Finnish central and local governments’ joint procurement can soon be tendered centrally under one roof. KL-Kuntahankinnat, a national municipal sector’s purchasing body owned by the Association of Finnish Local and Regional Authorities, and the government's central purchasing body Hansel will unite their efforts. The Association of Finnish Local and Regional Authorities will become a shareholder in Hansel Ltd with a 35% stake, the state’s ownership remaining at 65%.
The purpose of this new arrangement is to deliver better services and cost and process benefits across the whole public administration. It has been estimated that joint procurement can achieve more than 20 per cent savings compared to decentralised procurement. The aim is also to harmonise practices to make it easier for companies, both large and small, to participate in competitive tendering.
The Government and the delegation of the Association of Finnish Local and Regional Authorities have approved the re-organisation and ownership arrangements. The new Hansel will start operations as of 1 September 2019. The staff of KL Kuntahankinnat will be transferred to the employment of Hansel with their existing terms and conditions.
Cooperation to deliver better public procurement
Finnish central and local governments undertake procurements worth about EUR 35 billion annually. In the future, Hansel's share could be as much as three billion.
– I am delighted that the experts of the two companies can soon combine their experience and start developing the practices to make them even better than they already are. This work will be carried out purposefully, systematically and making better use of digitisation, lists Hansel's Managing Director Anssi Pihkala.
– I am particularly happy that municipalities can now become involved in the new Hansel's operational development and that their needs will be better met in the future. A joint procurement unit for the public sector will also make the use of public funds in procurement more transparent, says Raili Hilakari, Managing Director of KL-Kuntahankinnat.
A joint procurement unit promotes competition
Hansel's aim is to improve the functioning of the market. For example, joint procurements can be made on a regional basis, or they can be divided between several suppliers of goods and services to encourage healthy competition. Of course, competitive tendering will be continued locally by other parties as well.
Hansel boasts an extensive knowledge of the products, procurement legislation, customer needs, and an in-depth understanding of the market. In competitive tendering, attention is also paid to responsible procurement and the promotion of innovation. Along with joint procurement, Hansel offers expert services, which will become gradually available to new customers as well.
In Denmark and Austria, the central and local governments have already for long had joint procurement companies, and the effects have been positive. The EU’s directive on public procurement encourages the public procurement sector to cooperate.