Action brought to impose procurement fines on Mariestad

Mariestad Municipality has signed a public works contract with a supplier without first publishing a contract notice in accordance with the Swedish Public Procurement Act (LOU). Prior to this the Municipality had published a contract notice concerning a building on the same property. However, the contract notice did not concern the procurement specified in the contract. The procurement in the notice concerned a rent solution in which the Municipality would sell the property to a supplier who would erect a building that the Municipality in turn had undertaken to rent for a fixed period.

The Municipality published a contract award decision in the previously published procurement, but thereafter revoked this decision and withdrew the invitation to tender. At the same time, the Municipality allocated funding for a public works contract. The contract was signed without publishing a new contract notice, despite the fact that the contract concerned a different procurement than the previously published. Another supplier had also pointed out to the Municipality that the publication of a new notice was required.

The Swedish Competition Authority has investigated the issue and concluded that Mariestad Municipality has performed an illegal direct award of contract. The Swedish Competition Authority is now referring the matter to the Administrative Court in Jönköping with the demand that the Municipality shall be required by law to pay SEK 730,000 by way of a fine/procurement claim.

“An illegal direct award of contract is a serious breach of the rules and regulations on procurement,” says Rikard Jermsten, Director-General of the Swedish Competition Authority.

“An illegal direct award of contract in cases where several companies could submit a tender runs the great risk that the winning tender for the contract offers neither the best price nor the best quality.”

Read the application, dnr 144/2018 (in Swedish)