In our newsletter in April, we wrote about four pending legislative proposals in the area of procurement. Some of these have now entered into force, while others are still under consideration. Below is a status update of the proposed legislative amendments.
SFS 2022:778 – A MORE EFFECTIVE REVIEW
The changes to the law that have the aim of making court proceedings in public procurement cases faster and more predictable for both procuring public authorities and for suppliers have now entered into force. The basis for the legislative amendments was the Government Bill 2021/2022:120 – A more effective review.
- Cases concerning review of a procurement or of an agreement's validity must be processed promptly according to chapter 20 section 5a of LOU (Lagen om offentlig upphandling – the Public Procurement Act). However, it can be questioned whether the amendment to the Act will entail any change in practice.
- A limitation period has been included in review cases in the Administrative Court and the Administrative Court of Appeal. See chapter 20 sections 5b and c of LOU. A supplier may now not cite a new circumstance as a basis for their action any later than three weeks from the date when the application for review was received by the Administrative Court. The circumstance may only be taken into consideration if the supplier credibly establishes that it was unable to cite the circumstance earlier or otherwise has a valid excuse for not doing so. In the Administrative Court of Appeal, the supplier may only cite a new circumstance under these conditions. The limitation periods only apply to new circumstances and not when citing new evidence.
- The time limit for applying for a review of the validity of an agreement which is not subject to the Directive is shortened from six months to 30 days if the public authority has issued a contract award notice on the procurement. See chapter 20, 17 section of LOU.
- The time limit for bringing an action for damages is changed from within one year from the moment when an agreement has been entered into between the procuring authority and a supplier to within one year from the date when the claimant became aware of or should have become aware of the fact that an agreement had been entered into. However, if an agreement has been declared invalid by a court, the action may nevertheless always be brought within one year from when the ruling became firm and final. See chapter 20 section 21 of LOU.
- According to chapter 13 sections 1a and 3a of LOU, it follows that a procuring public authority should not be permitted to allow a judgement older than five years or events older than three years to form a basis for excluding a supplier due to offences or misconduct in general.
The new rules enter into force on 1 July 2022.
DS 2021:31 – PROPOSAL FOR AN OBLIGATION TO TAKE CERTAIN SOCIAL INTERESTS INTO ACCOUNT IN PUBLIC PROCUREMENT
The aim of the proposal is to utilise the power of public procurement in order to contribute to the sustainability agenda. It is noted that current procurement legislation allows a great deal of scope for taking social interests into consideration in various ways. However, it is based on freedom, which is considered to be a weakness. According to the proposal, procuring public authorities therefore have an obligation to take social interests into account such as the environment, and social and labour law in public procurements. It is proposed that the new rules enter into force on 1 July 2023.
The proposal has been presented as a referral to the Council on Legislation, but has not resulted in a Government Bill. No information has been forthcoming from the new Government on whether it will proceed with the proposal. It therefore remains to be seen whether the proposal will become law.
SFS 2022:902 – IDEA-DRIVEN WELFARE
The proposal, Government Bill 2021/22:135 – Idea-driven welfare, i.e. increasing the ability of idea-driven organisations to provide publicly-funded welfare services, has become law. A provision has been inserted in chapter 19 section 25a of LOU that procuring public authorities may reserve participation in procurements of certain services for idea-driven organisations with aims directed towards the public good. Municipalities, regions and state authorities will therefore be able to benefit from the expertise, experience and other resources of idea-driven organisations to a greater extent than previously. To be able to participate in a reserved procurement, the idea-driven organisation may not transfer any value to organisations other than idea-driven organisations or to research, according to section 8, first paragraph of the Registration of Idea-Driven Organisations Act (2022:900). It is a new act that has been implemented for the purpose. In addition, municipalities, regions and state authorities may not have judicial control over the idea-driven organisation.
The new law and other proposed changes enter into force on 1 January 2023.
Ds 2022:5 – MORE EFFICIENT PROCUREMENT SUPERVISION
It is proposed that the Swedish Competition Authority be granted a number of extended powers with regard to penalties and investigation options in procurement supervision. This will include the Swedish Competition Authority being permitted to make decisions on a procurement fine at first instance, i.e. without a procedure involving an application to a general administrative court. The procurement fine will not only be imposed in the event of illegal direct procurement, but also in the event of breaches of the following obligations (i) issue of a contract award notice, (ii) publication of notices in a registered database for notices, (iii) the documentation obligation, (iv) preparation of individual reports and (v) the obligation to give reasons why a contract should not be awarded in separate parts. Furthermore, it is proposed that the ceiling for the amount of the procurement fine be increased from SEK 10 million to SEK 20 million. As previously, the procurement fine will amount to a minimum of SEK 10,000, but may not exceed 10 per cent of the value of the procurement.
The memorandum has now been been referred and the referral bodies have had the chance to submit their comments. The Swedish Competition Authority welcomes the proposal, but also proposes some extension to the proposal. The National Agency for Public Procurement recommends the majority of the proposals, but rejects the proposal that the Competition Authority should target investigation orders at suppliers. The Administrative Court of Appeal in Gothenburg takes a similar position. The Swedish Association of Local Authorities and Regions (SKR), on the other hand, rejects the proposal. It considers the proposal to be incompatible with the new rules in chapter 19 and 19a of LOU, which should increase flexibility in procurements. SKR considers that the focus should be on doing effective and sustainable business, and on what it is possible to do within the framework of the legislation and not on supervision, sanctions, reviews and fees.
The next step in the process is for the Government to review the referral responses and, if necessary, refine the proposal. The Government will subsequently submit the refined proposal to the Council on Legislation for review, what is called a referral to the Council on Legislation. The Government then further refines the proposal and ultimately submits it as a Government Bill to the Riksdag.
It is proposed that the new rules enter into force on 1 February 2023.