• 25.08.2025 at 06.45
• Compliance audit, Performance audit

Central government in-house procurement

The audited central government’s procurements from in-house entities involved legal risks, and in some cases, procurements had also been carried out in violation of the procurement regulations. The in-house entity status of HAUS Kehittämiskeskus Oy has been jeopardised due to excessive external sales. CSC – IT Center for Science Ltd has made reverse in-house procurements and in-house sister procurements in violation of the procurement regulations.

The audit focused on procurements from state-owned in-house entities. An in-house entity refers to an entity that is formally separate from the central government’s contracting entity and independent of it in its decision-making and over which the state owner, either alone or together with other shareholders, exercises control. Procurements from in-house entities do not have to be tendered.

The audit examined the appropriateness and legality of the status of state-owned in-house entities as well as the risks associated with their status. From perspective of cost-effectiveness, the audit examined whether procurements from in-house entities have been economically efficient and whether in-house entities are an appropriate way of organising the operations. The audit was targeted at the seven largest state-owned in-house entities in terms of procurement volume.

In-house procurements have obvious benefits for central government authorities. One of the key benefits is avoiding the burdensome competitive tendering process. This reduces administrative costs and frees up resources needed to carry out procurements. State-owned in-house entities do not usually have significant negative effects on the market. There are no direct competitors in the market for their services, or the market effects of in-house entities are rather limited.

The audited in-house procurements involved legal risks, and in some cases, procurements had also been carried out in violation of the procurement regulations. There is legal uncertainty involved in interpreting the in-house entity regulation in such a manner that the sales of a subsidiary operating on the market are not considered external sales (Motiva Oy and Suomen Erillisverkot Oy).

Uncertainties are also associated with the interpretation that service sales are not subject to the external sales restrictions under the procurement regulations (Suomen Erillisverkot Oy), because the service provision is based on the implementation and usage obligation set out in law. The in-house entity status of HAUS Kehittämiskeskus Oy has been jeopardised due to excessive external sales. CSC – IT Center for Science Ltd has made reverse in-house procurements and in-house sister procurements although it has several owners and such procurements are not allowed.