Volume of public procurements up more than €800 million last year

Cranes (photo is illustrative).
Cranes (photo is illustrative). Source: Ken Mürk/ERR

A Ministry of Finance overview shows that the number of public procurements, as well as the total sum and contested procurements all went up in the previous year. The volume of public procurements increased by more than €800 million during the pandemic when compared to the previous year.

The number of public procurements went up by 292 last year compared to 2019. The total sum of tenders also saw a significant increase, reaching €3.87 billion, up from €2.9 billion in 2019.

2.7 percent of all tenders were contested last year and a total of 28,813 challenges were presented, which affected 224 procurements initiated in the last year, the finance ministry overview reads.

One challenge was presented for 182 tenders and two challenges were presented for 32 tenders. The remaining tenders saw up to seven different challenges.

The overview also notes that larger procurements are more often challenged, which is why the average price of challenged procurements is multiple times higher than that of unchallenged procurements. The average cost of a challenged procurement was €2.8 million last year, the average cost of unchallenged procurements was €0.47 million.

In 2020, the rate of challenged procurements among all procurements increased, making up 2.7 percent, up from 2.0 percent the year prior.

Data from the Public Procurement Review Committee (VAKO) shows that there were more challenges than previous years. According to the ministry, the number of challenges was expected, because an option to reimburse legal costs was implemented in 2019.

The state used procurements to encourage economy

In 2020, there were 8,323 state procurements initiated in the procurement database, 1,270 of which were small procurements. The total cost of procurements in 2020 was €3.742 billion, up by more than €800 million from the year prior.

The finance ministry noted that the significant increase in total cost stems from larger investment contracts and state activity in reinvigorating the economy, which was hit by the coronavirus pandemic. The state accelerated investment projects and allocated resources to local governments for investments.

"The increase in the total cost of state procurements stems from large-scale state procurement contracts signed in different sectors (such as coronavirus testing, developing Eesti Raudtee infrastructure, buying personal protective equipment, Eesti Energia investments)," the ministry explained.

As the state does not intend to stimulate the economy with tenders going forward, the total volume of tenders for 2021 will likely be less than in 2020, the ministry forecast.

As of June 28 2021, 160 of the procurements initiated in 2020 are still uncompleted and 1,035 ended without a contract.

Each year, some 1,000 tenders are ended without contracts, the ministry noted. The most common reasons are rejecting all offers, non-submissions of participation requests in tenders or rejecting all offers on the grounds that no offer was declared suitable.

12,665 procurement and framework contracts have been signed in relation to the 8,323 procurements initiated in 2020. The total sum of these contracts amounts to €7.74 billion. The total sum exceeds that of previous years since 59 international framework contracts were signed in order to acquire large amounts of personal protective equipment.

The rate of state procurements of the GDP has been steadily around 10-12 percent in earlier years, but the rate increased to 14 percent of the GDP last year. The rate of procurements in the state budget also increased, going from 28 percent to 32 percent.

Number of participants in state procurements also up

While the average number of participants in state tenders has been 3.4-3.6 submitters in previous years, the average number reached four in 2019 and went to 4.6 in 2020. The ministry noted that an increased number of tender participants was one of the goals.

The highest number of participants in procurements was in the construction sector, which saw an average of six companies interested in tenders in 2020. The average number of tender participants was 4.46 in services (4.61 in social services and 3.14 in special services) and 3.48 in goods procurements.


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Editor: Kristjan Kallaste

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