Government proposes increasing competition in public procurement

The Government aims to increase fair and open competition. For this reason, it proposes several amendments to increase competition in public procurement and limit the use of in-house entities.

On 5 February 2026, the Government submitted to Parliament its proposal for amending the Act on Public Procurement and Concession Contracts and the Act on Public Contracts in the Utilities Sector.

Public procurement amounts to around EUR 38 billion a year in Finland. However, there is relatively little competition in public procurement: a maximum of two tenderers participate in 40 per cent of all public tendering processes. 

“We will make it easier especially for small and medium-sized companies to participate in competitive tendering for public procurement and will make sure that tax revenue is used wisely.  Well-functioning markets and fair competition play a key role in boosting economic growth. The reform includes a number of long-awaited measures to improve preparations for procurement and increase competition,” says Minister of Employment Matias Marttinen. 

More competition in public procurement

The reform encourages better consideration of markets when preparing a competitive tendering process. The Government proposes that an open competitive tendering procedure for procurement that exceeds the EU threshold value must, as a rule, be repeated if there is only one tenderer. If the procurement was prepared using a market survey, there would be no need for new competitive tendering. Conducting a market survey would continue to be voluntary, but it would be encouraged more widely.

In future, large-scale public procurements should be divided into lots so that smaller companies would have more opportunities to participate in competitive tendering.

Limiting use of in-house entities to promote competition

Public actors can make procurements from their in-house entities without competitive tendering. The Government proposes that, in future, a contracting entity should own at least 10 per cent of its in-house entity operating as a corporation in order for the contracting entity to be able to procure the necessary services from the in-house entity.

“The functioning of the markets is hampered by in-house entities that have tens or hundreds of shareholders and operate particularly in the support services sector for which there is a well-functioning private market. The reform will increase competition, but at the same time, we will make sure that municipalities and wellbeing services counties continue to have options when it comes to organising services,” says Minister of Employment Marttinen.

This means that contracting entities could continue to provide services themselves or procure them from in-house entities, in addition to external service providers selected through competitive tendering. Municipalities and wellbeing services counties could make use of joint procurement and engage in pooled procurement in order for several actors to utilise the same tendering process.

Exceptions to and transition period for the application of legal provisions

The legal provisions governing in-house entities would include certain exceptions. The minimum ownership requirement would not apply to small in-house entities performing various statutory duties, such as libraries, or water utilities. The intention is to lay down an exception concerning waste management as part of the reform of the Waste Act that is currently under preparation.

In addition, health service contracts concluded with in-house services could be utilised longer. This would ensure the continuity of services.

The government proposal would enter into force as soon as possible. The provision on the minimum ownership of in-house entities would become applicable in stages after the entry into force of the Act.

Inquiries: 
Olli Hyvärinen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 7026
Riikka Hietanen, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 078
Teresa Salminen, Special Adviser to the Minister of Employment, tel. +358 295 047 318 (questions to the Minister of Employment)