Each year, we spend about EUR 1 billion on procurements. In 2020, the coronavirus pandemic put a severe strain on procurements.
Procurement needs are numerous and varied. In 2020 alone, we identified more than 500 procurement needs, and we completed more than 300 competitive tenders during the year, over 100 more than in 2019.
The coronavirus pandemic caused global supply issues that put a heavy additional strain on procurements. Acquiring and distributing personal protective equipment and nationwide responsibilities took up a lot of resources during the year. Because of the pandemic, we were forced to make more than 150 direct procurement decisions in 2020.
The procurement anomalies that emerged in 2019, meaning that many procurements were not put to tender at all, led to an extensive procurement reform at HUS Logistics, and this continued into 2020.
We updated our procurement process descriptions and guidelines in spring 2020 and also completed a new permanent directive for procurements in order to clarify responsibilities. We recruited ten new experts for procurements and also purchased procurement services from agencies specializing in public procurements in order to step up competitive tendering.
All procurement decisions available online
As of the beginning of 2020, we have aimed to have the invitation to tender and draft procurement decision vetted in an in-house legal audit for as many EU procurements as possible. Category managers will perform a similar scrutiny on national procurements.
We now process all procurement decisions online, and in 2020 we also prepared for the acquisition of a new IT system for procurement management and monitoring. This system is expected to be adopted in 2021.
Eliminating untendered procurements in just over one year
In March 2020, we estimated that the combined value of untendered procurements per year was about EUR 62 million. As a result, the Market Court imposed a monetary penalty of EUR 160,000 on HUS.
Notwithstanding our efforts, there was still about EUR 45 million in procurements not yet put to tender in autumn 2020. However, in more than half of these cases the tendering process was already under way, and projections show that we should be able to eliminate untendered procurements altogether in just over one year.
A new strategic steering group for procurements, appointed by the CEO, has been monitoring procurements since the beginning of the year. The HUS Executive Board and Financial and Group Division have been closely following the corrective action taken in procurements and have reported on these to the HUS Council.