Sweden: Public Procurement

The Swedish public procurement laws are based on and implement the EU procurement directives. The EU procurement directives apply to procurements above certain threshold values, but the Swedish legislator has chosen to adopt rules also for purchases below the EU threshold values.

A new EU regulation (Regulation 2022/1031, International Procurement Instrument – IPI) entered into force in 2022, and regulates access of third-country economic operators, goods and services to the union market. As a member of the EU, Sweden has also committed to comply with the provisions of the GPA.

Swedish procurement laws apply to contracts for supplies, services or works through contract award by contracting authorities and entities. For procurements below the EU threshold values, a national set of rules applies, included as separate chapters in the procurement laws.

The main public procurement laws in Sweden are:

1. The Public Procurement Act (Sw. lag (2016:1145) om offentlig upphandling). This act implements Directive 2014/24/EU and applies procurements within the classic sector.
2. The Act on Procurement in the Water, Energy, Transport and Postal Services Sectors (Sw. lag (2016:1146) om upphandling inom försörjningssektorerna). This act implements Directive 2014/25/EU and applies to procurements within the utilities sector.
3. The Defence and Security Procurement Act (Sw. lag (2011:1029) om upphandling på försvars- och säkerhetsområdet). This act implements Directive 2009/81/EC.
4. The Act on Procurement of Concessions (Sw. lag (2016:1147) om upphandling av koncessioner. This act implements directive 2014/23/EU.

The EU procurement directives apply above certain threshold values. The Swedish legislator has decided to adopt rules also for procurements below the EU threshold values (national set of rules).

The provisions for valuation of a contract correspond to Article 5 in Directive 2014/24/EU and are the same for procurements above the EU threshold values and procurements under the national set of rules.

The current thresholds apply as of 1 January 2022 and are stated in SEK below.

The Public Procurement Act

The Act on Procurement in the Water, Energy, Transport and Postal Services Sectors

The Defence and Security Procurement Act

The Act on Procurement of Concessions

The Swedish procurement laws include provisions regulating procurements below the EU threshold values.

Procurements above the direct award threshold, but below the EU thresholds, are subject to a simplified regulatory framework under national legislation. The national set of rules was amended during 2022, to allow for more flexibility for contracting authorities. The rules enable contracting authorities to freely decide how to design the procurement procedure as there are no longer any regulated procurement procedures for such procurements.

For direct awards below the direct award threshold, the contracting authority shall always observe the fundamental principles of procurement in the awarding process. Contracting authorities are required to set guidelines for the usage of direct awards of contract and shall document the conducting of all procurements for which the value exceeds SEK 100,000. The documentation shall be sufficient to justify the authority’s decisions during all stages of the procurement.

Procurements for contracts above the EU threshold values shall be advertised in the EU’s joint advertising database; Tenders Electronic Daily (TED) as well as in a national registered database.

With the definition of complex contracts provided, contracting authorities would apply a competitive procedure with negotiation or a competitive dialogue to procure a complex contract. The minimum period for submitting tenders correspond to those set out in the EU procurement directives, as a main rule 30 days from the date on which the contract notice was sent.

Only candidates who fulfil the qualification criteria may be selected to submit a tender. The criteria for limiting the number of candidates will depend on the type of contract and shall be objective and non-discriminatory. The criteria shall be stated in the procurement documents.

The Swedish procurement laws include both mandatory and discretionary grounds for exclusion of a bidder that correspond to Article 57 in Directive 2014/24/EU. The Swedish legislator has not used the possibility to require that contracting authorities exclude bidders from participation where the bidder is subject to exclusion grounds under Article 57.4, such exclusion grounds are therefore discretionary.

Bidders shall be excluded from participation in a procurement if the authority learns that the bidder, or certain representatives of the bidder, through a judgment that has entered into legal force has been found guilty of certain crimes, as specified in Article 57.1 of Directive 2014/24/EU. These exclusion grounds include inter alia corruption, fraud, money laundering or terrorist financing or trafficking.

A bidder shall also be excluded from participation in a procurement if the bidder is in breach of its obligations relating to the payment of taxes or social security contributions in (i) the country in which the bidder is established; or (ii) the country where the procurement occurs, and this has been determined by a judicial or administrative decision that has entered into legal force. If there is no judicial or administrative decision with legal force, the authority may voluntarily exclude the bidder from participation in the procurement if the authority can demonstrate by any appropriate means that the obligations referred to have not been observed.

There is no central register of excluded suppliers or suppliers subject to mandatory exclusion grounds in Sweden. Therefore, a solemn declaration that a bidder is not subject to exclusion grounds is often required.

The discretionary grounds of exclusion correspond to the exclusion grounds of in Article 57.4 of Directive 2014/24/EU and relate to other misconduct of the bidder. These discretionary exclusion grounds include inter alia situations where the authority can demonstrate that the bidder is in breach of applicable environmental, social or labour law obligations, is in an insolvency situation or is guilty of grave professional misconduct, which renders its integrity questionable.

The bidder shall be provided with an opportunity to make a statement on the circumstances which the authority considers to be grounds for exclusion before being excluded. A bidder may avoid being excluded, even if the bidder is subject to an exclusion ground, if the bidder can demonstrate its reliability by having taken certain measures in relation to the criminal offence or misconduct.

For procurements subject to the national set of rules, there are no mandatory grounds for exclusion. The contracting authority is free to determine the exclusion grounds for each procurement, including applying exclusion grounds in addition to those listed in the EU directives as long as such grounds of exclusion grounds are clearly stated in the procurement documents and conform with the fundamental principles of procurement.

With the definition provided of a complex contract, the procurement procedures suitable for the procurement of a complex contract would be the negotiated procedure with prior publication or the competitive dialogue. The total length of the procedure will depend on several factors, such as the complexity of the contract, the volume of the procurement documents and whether there is one or more negotiation sessions.

The negotiated procedure with prior publication is a two-stage procurement procedure in which all suppliers may apply to participate. The procurement process starts with the preparations, including identifications of the authority’s needs and drafting of procurement documents. Thereafter, the procurement is published, and bidders are invited to participate. For a negotiated procedure with prior publication, the minimum time limit for submitting a request to participate is 30 days, but this time limit may be shortened subject to certain actions or due time constraints. The candidates that the authority later selects to participate in the procurement will be invited to submit a bid, that will form the basis for later negotiations before the contract is awarded.

The open procedure is the most commonly applied procurement procedure. The open procedure is a one stage procedure, where all interested bidders may submit tenders. There are no negotiations when the open procedure is applied.

It is considered good practice for contracting authorities to adopt and implement procurement strategies and policies or guidelines for the conduct of procurements. Internal guidelines may include routines for ensuring that employees responsible for conducting the procurements are involved at an early stage of the decision making and discussions and should also address the process for direct awards. Further, various methods for obtaining the potential bidders’ views before a procurement is published are often used. This could include holding dialogue meetings, publishing requests for information or publishing draft procurement documents to receive the potential bidders’ views on unnecessary or cost-driving requirements as well as suitable contractual terms.

Authorities that take measures as set out above, can achieve procurements that are well-balanced, adequately meets the needs of the authority and do not restrict the number of potential bidders through unnecessary requirements and ensure best value for money. This could also have the effect of mitigating the risk that a supplier applies for review of the procurement in court.

Public contracts shall be awarded to the supplier with the tender that is most economically advantageous for the contracting authority, which is assessed on the basis of one of the following grounds

• best price-quality ratio,
• cost, or
• Price

The rules for evaluation of tenders correspond to Article 67 in Directive 2014/24/EU. The evaluation ground shall be stated in the procurement documents. The Swedish legislator has not used the possibility under Directive 2014/24/EU to restrict contracting authorities’ possibility to evaluate tenders solely on the basis of price.

When evaluating tenders based on the best price-quality ratio, the authority shall evaluate the tenders based on criteria connected to the subject-matter to be purchased. The award criteria shall ensure effective competition and must not give the contracting authority unlimited freedom of choice. The criteria shall be weighted relative to each other and shall be presented so that it, based on the supplier’s information, is possible to review how well a tender satisfies the criteria. If the authority evaluates the tenders based on cost, the authority shall assess the effects of the tender in regard to cost-efficiency, for instance through an analysis of the life cycle costs.

Swedish procurement legislation does not include any definition of what an “abnormally low” tender would be.

For procurements above the EU threshold values, Swedish procurement legislation regulates a process for the treatment of abnormally low tenders that corresponds to that set out in Article 69 of Directive 2014/24/EU. This includes a requirement to request an explanation from the bidder if the contracting authority identifies a tender as abnormally low and an obligation to reject the tender if the bidder has not satisfactorily explained the low price or cost.

For procurements below the EU thresholds, the contracting authority has a possibility, but no obligation, to reject a tender that is identified as abnormally low. Before a tender may be rejected, the contracting authority shall require an explanation from the bidder and the tender may only be rejected after the contracting authority deems that the explanation is not adequate.

The contracting authority shall as soon as possible notify the bidders in writing about the decision that has been made on the contract award. The notice should include the reasons for the decision as well as the length of the standstill period, i.e., the time during which the authority is prevented from concluding an agreement and bidders may apply for review of the procurement.

Bidders may request additional information on the reasons that the bidder’s application or tender has been rejected. Upon request of a bidder that has submitted an admissible tender, the contracting authority shall also provide information about (i) the design and relative advantages of the tender selected, and the name of the bidder awarded the contract or the parties in the framework agreement, and (ii) how negotiations or dialogues with the bidders have proceeded, where relevant.

Many contracting authorities in Sweden are subject to the principle of public access to official documents. Such authorities are obligated to provide the winning tender to a competitor upon request. To the extent information therein is covered by a provision of confidentiality under law, such information may be kept confidential where it could damage the bidder if the information is disclosed. This possibility to review the winning tender is often used by unsuccessful bidders. It is only possible to request copies if competitors’ tenders after the notification of an awarding decision has been made, since all information relating to bidders and/or the bids is confidential up to this point.

The remedies available to bidders under Swedish procurement laws include:

1. Applying for review of the procurement or of a decision to cancel a procurement;
2. Claiming damages for harm caused by the authority’s violation of a provision of the applicable procurement act; and
3. Applying for review of the effectiveness of a contract concluded by a contracting authority and a supplier.

Following an application for review of the procurement, an administrative court may order that the procurement shall be recommenced or that it may be concluded only after corrections have been made. An application for review must be submitted to the administrative court before the end of the standstill period.

Claims for damages are handled by the general courts and the claim must be submitted to the court within one year from the date the contract was concluded between the authority and a supplier.

Contracts that have been concluded without a prior call for competition in violation of procurement laws may be declared ineffective by an administrative court following an application from another supplier. As a general rule, the application shall be submitted to the administrative court within six months from conclusion of the contract, but in certain situations the time limit is 30 days. If the court declares a contract ineffective, all contractual obligations retrospectively terminate.

It is fairly common in Sweden that public procurements are challenged. In recent years, approximately 7 – 8 per cent of all published procurements were appealed.

There is generally no perception that bidders that make challenges suffer reputational harm or harm to their prospects in future procurements.

The final cost for a claim will depend on several factors, including the type of proceeding. There is no fee for a bidder for submitting an application for review of a procurement or an application for review of the effectiveness of a contract to the administrative court. For such proceedings, each party bears its own legal costs and the losing party has no obligation to compensate the winning party for its legal fees for the proceedings. The applications for review are handled as written procedures and attendance in court and hearings are rare. The cost for the procedure will depend on the complexity of the case and whether the parties choose to engage external counsels or not.

For claims for damages, the final cost risk to be higher than for the applications for review. There is a small fee to be paid to the general court for the court to handle the claim. Further, the losing party will risk having to compensate the winning party for all, or part, of its legal fees for the proceeding. Claims for damages are handled by the general courts and attendance in court and hearings are generally part of the proceeding.

The time for the proceedings before court will depend on several factors, such as the number of violations of procurement laws and the complexity of such violations. Applications for review are generally handled as written procedures. The court will communicate the submission from one party to the other party and provide the party with an opportunity to respond. This will continue until the court deems that the case has been sufficiently examined. In recent years, the average time for an administrative court of first instance to handle an application for review 3.5 – 4 months for cases examined on the merits. In 2022, new legislation entered into force with the objective of achieving a more efficient appeal procedure in the administrative courts for public procurement cases. It is not possible yet to assess the effects that the new legislation has on the average time for procurement disputes to be resolved.

It is possible to appeal a judgment of the first instance to an administrative court of appeal, but leave for appeal is needed for a case to be examined on the merits by the administrative court of appeal.

Generally, Swedish public procurement laws do not differ between suppliers within the EU and suppliers based in countries outside the EU. This said, under the Act on Procurement in the Water, Energy, Transport and Postal Services Sectors, contracting entities have the possibility to restrict an award to tenders covering products originating in third countries with which the EU has not concluded, whether multilaterally or bilaterally, an agreement ensuring comparable and effective access for EU undertakings to the markets of those third countries.

Under EU Regulation 2022/1031, International Procurement Instrument – IPI), the European Commission has certain powers to decide to restrict the access of economic operators, goods or services from a third country to public procurement procedures within the EU. The European Commission will provide further guidance to facilitate the application of the International Procurement Instrument.

The GPA also includes some possibilities to limit the possibility for suppliers outside the EU to participate in certain procurements, but the Swedish legislator has not used this possibility.

A subsidiary based in Sweden affords the same rights and remedies as a nationally owned company.

There is no specialist court or tribunal for public procurement issues in Sweden.

Amendments to public contracts are subject to regulation under Swedish procurement laws. The provisions are based on Article 72 of Directive 2014/24/EU. The Defence and Security Procurement Act does not contain any explicit provisions for amendments of contracts, but certain amendments are possible also to such contracts.

A change of supplier is permitted if the new supplier, universally or partially succeeds into the position of the original supplier, following corporate restructuring, including takeover, mergers, acquisitions or insolvency, and the change of supplier does not entail other substantial modifications to the contract or framework agreement. A change of supplier further requires that the new supplier is not subject to any mandatory exclusion ground under procurement laws and that it satisfies the criteria for qualitative selection of the original procurement. In addition, a subcontractor of a supplier may, without a new procurement, also succeed into the position of the supplier as a result of an agreement between the supplier, the authority and the subcontractor.

Given that the main rule is that public contracts shall be subject to prior publication, and that the possibility to make direct awards are limited, direct awards of complex contracts are generally not common in Sweden.

For contracts above the EU threshold values, direct awards without prior notice may be used when the conditions for using a negotiated procedure without prior notice are satisfied, e.g., when competition is absent for technical reasons, or the subject-matter of procurement is protected by exclusive rights, and therefore can only be supplied by a certain supplier.

Before a contract is concluded, a supplier who considers that there are no grounds for making a direct award may submit an application for review of a procurement through direct award. If a contract has been concluded, the supplier may instead submit an application for ineffectiveness of the contract and request that the court shall declare that the contract is ineffective. For further information on the available remedies, please refer to question 14.

The public procurement regime is adapted for urgent situations and the possibilities allowing for more flexibility have been useful during the COVID-19 pandemic.

During the COVID-19 pandemic, contracting authorities have used the possibilities for flexibility permitted under the procurement legislation to a further extent. This includes e.g. using the possibilities to apply an accelerated procedure, to make contract awards without prior publication due to extreme urgency brought about by events not attributable to and unforeseeable by the contracting authority. We have also seen a rise in questions relating to the possibility to modify existing contracts where the need for modification has been brought about by circumstances which a diligent contracting authority could not foresee.

As contracting authorities and suppliers have become more accustomed to make use of the flexibility provided for within the legal framework, it can be expected that this will continue also going forward.

In relation to ongoing contracts, there have been challenges as suppliers have not been able to e.g. comply with delivery times or to continue to supply products or services at the price agreed in the initial contract. Even though the public procurement regime includes possibilities to modify public contracts, there are limitations as to the modifications permitted. The legal framework has therefore not been perceived as sufficient to meet the need for modifications in all situations. We have also noted that there have been uncertainties in terms of what evidence is required from the supplier to demonstrate that there is a need for a modification, e.g. a price increase, with contracting authorities requiring different types of evidence. This has also been perceived as difficult by some suppliers, as documents submitted to contracting authorities may become public documents.