SWEDEN: An Introduction to Public Procurement

What to Expect in Public Procurement in Sweden

Public procurement in Sweden is evolving. Below, in no particular order, are five of the main trends we believe will characterise the upcoming years in public procurement.

It is harder than ever for suppliers to win procurement cases in the administrative courts

In 2013, the success rate – ie, the percentage of procurement cases where the administrative court ruled, in whole or in part, in favour of the supplier’s request, was 30%.

For a case in an administrative court, this was a relatively high success rate, but it could likely be explained by the complexity of procurement regulations (making it difficult for authorities to get things right) and the fact that suppliers could successfully apply for review, even when it could be questioned whether or not the supplier actually suffered any harm from the alleged infringement of procurement law.

In 2023, which is the most recent available data on success rates in administrative courts, the rate was 9%. We would argue that the decrease in success rate over the past ten years is not due to the procurement regulations becoming easier to understand and apply.

What seems to be the most likely explanation for the declining success rate, which has especially accelerated in recent years, is the development following the Supreme Administrative Court’s ruling in the case HFD 2022 Ref 4 I and II – ie, the case that led to what is sometimes referred to as the obligation to raise objections.

The development, whether one believes it was intended by the Supreme Administrative Court or not, means that it becomes crucial for suppliers to monitor their legal positions and raise any legal issues before submitting a tender in a procurement. Many foreign suppliers are unaware of this practice and therefore risk being effectively deprived of their right to legal review of a procurement in Sweden.

Growing interest in seeking damages for infringements of procurement law

A natural consequence of the administrative courts’ increasingly summary examination and increasing focus on burden of proof rules and questions of preclusion, is that the need for an alternative forum for examining substantive procurement issues has become more pressing. Where suppliers feel they have not received a fair and comprehensive examination in the administrative courts, they tend to take the matter to the general courts, seeking damages.

Procurement often involves very high contract values, and we perceive a growing interest among suppliers for the more comprehensive review that a general court trial can offer. We have also recently seen examples of general courts overturning the assessment made by the administrative courts and reaching entirely different conclusion on the issue of law.

This, of course, presents a risk for contracting authorities who have relied on a favourable administrative court ruling and entered into a contract with a winning supplier. If the general court makes a different assessment in a multimillion procurement, there is a potential risk for the authority having to pay quite substantial damages.

Civil preparedness leads to a greater regional focus

As a response to the Russian war on Ukraine, Sweden is undergoing a rebuilding of its civil defence capacity. This reconstruction largely revolves around creating greater transparency and resilience in the supply chains that support critical infrastructure and public services.

The public sector in Sweden will, of course, still depend on foreign suppliers for its operations, but there is a clear interest in creating a greater local presence when it comes to the most central production resources and competencies.

One challenge moving forward will be to reconcile increasing demands for national and local presence with goals (and legal requirements) for cross-border competition.

Hand in hand with this development is the increasing degree of protectionism that also influences the EU’s view on procurement law. Sanctions against Russia and the International Procurement Instrument (IPI) have placed public procurement at the heart of international trade policy. Furthermore, the EU Court of Justice recently found in case C-652/22, Kolin, that it is permissible, sometimes even required, to discriminate against suppliers from countries that are neither EU members nor signatories to the GPA.

This represents an important deviation from how Sweden previously viewed the procurement regulations, where the presumption was that all suppliers had the same right to participate in public procurement and access judicial review, regardless of where the supplier was based.

This legal development, combined with an increasing Swedish interest in excluding suppliers from certain countries from participating in public procurements for essential services, suggests that discrimination against third-country suppliers and favouring suppliers with regional production will likely become one of the more pressing procurement issues in the coming years.

Combating welfare crime

In recent years, there has been a wake-up call regarding welfare crime – ie, criminal activities aimed at public authorities, and there is now broad political consensus that this is a priority issue, particularly within the framework of public procurement.

In the legislative proposal SOU 2023:43, a co-ordinated register check for contracting authorities and entities is proposed, as well as the introduction of a more centralised function for supplier checks. In another legislative proposal, Ds 2024:24, Expanded Register Checks for Employment in Municipalities, increased powers for background checks are also proposed.

There is no doubt that Sweden has had too naïve an attitude towards the criminal elements that may infiltrate both authorities and the supplier community, but this issue also highlights the importance of continuous contract follow-up to identify any irregularities as soon as possible. Suppliers will also be held responsible for criminal elements infiltrating their supply chains and may risk exclusion from the Swedish procurement market in its entirety.

The digital purchaser

Finally, as in all other sectors, the procurement community sees great advantages in increasing the digitalisation of the more mundane tasks.

There are already tools for automated creation of procurement documents and contracts, and it will not be long before simpler legal processes in procurement could be handled automatically using digital tools.

We believe and hope that this development will allow purchasers and procurement lawyers to focus less on tender formalities and more on the actual outcome of the procurement.

If AI and other digital tools can relieve the purchaser of more routine tasks, time will be freed up for more RFIs, dialogue, negotiation and contract follow-up, as well as collaboration with suppliers.

Perhaps an increased digitalisation of the purchaser’s tasks will even lead to more in-person meetings between purchasers and suppliers.