Public works contract should have been procured
The main purpose of the sale of property contract and the lease contract concluded by Boden Municipality with regard to Medborgarhuset was the acquisition of works. The transaction is a public works contract that should have been procured in accordance with the public procurement rules. This is the assessment by the Swedish Competition Authority in its application for a procurement fine.
The so-called “Medborgarhuset” in central Boden was in great need of maintenance work. The municipality, which owned the property, had difficulty financing the renovation. In the autumn of 2020, the municipality therefore sold Medborgarhuset to a property company. As part of the deal, the municipality is to rent back the sold property for a period of 35 years. The lease also means that the company will carry out works on the property, the value of which is significant. The value of the procurement amounts to approximately SEK 193 million.
According to the opinion of the municipality, the transaction does not qualify as procurement under the Public Procurement Act.
“Regardless of what you call an agreement with a supplier, the procurement rules must be followed if the contract is regarded as a public works contract according to the Public Procurement Act,” says Rikard Jermsten, Director General of the Swedish Competition Authority.
According to the Swedish Competition Authority, the main purpose of the transaction was to acquire construction work. The arrangement as a whole (i.e., the sale of Medborgarhuset, the municipality’s lease of the property and the agreed maintenance work) constitutes a public works contract that must be procured in accordance with the Public Procurement Act.
“Opening up the entire arrangement to competition means that more suppliers will have the opportunity to compete by offering better terms such as lower rent, shorter rental time and other added values such as more extensive renovations and development of the property,” says Rikard Jermsten.
The Swedish Competition Authority is now turning to the Administrative Court in Luleå demanding that Boden Municipality be ordered to pay SEK 7 million in procurement fines for carrying out an illegal direct award of contract.
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Last updated: 2021-09-14
Press release10 september 2021