Leena Karjalainen Head of Legal Councel City of Espoo Experiences with existing Public Procurement procedures Procurement of consultancy services for a High school, swimming pool and sports hall the project was carried out with a PFI (private-finance-initiative) model

Leena Karjalainen Head of Legal Councel City of Espoo Some facts about the city of Espoo Espoo is the second biggest city in Finland Espoo is situated next to the capital Helsinki It´s population is about people It is an important IT-city, the headquarters of Nokia are in the town We try to find new ways and models to finance our services.Espoo is the first city in Finland who has acquired ERP ( enterprise resources planning ) -system. We serve the services to citizens by doing or by acquiring from other producers

Leena Karjalainen Head of Legal Councel City of Espoo Legislation on public procurement in Finland The Finnish legislation on public procurement is based on the Treaty and Directives Public Procurement Act covers the scope, the central principles of contract procedures and remidies regardless of the value of the contracts Decree on public supply contracts concerning the procurement of goods and services and on works contracts exceeding given threshold values

Leena Karjalainen Head of Legal Councel City of Espoo ……….. The rules of mentioned decrees are very similar to the EU directives Below the threshold contracts and of contracts above the threshold are advertised on several forums –-the Supplement to the Official Journal of EU –-in the Finnish Supplement –the web sites of the Ministry of Trade and Industry –the web sites of the city of Espoo An effective Competition Court

Leena Karjalainen Head of Legal Councel City of Espoo The Espoo PFI case Espoo was the first city in Finland to carry out a procurement with the PFI model As a pilot project it created a lot of work to the municipal administration First of all Espoo cleared up the essential points about PFI to see if it was possible to use the method The goal was that the private company designs and builds and finances the School building and the city buys the use of the school rooms and the maintenance of the building, cleaning, safety services and serving of meals

Leena Karjalainen Head of Legal Councel City of Espoo The Essential points of the PFI metod The detailed model of PFI The risks and their allocation The main points of the agreement The tax questions Compliance of public procurement rules The economic benefit of PFI

Leena Karjalainen Head of Legal Councel City of Espoo The agreement partners building contractor producer of services ESPOO project company financier leasinglease of the building contract of the option to buy the buildings contract lease of the land contract of services

Leena Karjalainen Head of Legal Councel City of Espoo Tendering of consultants to help the city -to draw up an invitation to tender -to draw up a draft to a concession agreement to compare the tenders

Leena Karjalainen Head of Legal Councel City of Espoo The criteria to choose the tenderer experience of PFI models, practical knowledge of schools, the rooms, the maintenance practical knowledge of concession agreements the knowledge of building and developing the knowledge of real estate financing the knowledge of taxlegislation

Leena Karjalainen Head of Legal Councel City of Espoo …… the city had annouced to choose the most advantageous tender economically the weight of the price was 20 % the city used the restricted procedure

Leena Karjalainen Head of Legal Councel City of Espoo Consortium which won the competition KPMG Corporate Finance with other companies the expertise of the companies -costs of capital -financial planning -payment mechanism -architectural skills and school planning -legal advice -an English PFI adviser

Leena Karjalainen Head of Legal Councel City of Espoo Concessions under community law Definition as given in Directive 93/37/EEC :”the works to be carried out consists either solely in the right to exploit the construction or in this right together with payment ” Concessions are not defined in the Treaty The only definition to be found in secondary community law is in the works Directive, which lays down specific provisions for works concession

Leena Karjalainen Head of Legal Councel City of Espoo ….. Other forms of consessions do not fall within the scope of directives on public conttacts Consessions are however a subject to the rules and principles of the Treaty and to principles which derive from court case law

Leena Karjalainen Head of Legal Councel City of Espoo Tendering the consession Our consession consisted of the use of the building and its maintenance and certain services In Finnish legislation the Decree on public supply contracts concerning the procurement of goods and services and on works contracts exceeding given threshold values says that the tendering is possible with open procedure or restricted procedure or negotiated procedure

Leena Karjalainen Head of Legal Councel City of Espoo …. We made a contract notice in the Supplement to the Official Journal of the EU and asked the companies to send us a notice if they wanted to take part in the contest. In this notice they should clear up the essential points about the project company and their ability to make a proper tender

Leena Karjalainen Head of Legal Councel City of Espoo..… We got 5 notices, two of them were insufficient We sent the the tender documents to all three tenderers The documents included a detailed description about the rooms needed, the descriptions about the services (quality specifications) and a draft of the consession contract We continued with a negotiated procedure

Leena Karjalainen Head of Legal Councel City of Espoo The criteria to choose the tenderer The financial effects The quality of the planning and building Tecnical solutions The quality of services Reliability Legal facts

Leena Karjalainen Head of Legal Councel City of Espoo The role of consultancy services The architectural and engineering consultancy is needeed both on the suppliers side and the tenderers side Normally there is a concortium of experts on both side, so good teamworkskills are needeed

Leena Karjalainen Head of Legal Councel City of Espoo The areas of development in Finland The markets are not mature, there are not companies specialised to consessions The financiers don´t trust to companies as much as to the municipalities ( the taxing right) The tax rules are not very clear for consessions, there is a need to change The municipalities compared to companies get the cheapest money

Leena Karjalainen Head of Legal Councel City of Espoo NOW We made a consession for 28 years The pupils are already in the building and the school was the most wanted high-school in Espoo this year We are planning new projects and looking for new models to public-private- partnership.