Reform of the Finnish Public Procurement Act submitted to Parliament – key amendments and their implications in a nutshell

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On 6 February 2026, the Government submitted to Parliament its long-awaited proposal for reforming the Public Procurement Act. The proposal largely follows the direction set out in last year’s draft, and increasing efficiency in public procurement as well as improving the private sector’s ability to participate in public tenders remain the key objectives. The proposal will progress at pace, so below we have highlighted elements of the proposal to watch out for, particularly for contracting entities.

1. 10% minimum ownership requirement for procurements from in-house entities

This is one of the key themes of the government’s proposal and indeed, it received the most feedback during the consultation for the draft government proposal. A significant factor behind the proposed ownership requirement is a substantial increase in procurement from in-house entities in recent years.

The proposal puts forward that as a general rule, in addition to the current requirements, the contracting entity shall hold at least 10% ownership in the in-house entity. The new ownership requirement would thus supplement the existing cumulative requirements regarding control, sales to third parties and capital.

The minimum ownership requirement is proposed to be based on an overall assessment, taking into account the parent company, its subsidiaries and affiliated companies. The aim is to prevent arrangements which evidently aim to circumvent the requirement, for example, by having an in-house entity act as a parent company with shareholdings divided between its smaller subsidiaries or affiliated companies.

However, the following exception to the general rule is also included in the proposal:

  • The 10% ownership requirement would not apply to in-house entities established in the public interest to provide exclusively a limited and statutory service or information systems directly linked to the provision of such service, and whose turnover does not exceed EUR 1 million per year. Such a service agreement with an in-house entity shall be valid for a maximum of four years, but according to the detailed rationale of the government proposal, a contracting entity could conclude a new agreement with the same content with the in-house entity after the expiry of the contract. Examples of limited and statutory services include library services and in-house entities established for the procurement of library materials.

In addition, the rationale section of the government proposal clarifies the following preconditions:

  • The minimum ownership requirement only applies to in-house entities that are limited liability companies. The requirement would therefore not apply, for example, to foundations, associations or joint municipal authorities under the Municipalities Act.
  • In the rationale, further clarification is provided on the rules concerning ‘reverse in-house entity procurement’: an in-house entity is not permitted to procure from its owner or sister in-house entity if the in-house entity has more than one owner.

The views expressed during the consultation about conservative transition periods have been taken into account in the final government proposal. Whereas most of the other proposed provisions are planned intended to enter into force in spring 2026, the new rules on procurements from in-house entities are proposed to enter into force as follows:

  • 1 July 2027 – the date on which the 10% minimum ownership rule will come into force as a general rule.
  • 30 June 2027 – the date by which existing agreements must be terminated if they do not comply with the new in-house entity procurement rules.
    • 30 June 2030 – the date by which existing agreements shall be terminated in cases where, exceptionally and for compelling reasons of public interest, termination of the agreement on 30 June 2027 would have unreasonable consequences or involve significant financial risks. However, such agreements must be notified to the State Treasury by 30 September 2026.
  • 30 September 2026–30 September 2027 – after the Act enters into force, this is the maximum possible duration of a new fixed-term agreement if it is concluded with an in-house entity that does not meet the requirements of the new act.
  • 1 July 2029 – as an exception to the transitional period, the provision on minimum ownership will enter into force on this date for in-house entities whose main purpose is to provide statutory life- and health-supporting health care services or centralised specialised medical care referred to in the Health Care Act (1326/2010) or information systems intended for the provision of these services.

The transitional provisions provide relief for contracting entities procuring from in-house entities in which their ownership share is less than 10%. However, it is important to note the transitional provision for existing contracts in situations where the contracting entity considers termination in 2027 to be exceptionally unreasonable, because this requires a notification to the State Treasury as early as September 2026. If this is delayed, the contract must be terminated within the general time limit, i.e. by 30 June 2027. Contracting entities should therefore start these assessments as soon as possible.

2. Market consultation

The key methods of market consultation in the government proposal are a traditional market survey conducted by consulting companies in the sector and the use of various analytical tools. As is currently the case, the aim of market consultation is to ensure that a call for tenders does not include any non-essential criteria or requirements that would unnecessarily restrict competition in the procurement in question. The procedure promotes the effective use of competitive conditions and cost-effectiveness.

The use of market consultation is made more attractive by other amendments: by conducting a market consultation in advance, the contracting entity could avoid the mandatory division of the procurement into lots, and the proposed obligation to suspend the procurement if the contracting entity has received only one tender in an open procedure.

It is also noteworthy that conducting a market consultation or a documented assessment of different procurement procedures and options will become mandatory for large procurements exceeding EUR 10 million.

The proposal mentions the use of various analytical tools, but there are few concrete details about what these might be; indeed, the detailed rationale section of the proposal states explicitly that an exact method will not be mandated. Examples of market consultation mentioned include informal discussions, various tools, publishing requests for information, sending a call for tenders in draft form to interested parties or its publication. The proposal emphasises that market consultations must be carried out on a case-by-case basis considering the nature, scope and complexity of the procurement. Contracting authorities would benefit from getting a start on assessing how market consultations are carried out and how they can be used to best effect.

3. New obligations for procurements exceeding EU threshold values

The proposal includes two new obligations for procurements exceeding EU thresholds. However, both of these obligations can be avoided where the contracting entity can demonstrate that it has sufficiently surveyed the market supply, taking into account the subject and scope of the procurement. These obligations would enter into force on 1 October 2026. 

  • Re-tendering: a procurement carried out in an open procedure shall be suspended if the contracting entity has received only one tender. The procurement procedure shall be repeated only once.
  • Division into lots: in future, procurements exceeding the EU threshold values must be divided into lots. The proposal also includes exceptions to this obligation based on, for example, the nature of the procurement or the associated costs. The Act retains the obligation to justify a decision not to divide a procurement. However, a significant change to the current provisions is the proposed possibility of appealing a decision not to divide a procurement. As such, contracting authorities will have to take particular care when drafting such decisions going forward.

4. Preparedness, safety and security of supply in procurements

Global developments are reflected in the government proposal on the Procurement Act reform. This can already be seen in the section on the aims of the Act, which is proposed to include references to ensuring the security of supply and safety aspects in public procurement. More specific aspects relating to preparedness, safety and security of supply are included in the following proposals.

  • A new subsection will be added to the section on the description of the procurement, which will now explicitly allow for preparedness and safety to be taken into account in the procurement. The rationale section of the proposal states that such conditions may be particularly relevant in situations where the procurement is related to the provision or the operation of critical activities and services of society or an organisation.
  • Discretionary grounds for exclusion include finding the reliability of a tenderer so inadequate that there would be an evident risk to national or local security.

5. Other highlights

In addition to the above, the proposal includes many other suggestions, such as:

  • Extending the notification obligation to national direct procurement
  • Increasing the right of contracting entities to obtain information in order to replace subcontractors and resource units, when mandatory or discretionary grounds for exclusion apply to them.

Compared to the draft government proposal, it is also noteworthy that the amendment concerning the review of mandatory grounds for exclusion of tenderers has not been taken forward.

6. The progress of the proposal

The Parliament held a lively preliminary debate on 12 February, which largely repeated the themes raised in the feedback on the draft proposal; the provision on in-house entities was once again at the centre of attention. At the end of the debate, the matter was referred to the Economic Affairs Committee, to which the Constitutional Law Committee, the Administration Committee, the Agriculture and Forestry Committee and the Social Affairs and Health Committee shall submit their statements. Having already attracted a lot of attention, the proposal is sure to generate considerable discussion in the committees as well.

 

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