A dispute over the fairness of a Norwegian local authority pensions tender has escalated, with market leader KLP now seeking a court injunction to stop Vestland County municipality from handing the contract to its rival Storebrand.
Marianne Sevaldsen, executive vice president for KLP’s life insurance operation, told IPE: “We want to make sure that the process surrounding the tender in Vestland County is neat and orderly, and that the best offer wins for the benefit of the county municipality and their employees.
“As part of that work, we have requested a temporary injunction,” she said.
“It is not right for us to say any more about this at this point, because of the process that is going on,” Sevaldsen said.
At issue is a two-year extendable contract to provide pensions for the staff and pensioners of Vestland County municipality (Vestland Fylkeskommune, VLFK).
That mandate was won by financial services group Storebrand a month ago after a tender in which only KLP – the incumbent provider – and Storebrand submitted bids.
Weeks later, KLP complained to VLFK – the authority for the region surrounding Norway’s second-largest city Bergen – about the way the tender had been handled, saying it believed procurement regulations had been broken by the setting of the alternative return on equity after the offer deadline.
This detail relates to the comparability of returns from different types of pension provider.
When its complaint was rejected by the local authority, KLP said last week that it may take the matter further.
VLFK said in a statement that KLP’s claim for an interim injunction would be sent to Bergen District Court at the beginning of this week, and that KLP would send its reasoning to the court today.
It said the action now taken by KLP meant its ability to enter into a contract with Storebrand was suspended until the case had been processed by the court.
“We expect the district court to hear the case in November,” said Trond Amundsen, purchasing manager at VLFK.
The local authority said that as it had ongoing obligations to pay pensions to its retired former employees, if it did not sign a contract with Storebrand as thought, it would have to find an alternative solution.
“Here we may carry out a direct procurement until we are in a position to sign an agreement based on the exemption provision in the regulations,” the municipality said in the statement.
VLFK said it would decide what to do once it saw the legal document from KLP. Storebrand was not immediately available for comment.
However on 21 October after KLP made the complaint to VLFK, the company’s head of public sector, Jon Hippe, told IPE that there was nothing in the way the tender took place that gave any grounds for complaint, as far as he knew.