Is It All Worth It? Litigation Risks in Public Procurement and Role of Reputation in Particular: Evidence from Finland

Tutkimustuotokset: Kirjoitus lehdessä tai erikoisnumeron toimittaminenArtikkeliTieteellinenvertaisarvioitu

Abstrakti

The ultimate goal of the public procurement remedies system is to ensure an effective enforcement of procurement rules and to ensure that companies can appeal against contract awards and other decisions as efficiently and quickly as possible. In Finland several studies have explored ways of improving the efficiency of the public procurement appeal systems and different measures that aim for increasing effectiveness of judicial review have also been adopted. However, these measures, including increasing the court fees, national thresholds or introducing a system for leave to appeal, have made it more difficult and less attractive to appeal against procurement measures. Moreover, there is a high withdrawal rate of complaints to the Market Court in Finland. This article assesses the factors which, alone or in combination with other factors, have led companies to decide to withdraw their procurement appeal. These factors include, among others, the processing times, the cost of litigation and other factors. Further, we also examine whether potential reputational concerns prevent companies from challenging award decisions. However, the main focus in the article is on assessing whether concerns relating to an establishment or preservation of a good business relationship affect companies’ decisions to withdraw an appeal. The results show that reputational risk—or in other words, the aim to preserve good business relationships—has an impact on the companies’ decisions, i.e. the withdrawal of the appeal. Moreover, the results demonstrate that such concerns also affect the future behaviour of firms regarding whether or not to initiate legal proceedings in the first place. In relation to the financial risks relating to the dispute, the risk of having to compensate the attorneys’ fees appeared to be a much more important factor in companies’ decision-making than the court fees or the processing times. There are also several other factors, which alone or together with other factors contribute to companies’ decisions relating to procurement litigations.

Alkuperäiskielienglanti
Sivut171-185
Sivumäärä15
JulkaisuPublic Procurement Law Review
Numero4
TilaJulkaistu - 22 kesäk. 2023
OKM-julkaisutyyppiA1 Vertaisarvioitu alkuperäisartikkeli

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