New system for coordinated register checks in public procurement

Background

The Public Procurement Acts contain provisions on grounds for the exclusion of suppliers. Exclusion may apply, for example, in cases of criminal offences, unpaid taxes and social security contributions, or in the event of bankruptcy. In procurements above the threshold values, there is in certain cases an explicit obligation for contracting authorities and entities to carry out checks, prior to awarding a contract, to determine whether there are grounds for exclusion. In other cases, the check is voluntary. In practice, checks are largely handled by suppliers submitting certificates from authorities and signing so-called declarations of truth – a system which the Government considers inadequate from both a reliability and an efficiency perspective.

In June 2022, an investigator was commissioned to propose an effective and reliable system for supplier checks, Dir. 2022:50. The aim of the inquiry was to strengthen democratic control over welfare services, promote healthy competition and combat labour market crime by preventing unscrupulous or unsuitable suppliers from being awarded public contracts. In August 2023, the Supplier Control Inquiry submitted its report, A Coordinated Register Check for Contracting Authorities and Entities (SOU 2023:43), which was subsequently referred to a number of authorities and organisations. The Government has now proceeded with a referral to the Council on Legislation based on the inquiry's legislative proposal.

Coordinated register checks – structure and scope of the system

The referral to the Council on Legislation proposes the establishment of a system for coordinated register checks to be applied in public procurement and the use of choice schemes. The system will enable contracting authorities and entities to retrieve data in a coordinated manner from several authorities via the Swedish Companies Registration Office.

The system will initially cover checks on information relevant to the following grounds for exclusion:

• Criminal offences

• Unpaid taxes and social security contributions

• Certain serious financial difficulties, e.g. bankruptcy

It must be possible to request such a supplier check both in connection with the award and the monitoring of contracts.

With regard to exclusion on the grounds of criminal offences, the proposal means that the Swedish Companies Registration Office shall carry out an initial relevance assessment of information from the criminal records register and forward only that which may be relevant to the contracting authority or entity. The Swedish Companies Registration Office shall thus filter out convictions that are not relevant to the assessment.

The register check may involve sensitive information, which is why the draft bill contains supplementary rules on confidentiality, professional secrecy and the processing of personal data. It is further proposed that the exclusion rules in the Public Procurement Act (2016:1145) (LOU) shall, in principle, also apply to the exclusion of applicants under the Freedom of Choice Act (2008:962) (LOV).

The group of persons subject to exclusion on criminal grounds

A practical issue that has long caused uncertainty is which natural persons within a legal person should be checked in the case of exclusion on criminal grounds. According to Chapter 13, Section 1, second paragraph of the Public Procurement Act, a legal person shall be excluded if a person who is a member of the supplier's administrative, management or supervisory body, or who is authorised to represent, make decisions on behalf of or control the supplier, has been convicted of an offence constituting grounds for exclusion.

The Government considers that, as a starting point, the group of persons should be limited to those who have powers and functions corresponding to those of the board of directors, the managing director and the authorised signatory in a limited company. According to the Government, exactly which persons are to be included should be determined at a lower regulatory level than that of the Act.

Certificates and declarations of truth to be phased out in favour of coordinated register checks

The Government emphasises that the current system of declarations of truth should cease to the extent that register checks provide access to equivalent information. The draft bill therefore proposes the following:

"When checking whether there are grounds for exclusion, a contracting authority or entity shall not be able to request that the supplier or applicant submit documents or certificates if the authority or entity itself has the possibility of accessing equivalent information free of charge by electronic means through a coordinated register check function."

The purpose of introducing such a provision is to prevent contracting authorities and entities from continuing to use declarations of truth for the sake of convenience when register checks are available. However, as the register check does not initially cover all grounds for exclusion, declarations of truth may still be required for those grounds not covered by the system, as well as for information missing from existing registers.

Concluding remarks

The proposed system for coordinated register checks is welcome as it aims to streamline the verification of grounds for exclusion that are relatively straightforward to check, and is therefore expected to ease the administrative burden on both contracting authorities and entities as well as suppliers.

However, one issue that the introduction of the system does not resolve, at least at present, and which in practice is one of the most difficult, is how to define the group of persons subject to exclusion on criminal grounds. The question is whether the group of persons proposed by the Government can be considered to cover all those referred to in the text of the Act (cf. Chapter 13, Section 1, second paragraph of the Public Procurement Act) and whether, in practice, it will provide the predictability that is sought. In this regard, it remains to be seen what the regulations will contain.

In addition, there is reason to monitor how the Swedish Companies Registration Office's handling of criminal record data will work in practice. According to the proposal, the Swedish Companies Registration Office is to carry out an initial relevance assessment and filter out information that is not relevant to the exclusion assessment – a filtering process into which contracting authorities and entities have no insight, but which nevertheless forms the basis for their decisions. This places high demands on the Swedish Companies Registration Office having the right expertise. The issue of processing times is also central, and it remains to be seen whether the system risks causing delays in contract award.

Finally, it should be noted that the legislative amendments are proposed to come into force on 1 July 2026, whilst the Swedish Companies Registration Office's IT support is not expected to be fully operational until 2028. The Swedish Companies Registration Office aims to deliver a pilot scheme by the end of 2026, with ongoing roll-out thereafter. For the vast majority of contracting authorities and entities, the current system will therefore remain in place in practice for the foreseeable future.