Nacka municipality should have procured a construction contract

Nacka municipality argues that the agreement for new premises for the municipal high school is a lease agreement, with elements of construction work in the form of an extension. Since the main purpose of the agreement is to lease premises, not to construct the new building, it falls under the lease exemption in the Swedish Public Procurement Act. This means that, according to the municipality, the agreement does not need to be procured in accordance with the public procurement rules.

According to the Swedish Competition Authority, the main purpose of the agreement is to construct a new building. The municipality's renting of school premises is more of a complement to the arrangement. Therefore, it is considered a construction contract, and the lease exemption cannot be applied. The agreement falls within the framework of The Swedish Public Procurement Act and should have been procured and prior noticed according to the procurement rules.

"We repeatedly see various types of direct award of contracts without publishing a contract notice in connection with construction contracts. If an agreement entails a contracting authority purchasing a construction contract, public procurement rules must be followed," says Rikard Jermsten, Director General of the Swedish Competition Authority.

The Swedish Competition Authority is now petitioning the Administrative Court of Stockholm that Nacka municipality be ordered to pay a procurement fine of SEK 3 million for an illegal direct award of contract.