Article about Norwegian public procurement market, written by Ryte Venckuviene, Enterprise Estonia export advisor in Norway.
Summary and edited version in English (original article in Estonian):
“This time I would like to desire the businesses to take a closer look at public procurement in Norway. And not only see, but also learn to understand when it is worth spending the time and resources to participate in Norwegian public tenders. Why? Because Norway’s public procurement constitute a large and increasing share of the value of purchases every year. Public procurement is thoroughly regulated with a focus on the best offer to win. The following contracts are solid in terms of fairness, continuity, solidarity, and responsibility. What is well suited for Estonian companies having or making long-term plans toward Norway. Furthermore, I will give a short overview and answer some of the most common questions I receive from Estonian companies.
Norway with more than 5 000 000 inhabitants is the leading country in the world’s rankings in the wealth, quality of life, ease of doing business, etc. It is partly because of relatively high-income= GNI/capita of $66 117, GNP per capita $420.97B. Nevertheless – the Index of Economic Freedom 2021 is on 28th in the world and the Global Index of Economic Openness 2019 is 6th best of 157 countries. Competitiveness Index 2019 (World Economic Forum) was the 17th best of 140 countries. Corruption Perceptions Index 2020 was 7th out of 180 countries
Many Estonian managers still think that public tenders in Norway are only for Norwegians. And the only way to win them is together with Norwegian partners. That strategy is good as gold when you have a strong, trustworthy, and experienced partner to apply, win, and, most importantly, run the export, project, management, etc. Otherwise, Estonian companies have good references in North Europe and can apply themselves. For complex contracts with eg assembling, works on-site, adaptions and warranty works can be good to have a partner, representative or other help in the busiest period of the project. Many companies in Norway and Estonia can help you with that or simply find a representative here in Norway, it may even be an Estonian :). My most important message – do your homework before making the offer, ask for help when you are unsure, and BE PRESENT ON PROJECTS, EXPORTS, DELIVERIES. Winning the tender is a great deal, but running successful trade here in Norway is much more advanced.
Not very complex contracts like only export (sale and buy) can be managed from Estonia but remember to follow all the rules. When it is pointed out, I would say that tendering in Norway is not very different from Europe. Through the EEA Agreement, Norwegian law complies with the EU/EEA rules on public procurement. Public procurement constitutes approximately 16 % of GDP in Norway. That gives f. ex 11 323 public tenders for more than 2 billion EUR in 2019. Most of them are for construction and IT sectors, which again suits well for Estonian export tenders. The tender process has a high level of transparency and integrity. As mentioned before Norway interpret and apply the rules with EU/EEA law. This entails that the Norwegian legislation for the main part is EU law and that the parts of the legislation that are strictly national are based on the same principles as EU law. Norway is also obliged to follow the WTO GPA.
There are a few things that foreign bidders should be aware of.
Language – almost all the documents are in Norwegian, same requirement for the offer itself. You might need at least an official translation. But there is an interesting niche of public procurement of innovation (again – perfect for some Estonian business), which makes most of tendered in English.
Written descriptions are the trickiest part in my eyes (especially if you don’t understand Norwegian and as often have not enough time). Because of a lot of written information. The tender owner also requests written descriptions of your proposal for solutions, products, alternatives, and options to be evaluated under the award criteria “Quality”. Please read that chapter about what the qualities is most valuable for the potential client, do the research and formulate your offer in a way that shows good understanding and proper quality of the suggested solution.
Prequalification is the second important step after choosing the right tender. Why – because here you will submit simple information about your company, but also you may need to enclose your potential cooperation partners locally and internationally. You will submit their info and the special forms too. It is important to follow the deadlines (that are absolute) and choose the right partners (if necessary). Many tenders are restricted procedures or competitive procedures with negotiation. For that will only a few qualified tenderers are invited to submit tenders (between 3 and 6, you can find it in tender info). It is important to reply correctly and pointedly to the criteria.
Dialogue: for tenders below EEA-threshold values (about thresholds later in this text) but above the national threshold values, national rules and legislation applies. Then more soft rules, including dialogue with the tenderers can be used. In that case, use your rights and possibilities wisely, ask smart questions and give clear answers yourself. Remember that in some faze of tender all the questions and replies will be open to all prequalified bidders. Sometimes it is better to keep your thoughts by yourself if access to them can give the competitors some advantages. In those situations, seek professional help or a piece of friendly advice from partners, clients, etc. all this is very different and very specific for the tenders. Maybe it sounds stupid, but I know that many times calculation/offering team use their intuition when information is limited.
But at the end of the day – please request information from the contracting authority when you are unsure. It is much better than making assumptions or including reservations in your tender (you might get rejected for it), but make sure you meet the deadlines.
5 tips for successful tendering in Norway (magnuslegal.no)
About the financial thresholds in Norwegian public procurement: The thresholds are connected to certain financial values. These threshold values are updated every two years. For contracts with an estimated lower value, national rules apply. Norway has a national threshold value of 1.1 million NOK
Threshold I: All contracts of between NOK 100,000 and NOK 1.3 million excluding VAT + Contracts for the purchase of health and social services for less than NOK 7.2 million excluding VAT. – No special procedure. Basic principles and provisions of FOA Chapter 7.
Threshold I and II: Goods and services contracts worth between NOK 1.3 million and NOK 2.05 million excluding VAT for all but state authorities + All construction contracts worth between NOK 1.3 million and NOK 51.5 million excluding VAT + Contracts for special services worth more than NOK 1.3 million excluding VAT requires an open offer competition (FOA § 8-3) and Limited supply competition (FOA § 8-3)
Threshold I and III: Goods and services contracts worth more than NOK 1.3 million excluding VAT for state authorities + Goods and services contracts worth more than NOK 2.05 million excluding VAT for all other enterprises + Construction contracts worth more than NOK 51.5 million excluding VAT (all enterprises) – applies open and limited tender competition (FOA § 13-1 (1)), Competition with negotiations (FOA § 13 (2)), Competitive dialogue (FOA § 13 (2)), Innovation Partnership (FOA § 13 (3))
Contracts for health and social services are worth more than NOK 7.2 million excluding VAT. Separate procedural provisions
Terskelverdier for offentlige anskaffelser | Anskaffelser.no
For providers, this means that the way to be invited to tender for these “smaller” contracts, is by making yourself visible to the contracting authorities.
- When possible, attend exhibitions.
- Have stands in relevant conferences.
- Have an online availability that is easily accessible to contracting authorities.
- It is also possible to ask to be allowed to present your product directly.
- Forward your brochures and marketing materials.
Tendering in Norway below EU/EEA-threshold values (magnuslegal.no)
As mentioned, the public procurement procedures shall be published in Doffin/TED. The publication shall cover all the procurement documents, including but not limited to the description of the product or services, the contractual terms, the requirements for the tender and the participants. For a complex contract with the following negotiation, the deadline must be a minimum is 30 days after publication, and at least 25 days after the invitation is sent.
I have mentioned a few things that can result in the denied access to tender, like deadlines, prequalification, not the following description, giving price for other than is asked, etc. But there are some well-known grounds for the exclusion of a bidder from participating in a tendering procedure.
The contracting authority shall exclude the bidder when:
- the bidder does not meet the qualification requirements,
- the bidders not having fulfilled his obligations to pay taxes, fees and social security contributions in their home country of Norway.
- when there is disqualification/incapacity which the contracting authority cannot remedy with less restrictive measure.
- the bidder has participated in the preparation of the competition and achieved an unfair competitive advantage
- the bidder has participated in a criminal organization,
- has been found guilty of corruption, fraud, terrorist or criminal offences, money laundering or terrorist financing, child labour and other forms of human trafficking.
The contracting authority can exclude unless the rejection is disproportionate when:
- the economic operator is bankrupt, is the subject of insolvency or winding-up proceedings, has been forced into debt settlement or equal processes,
- the bidder has committed severe violations of regulations for the protection of the environment, working and social conditions,
- conflict of interest which may negatively affect the fulfilment of the contract,
- the bidders made agreements to distort competition,
- the bidder has committed a severe breach of contract which has led to the termination of the contract, compensation for damages,
- the bidder provided incorrect and misleading information with significant influence on the decisions in tendering.
- the bidder has tried to influence the decision-making processor obtained access to confidential information.
- the supplier has committed misconduct which makes its professional integrity questionable.
Norway: Public Procurement – Country Comparative Guides (legal500.com)
Because of the complexity of tendering and consequences for misunderstandings or different regulations, many suppliers wonder if they need a lawyer to petition for access to documents in a procurement process and preparing the offer. The answer is no. For example requesting access to the tenders’ documents is something the suppliers can do on their own. The starting point for a request for access – in section 3 of is The Freedom of Information Act the main rule states that:
“Case documents, journals and similar registers of an administrative agency are public except as otherwise provided by statute or by regulations pursuant thereto. Any person may apply to an administrative agency for access to case documents, journals and similar registers of that administrative agency”.
For procurement processes, there is an exception in the Act section 23, third paragraph. This exception is often called the main practical rule for access to documents in a procurement process and states that:
“Exemptions from access may be made in respect of tenders/quotes and minutes under rules made in pursuance of the Procurement Act until a choice of supplier has been made”.
In other words, you are not granted access to the documents before a supplier has been selected. The reason for this is to maintain fair competition. After this point, however, the public is allowed access. This means that anyone, from the suppliers to the press, can request access.
Section 13 of the Freedom of Information Act regulates public access to information that is subject to a duty of confidentiality by or under law. Such information is as a rule exempted from access, even after the choice of supplier has been made. The most important example of this is found in the duty of confidentiality stated in the Public Administration Act section 13, paragraph 1, number 2. Under this rule in number 2, it is the duty of any person rendering services to or working for an administrative agency, to maintain the confidentiality of any matter disclosed to him, in the course of his or her duties concerning: “technical devices and procedures, as well as operational or business matters which for competition reasons it is important to keep secret in the interests of the person whom the information concerns”.
How do you request access? Simply send an e-mail request. The contact details of the responsible person you will find in the procurement documents.
Another thing Estonian companies ask is to explain the rules for the evaluation of bids. The evaluation of offers is based on specific award criteria and requirements The award criteria must be non-discriminatory, objective, and suitable to identify the best bidder. If you certainly discover a mismatch for it, you can inform the authorities about it. In my experience have been few tenders where the product or/and solution was described in a way that only one producer could be able to produce it accordantly to the description. With the calculation team, we made a notice for the owner of the tender and the description was changed. Most of the Norwegian experts, advisers, architects, who make those descriptions know the rules very well and that kind of mistake happens seldom.
Even if you lose the tender, you must know your rights as unsuccessful bidders. First, you have the right have to receive the reasons for your score and the reasons for the score of the winning bidder. Before the contract is signed, the owner of the tender is obliged to notify all prequalified participants about the contract award decision. The notification must include but not necessarily be limited to the reason for the decision, a minimum 10 days standstill period (in construction more common with 30 days), the name of the winner and a statement of the characteristics and relative benefits of the selected tender by the award criteria. And it is not only info you should get. In many cases, you can also request and receive a redacted version of the other offers.
And I strongly recommend using your rights, it is a common professional etic in Norway and many companies do it. This will (normally) provide good knowledge for the award decision. No less you get know your competitors, even their suppliers, maybe find the reason of losing the tender (too good (expensive) solution, too expensive products or working cost, too many options, not enough points to the quality or management criteria) Understand the system better and learn something for next tender. In my work experiences, we have done it for 10-20 % of tenders where it was crucial to understanding how the winner calculated the total price so much lower than the average. It took much time in complex tenders to compare all the prices etc.
But in many of those cases, we have learned about how to calculate and prepare offers better. Sometimes we so that our competitor forgot to include a part of required products or work and could make a notice to the tender responsible. At the end of the day, you will become wiser and more equipped for the future. Remember if the winner of any reason chooses do not to continue – you have a ready offer to step in :). And you know better how to offer next time. Nevertheless, your prices are ready for the next public or private tender.
How to complain then? No institutions are overseeing or reviewing tenders where a decision is not challenged by a third party. The supplier may complain to the Complaint Board for Public Procurement. The Board may also impose penalty fines in cases of illegal direct awards. Decisions are only advisory, and thus no appeal procedure applies, but the dispute may nonetheless be brought in before the courts. An unsuccessful tenderer will have legal standing to challenge the awarding authority’s decision before the Court. Complaints may also be filed before the EFTA Surveillance Authority for review. Decisions of the Norwegian courts may be appealed before the court of appeal, and a decision of the EFTA Surveillance Authority may be appealed before the EFTA court. The court can, as a rule, decide that a contract is terminated when the contracting authority has carried out an illegal direct procurement.
The number of procurements claims before the Courts each year varies, and not all decisions are publicly available. Based on publicly available court decisions from the years 2012 to 2018, the average number is 20. Complaints Board has considered an average of 176 procurement claims in the years 2012 to 2019. Only from 2017 to 2019, the average number is 139, showing a significant decrease in cases before the Complaints Board the previous years. As mentioned, there are no direct negative effects for a bidder to challenge an award decision by. But the process may be time-consuming and costly and still may indirectly affect further procurements. The cost for a court case may vary from NOK 100,000 to NOK 300,000. And those legal costs tend to increase with the complexity of the case. Time consumes for prioritized cases the expected time is two months, and 12 months for other cases. In other words, take this challenge if you have much to win or a good cause.
Norway: Public Procurement – Country Comparative Guides (legal500.com)
What if any changes become necessary after winning the tender? Generally, the Public Procurement Regulation prohibits any significant changes to the contract during the contract period. Those significant changes may come from an illegal direct award. Change of supplier will generally be considered a significant change. But sometimes such a change is allowed without publishing a new contract. This may be done when/if a new supplier takes over the existing supplier’s rights and obligations because of a restructuring, merger, acquisition, or bankruptcy. Other changes allowed to do may fall within a change clause in the contract. If changes do not exceed the threshold values or 10 % of the contract value, it can be expected. And the contract amendments may legally include additional deliveries, changes that are necessary due to circumstances that were unknown in the tendering and was not possible to foresee.
The following adjustments shall always be considered as substantial, and thus illegal:
- if the modification introduces conditions which, had they been part of the initial procurement procedure, would have allowed for the admission of other candidates or for the acceptance of a tender other than that originally accepted, or would have attracted additional participants.
- if the modification changes the economic balance of the contract or the framework agreement in favor of the supplier in a manner not provided for in the initial contract or framework agreement.
- if the modification extends the scope of the contract or framework agreement considerably; or
- where a new supplier replaces the one to which the contracting authority had initially awarded the contract in other cases than those explicitly mentioned in the Regulation.
Norway: Public Procurement – Country Comparative Guides (legal500.com)
I want to avoid the COVID theme in this article, it has been just too much last 2 years. I will only mention that COVID-19 crisis has caused Norwegians about the flexibility that already exists for the purchase of the supplies, services, and works needed to respond to the COVID-19 pandemic. Several measures “specially made” for the crisis:
- Immediate direct awards to a pre-selected provider, given that the provider was the only one able to deliver the required supplies within the time constraints imposed by the extreme urgency. Such direct contract awards have mostly occurred for the procurement of direct COVID-19-related items, such as personnel protective equipment and medical device.
- Reduction of the applicable bid deadlines, to accelerate procurements based on the “open” or “restricted” procedures that are laid out in the procurement regime.
- Conducting negotiated procedure procurements without a publication of a contract notice“where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with”.
- Finally, public bodies have been in need toextend existing contracts as permitted under the general EU public procurement regime and the national implementing laws. The COVID-19-pandemic has amounted to an “unforeseeable event” by the contracting authority, which in turn has led to the ability to amend existing contracts (including price increases up to 50% of contract value).
Those rules look to be adequately flexible for public procurement to respond to the COVID-19-pandemic. The Norwegian government has issued additional guidance at the national level on applicable rules to address the crises: https://www.regjeringen.no/no/tema/naringsliv/konkurransepolitikk/offentlige-anskaffelser-/covid-19-utbruddet-og-anskaffelsesregelverket/id2693720 (only available in the Norwegian language).
Norway: Public Procurement – Country Comparative Guides (legal500.com)
I am cooperating with several institutions about procurement in Norway topics. On the 20th of April, I will participate in a webinar organized by the Estonian Chamber of Commerce and Industry about Norwegian Public procurement peculiarities, specifics, opportunities for SMEs in 4 target sectors (IT, smart health, smart cities, green economy). They will also have an exciting program to present.”
Ryte Venckuviene, Enterprise Estonia export advisor in Norway
Sources:
https://www.anskaffelser.no/public-procurement/e-procurement
Norway’s National Strategy for Artificial Intelligence by Ministry of Local Government and Modernisation: https://www.regjeringen.no/en/dokumenter/nasjonal-strategi-for-kunstig-intelligens/id2685594/
Guideline/brochure “Business and industry in Norway – https://www.regjeringen.no/en
https://anskaffelsesakademiet.no/forskningsnytt/green-public-procurement-practices-norway/
https://www.bbc.com/news/world-europe-58896850
Norwegian energy facts website: https://energifaktanorge.no/en/interactive-map-quick-downloads/quick- downloads/
Introduction to the Norwegian Directorate of e-Health and the forthcoming establishment of a National Service provider: https://www.himss.eu/sites/himsseu/files/vestli-directorate-ehealth-national-service-provider.pdf
https://www.nordicinnovation.org/programs/innovation-health-sector-through-public-procurement-and- regulation
https://anskaffelser.no/nb/verktoy/veiledere/mottakere-i- elma#argument=undefined&query=&page=1 )
http://etiskhandel.no/English/Publications_and_Reports/index.html
https://www.anskaffelser.no/public-procurement/e-procurement/about-e- procurement/e-procurement-statistics ;
https://www.anskaffelser.no/sites/anskaffelser2/files/ maps_norway.pdf
Forskrift om offentlige anskaffelser (anskaffelsesforskriften) – Lovdata
Anskaffelser i økonomiregelverket – DFØ (dfo.no)
Direktoratet for forvaltning og økonomistyring (DFØ) – Innovative anskaffelser