procurement
Competitive tendering in public procurement refers to how many tenders are received for each call for tenders. Lack of competition increases the risk that the price is not on the market basis and that no quality comparisons are made. According to a report by the Finnish Competition and Consumer Authority (FCCA), in more than half of all public calls for tenders in Finland, a maximum of three tenders are received.
More competition in public procurement is needed
More than 10,000 calls for tenders are issued by public administration each year. In as many as one third of all calls, fewer than three tenders are received. If public procurement can be made more attractive to companies, the benefits would be felt throughout society. More competition means lower prices. The figure shows how many tenders are received in calls for tenders.
Is there genuine competitive tendering in public procurement?
When do contracting entities purchase goods and services without competitive tendering?
Competition arises when more than one tenderer can submit a tender for the same contract. If only one tender is received or the direct award procedure is used, the market may not function properly. The figures should be interpreted as signals: they alone do not indicate that there are irregularities in the procurement process.
Percentage of single-tender bids in different sectors
Sectors in which single-tender bids are particularly common
The figure shows the sectors in which single-tender bids are particularly common. Single-tender bids are particularly common in sectors in which the market is dominated by actors with special expertise or there is only a small number of suppliers in each area.
Direct awards
Direct awards are an exceptional procedure specified in the Act on Public Procurement and Concession Contracts: the contracting entity may conclude the contract directly without issuing a call for tenders when a special requirement specified in the Act is met. The reasons for using this procedure must always be detailed in the purchasing decision. The Finnish Competition and Consumer Authority (FCCA) is responsible for ensuring that the direct award procedure is used in accordance with the law.
The direct award procedure can be used if no suitable tenders were received in the previous call for tenders, only one supplier can deliver the service or product for technical reasons or for reasons related to protecting an exclusive right, or if the contract must be concluded urgently. Direct awards that are not based on acceptable grounds or for which no notice has been submitted are considered as severe violations of the Act on Public Procurement and Concession Contracts.
Breakdown of direct award notices by direct award criterion
The horizontal bar chart shows on what grounds the contracting entities have used the direct award procedure. Technical reasons, reasons related to exclusive rights, the protection of exclusive rights and the failure of the previous call for tenders are the most common reasons. Extreme urgency is also often reported as a reason for using the direct award procedure. The emphasis on technical reasons is an indication of the structural concentration of the market in certain sectors.
Percentage of direct awards of all notified contracts in different sectors
Which procurement categories have the highest or smallest number of direct awards?
Frequent use of the direct award procedure is often an indication of structural market constraints or long-term supplier relationships that are difficult to retender.
Percentage of direct award notices of the contract notices issued by contracting entities
The list view compares the seven contracting entities with the largest number of direct award notices: both the absolute number and the percentage of the entity’s all notices are shown. The figure helps to identify the entities using the exceptional procedure instead of the normal procedure.
Take a look at the key procurement terms
Compare the differences between national and EU-level procurement