When the municipal body Östersundshem purchased a large number of supplementary houses (so-called Attefall houses) last winter, they were in breach of procurement rules. The Swedish Competition Authority has concluded that this constitutes an illegal direct award, and is demanding that the housing company must pay procurement fines amounting to SEK five million.
In February 2016, the municipal property company Östersundshem 2 AB entered into an agreement, through a direct award, for the purchase of 100 so-called Attefall houses (small supplementary houses of up to 25m2 that do not require planning permission), with the option of purchasing an additional 50 houses. This option could be used until June 30th 2017. The agreement was worth a little over SEK 80 million.
“If goods or services are purchased in accordance with the rules, following advertising and exposure to competition, the chances of ensuring value for taxpayers are improved”, says the acting Director-General of the Swedish Competition Authority Karin Lunning.
During the second half of 2015, the number of asylum-seekers who came to Sweden exceeded previous estimates considerably. The situation was such that, under certain circumstances, direct awards were allowed with reference to an “extreme urgency”, which is an exception to the procurement rules. Even with consideration to this exception, the Swedish Competition Authority has found that Östersundshem was not facing an extremely urgent need to enter into the agreement with the supplier through a direct award.
One of the objectives of the agreement was to tackle the shortage of accommodation for newly-arrived immigrants (that is, people with a residence permit) and students in Östersund municipality. This need for housing was, however, previously known and therefore not urgent. Neither the number of houses (a total of 150) nor the length of the option period, can be considered to have been strictly necessary.
Östersundshem has not limited the purchase an immediate need. With this in mind, the Swedish Competition Authority deems that it was not strictly necessary to formulate the agreement as has been done. This means that the exception for extreme urgency was not applicable when Östersundshem concluded the agreement. Hence, the agreement constitutesan illegal direct award.
“It is only in certain exceptional cases that the concept of so-called extreme urgency can be claimed, thereby permitting a bypassing of the procurement rules”, says Karin Lunning.
The Swedish Competition Authority is now approaching the Administrative Court in Härnösand with the demand that Östersundshem be fined SEK five million in procurement fines.
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