Watch the recording of the panel discussion: Public digital procurement in transition - what should be done differently?
Competitive tendering for public digital procurement has been a long and sometimes heated debate in Finland. The panel discussion organised by Wunder will approach the topic from a solution-oriented perspective, covering pain points in pricing, tendering conditions, use of tendering consultants and considering improvement solutions from the perspective of the client, the supplier and the ICT sector as a whole. Digital public procurement in transition - what should we dare to do differently in tendering?
Public sector digital procurement is much more than individual projects or technical implementations. They shape the entire Finnish ICT market: what kind of skills are valued, who gets to compete and what digital services for citizens will ultimately look like.
This topic has remained an active debate for a longer period of time, for several understandable reasons. Criticism has focused on issues such as pricing, the burdensome nature of competitive tendering, the narrowing of markets, and on whose terms digital services will ultimately be developed. The debate is important and that is why we wanted to invite the various parties to come together to consider proposals for improvement.
The aim was to bring together the day-to-day realities of the public sector subscriber, the practical experiences of digital service providers and the perspective of the IT sector as a whole and its international competitiveness.
The discussion was attended by Jonna Savikumpu, Head of ICT Infrastructure Services at Metsähallitus, Rasmus Roiha, CEO of Software Finland ry, Iris Alanen, Head of Business at Gofore, and Ulla Koho, CCO at Wunder. The panel allowed for a broad examination of public digital procurement: from the perspective of the customer, the supplier and the industry as a whole, up to export potential and national competitiveness.
Competitions drive the entire IT market
The panel strongly emphasized the idea that public sector digital procurement has an exceptionally large steering effect on the entire sector due to its scale (billions of euros per year). The terms of tenders have a direct impact on the kind of business that makes sense to develop in Finland, the kind of talent available for jobs, and the kind of players that will succeed in the market.
"The terms of tenders have a much bigger impact than is often thought - they drive the whole market, not just a single project." - Rasmus Roiha, Software Finland Ry
When properly designed, tenders can act as a force for the whole market: they can encourage quality, responsibility and innovation and enable Finnish companies to grow internationally. If they are wrongly designed, they can lock structures and reduce competition long into the future.
When the pursuit of certainty closes doors
Both the commissioner and supplier presentations highlighted the phenomenon of sometimes overly cautious drafting of tender conditions, as if to make sure. Reference, resource, and turnover requirements easily rise to a level that excludes a large proportion of potential bidders even before the actual competition.
"Conditions built for certainty easily exclude players who could actually deliver a quality outcome." - Rasmus Roiha, Software Finland Ry
On the client side, this is done explicitly as risk management, but on the supplier side the consequences are concrete: competition is narrowed, options are reduced and the market starts to favour only certain sizes and types of players and actors at the person level. Ultimately, the effects are also reflected in the quality of services and the ability to innovate.
"This is exactly what these market dialogues would help to find the golden mean" - Jonna Savikumpu, Metsähallitus
Price shock - when point optimisation supersedes quality
Pricing emerged as one of the key pain points in the debate. Several panellists described the phenomenon, also aptly called price shock. It refers to a situation where a competitive pricing model directs suppliers to optimise individual price lines and roles so that the overall score is matched - not to make the end result sustainable or of high quality, but to win the competition.
"You might "sacrifice" in the price of more expensive skills that are needed less in volume and "compensate" in roles that generate more billable hours, pushing the price up a few euros. There are other ways to implement the whole, where hourly pricing would not be an issue."- Ulla Koho, Wunder
The problem with the price dock is not just the price, but the fact that life-cycle thinking is left aside. Pricing models (fixed price, hourly, project price) have a significant impact on how the supplier and the client work together.
"We come across the fact that there is only one price in the tender. And quality scores may play an even smaller role than price. Even if the contractor says that the client has the option of ordering with different project models, the tender is decided on the basis of the price per man-hour and then the client may not get a quality delivery when the so-called price hag wins and may not be able to deliver at least for the whole contract period at the winning price." -Iris Alanen, Gofore
Digital services are easily seen as one-off projects, when in reality they require continuous development, responsiveness to change, and the managed use of new technologies - such as artificial intelligence - throughout the contract period.
Consultants supporting - or distancing from the need?
The role of competitive consultants was both praised and criticised in the debate. Consultants can bring structure, legal expertise, and fairness to the process, especially in large and complex procurements. This was seen as genuinely useful in many cases.
At the same time, it was stressed that substantive expertise and responsibility for procurement objectives cannot be outsourced.
"The customer owns the day-to-day workflows and the customer's substantive knowledge must be at the heart of the procurement" - Ulla Koho, Wunder
If the core and ownership of the procurement process are too externalised, there is a risk that the contracting organisation's ability to steer and develop procurement during the contract period is weakened.
Solutions lie in practice, not just in law
Perhaps the most encouraging message from the panel was that many of the problems identified do not require changes to procurement law. Many of the solutions relate to the way tendering is prepared and implemented in practice.
Avoidance and genuine market dialogue, fragmentation of procurement, modularity, and a move towards partnership and life-cycle models emerged as ways in which tendering can be developed already within the current framework.
However, there is a willingness to develop the whole field together, and one organisation that promotes cooperation and overall development of the ICT sector is the Hankinta-Suomen ICT-KohtaamoOpens in a new tab mentioned by Jonna and Rasmus.
Watch the full panel discussion and delve deeper into the topic
We have highlighted a few points from the panel discussion in this article. In the hour-long recording, we take a deeper dive into topics such as how public digital procurement affects the export potential of Finland's ICT sector, why IPR issues are critical to the development of Finland's GovTech exports and how artificial intelligence will change the logic of tendering in the coming years.
Watch the full panel discussion(in Finnish) on YouTube Opens in a new taband form your own opinion on the direction in which public digital procurement in Finland should be developed. You can also join the conversation on Linkedin with the tags #julkisethankinnat #digikehitys.