Procurement thresholds – when does the Procurement Act apply, and what does it mean for a bidder?
Public procurement is governed by legislation, but not every order of office supplies or small piece of expert work has to go through a heavy tendering process. The line between freer purchasing and strict statutory tendering is drawn using thresholds.
Thresholds are limits expressed in euros. When the value of a procurement planned by a public buyer exceeds the limit, the procurement must be tendered under the Procurement Act and published. For a bidding company, understanding the thresholds is essential, because they determine which channels tender documents are published in and which rules the tendering follows.
Three different markets
The thresholds divide public procurement into three different categories.
1. Small-scale procurements (below the national threshold)
If the estimated value of a procurement falls below the national threshold, it is a small-scale procurement. The Procurement Act does not apply to these; instead the buyer follows the internal procurement rules of its own organisation (a municipality or agency, for example).
- What does it mean for a bidder? Small-scale procurements do not have to be published in the Hilma portal (hankintailmoitukset.fi). A buyer can request bids directly from suppliers of its choice or publish them in its own small-procurement portal. This is an agile, fast market in which proactive selling and direct contact with buyers matter most.
2. National procurements
When the value of a procurement exceeds the national threshold but stays below the EU threshold, the buyer must follow the Procurement Act.
- What does it mean for a bidder? An official national contract notice must be published in Hilma. The tendering process is clear and follows the rules laid down in law, including those on bidders' suitability and the award criteria.
3. EU procurements
Very large procurements exceed the EU thresholds. These are significant in volume.
- What does it mean for a bidder? In addition to Hilma, the procurement is published in the Europe-wide TED portal (Tenders Electronic Daily). The deadlines for bids are stricter and often longer, and the procedures are defined in legislation in even more detail than for national procurements.
The most common thresholds compared
Below is a table of the most common thresholds. The national limits are more stable, whereas the EU thresholds are typically revised every two years.
| Type of procurement | National threshold | EU threshold (indicative) |
|---|---|---|
| Goods and services | 60 000 € | 143 000 € / 221 000 €* |
| Works contracts | 150 000 € | approx. EUR 5.5 million |
| Health, social and special services | 400 000 € | 750 000 € |
| Concession contracts | 500 000 € | approx. EUR 5.5 million |
(the EU threshold for goods and services depends on whether the buyer is a central government authority or, for example, a municipality).
How is the value of a procurement calculated? (The ban on splitting)
The value of a procurement cannot be estimated freely; the buyer must calculate the total estimated value excluding VAT.
The law contains a strict ban on splitting contracts. This means that a natural whole may not be artificially divided into smaller parts merely because the buyer would like to avoid exceeding the threshold and the heavier tendering that follows.
If the contract is open-ended (a continuous cleaning service or software maintenance, for example), the estimated value of the procurement is typically calculated as the value over 48 months, that is four years. If the monthly price of a service is EUR 1,500, for example, its calculated value over four years is EUR 72,000. The national threshold of EUR 60,000 is then exceeded, and the service must be publicly tendered under the Procurement Act.
Summary
The thresholds are the backbone of the Procurement Act. By following Hilma you keep track of national and EU-level procurements. If your company offers solutions whose value regularly stays below the thresholds (a total value below EUR 60,000, say), there is no point waiting for tenders in the official channels. In that case the sales strategy should be aimed directly at decision-makers and at organisations' own small-procurement channels.
Frequently asked questions
What do the thresholds mean?
Thresholds are limits expressed in euros; once they are exceeded, the procurement must be tendered under the Procurement Act and published. They divide public procurement into three markets: small-scale procurements, national procurements and EU procurements.
What is the national threshold for goods and services?
EUR 60,000 (excluding VAT). Purchases below that are small-scale procurements, which do not have to be published in Hilma. For works contracts the national threshold is EUR 150,000 and for health and social services EUR 400,000.
How is the value of a procurement calculated?
As the total estimated value excluding VAT. For open-ended contracts the value is typically calculated over 48 months. The ban on splitting prevents a whole from being artificially divided in order to stay below the threshold.
Sources: Public Procurement Act (1397/2016), sections 25–26. The EU thresholds are typically revised every two years — current values: hankintailmoitukset.fi