New Public Procurement Act enters into force: Competition in public procurement to increase

The Government aims to increase fair and open competition. The new Act on Public Procurement and Concession Contracts will increase competition in public procurement and restrict the use of in-house entities. The amendments will enter into force on 18 June 2026.

The President of the Republic approved the amendments to the Act on 16 June 2026. 

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

“With these long-awaited changes, the preparation of public procurement will improve significantly and competition will increase. The new Act will make it easier especially for small and medium-sized companies to participate in competitive tendering for public procurement, and ensure that tax revenue is used wisely. Well-functioning markets and fair competition play a key role in boosting economic growth,” says Minister of Employment Matias Marttinen.

More competition in public procurement

The new Act encourages better consideration of markets when preparing a competitive tendering process. 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 is prepared using a market survey, there is no need for new competitive tendering. Conducting a market survey will continue to be voluntary, but it would be encouraged more widely.

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

Limiting the use of in-house entities to promote competition

Public bodies are allowed to make procurements from their in-house entities without competitive tendering. In future, a contracting entity must own at least 10 per cent of its in-house entity operating as a corporation in order for it 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 dozens 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,” Marttinen adds.

This means that contracting entities can 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 can make use of joint procurement and engage in pooled procurement in order for several bodies to utilise the same tendering process.

Changes to enter into force on 18 June, with some to be applied in stages

The minimum ownership requirement will not apply to small in-house entities performing various statutory duties, such as information system services of 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.

The provision on minimum ownership of in-house entities will be applied in stages. The aim is to ensure the continuity of services and allow sufficient time to contracting entities to adapt their operations and to markets to meet the needs of contracting entities.

The existing in-house entities can be utilised in procurement regardless of the size of the ownership stake until 30 June 2027. Within health services, contracts concluded with in-house entities can be used for even longer. In certain individual cases, contracts concluded with in-house entities may remain in force until 2030.

Inquiries: 
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 for the minister)