Practical experience of the new Standard Terms and Conditions for IT public procurement in Finland

18 July 2008

Kari-Matti Lehti

Eight months after the Finnish government issued new standard terms and conditions for IT procurements, we look at how popular these terms and conditions are. We consider how successfully these have replaced the old terms and conditions, and consider the next steps for more successful use of these terms.

In October 2007, the Finnish government issued new Standard Terms and Conditions on public IT procurements. The JIT 2007 terms replace the old VYSE 1998 standard terms and conditions. Eight months after its introduction JIT 2007 has become widely adopted within the Finnish public sector and the use of VYSE 1998 in new contracts or Request for Particulars has virtually ended.

JIT 2007 is based on a modular structure, consisting of one set of general terms and conditions that should always be used and five specific terms and conditions. These specific terms and conditions cover consulting, continuous services, procurement of customised software, procurement of standard software and procurement of hardware. JIT 2007 envisages that users will choose the most applicable terms and conditions to their procurement.

After eight months of JIT 2007, practical experience shows that despite the wide acceptance of JIT 2007, public entities have not fully understood the guidelines given by the Finnish government on its use. JIT 2007 has mainly been used in public procurements by referring generally to the terms in the RFP documents. References to the specific terms and conditions that apply are not generally included. It is common not to include a statement as to whether the public body is willing to deviate in any way from the individual terms and conditions of JIT 2007. The result of this is that suppliers are often unsure as to whether they are entitled to suggest deviations from JIT 2007. Their concern is that if they suggest changes, they may risk being disqualified from the procurement process. It is also not clear to suppliers which specific terms and conditions would be applicable to the procurement in question. This has a significant effect on suppliers’ pricing models as the deliverables remain undefined due to the uncertainty over legal terms and conditions.

As there are many customer friendly terms and conditions in JIT 2007, it is in the interests of both the customer and the supplier to be fully aware of how JIT 2007 applies. Whether a customer wishes to deviate from the terms and conditions may depend on which of the specific terms and conditions are intended to be applied to the public procurement. This means that in practice, legal advisers must increase their awareness of how the legislation applies. It will also be important, as time passes, for both customer and suppliers operating with the public sector procurements to be fully aware of how JIT 2007 is intended to work.