Upcoming changes in Hungarian public procurement law include cutting number of single-bid procurements and a new remedy 

Among various important Hungarian public procurement law changes in the pipeline in Hungary, one of the most prominent is to significantly reduce the number of single-bid public procurements.

These and other changes are contained in Government Decree no. 63/2022 (II 28), which will come into effect on 15 March 2022.

The amendments in the Decree include:

Certain contracting authorities will be obliged to perform preliminary market consultations before launching open or restricted tenders (if the value of the tender is above the union threshold).

In addition, contracting authorities that launch a substantial amount of single-bid public procurements must now adopt an action plan to reduce the number of procedures.

Conducting a preliminary market consultation will be obligatory for:

• all contracting authorities aiming to procure certain goods and services which are mostly affected by low level of competition. The government will publish the list of such goods and services on 15 March on the electronic procurement system (EKR); and
• government-controlled budgetary institutions and directly or indirectly fully state-owned business entities, which participated in a substantial number of single-bid public procurements irrespective of the goods and services to be procured.

Preliminary market consultations may be a useful way to prevent the unjustified restrictive nature of tenders, but so far contracting authorities have not used this method in practice. As a result of the Decree, however, affected contracting authorities must perform preliminary market consultations in the Hungarian electronic procurement system (EKR). This will involve:

• publishing the subject-matter of the tender, the draft technical specifications and draft tender agreement;
• providing any potential tenderer or other interested entity with the opportunity to comment on the published documents; and
• preparation and disclosure of a summary of the comments received, the contracting authority’s position on the comments and any substantive changes to the documents in the light of the comments.

Preliminary market consultations, however, will not be mandatory if contracting authorities publish in the tender notice that they may declare the tender unsuccessful if only one offer is submitted. In addition, no preliminary market consultation will be necessary in the event of special procurement methods like framework agreements and dynamic purchase systems.

The Decree will also require contracting authorities – where the proportion of single-bid public procurements in the preceding calendar year exceeded 20% – to adopt an action plan. The action plan must examine the reasons for this high proportion of single bids and specify possible measures and practices to ensure the greatest possible competition in public procurement and to reduce the number of single-bid tenders. The government will notify the affected contracting authorities on this obligation before 15 March so that authorities can prepare and publish their action plans before 30 April.

On 15 March, the government will publish a guidance on best practices for avoiding single-bid public procurements, and how to conduct a preliminary market consultation.

In addition to the above developments, the Hungarian parliament is considering a draft law to amend the Hungarian Public Procurement Act. This amendment will provide a judicial remedy if the Public Procurement Arbitration Board allows or denies the conclusion of a tender contract in a legal-remedy procedure due to special circumstances.

Currently, there is no available legal remedy to challenge the decisions of the Public Procurement Arbitration Board, and the Hungarian Constitution Court recently declared this practice to be unconstitutional.

According to the draft law, a lawsuit against the decision of the Public Procurement Arbitration Board must be filed within five days, and the court should render a ruling within ten days. The court may change the Public Procurement Arbitration Board’s decision, and until the end of this procedure or the end of the appeal period, the parties involved are not allowed to conclude the tender contract.

The draft law is expected to be passed and to come into force in the coming weeks.

For further information, contact your CMS client partner or the experts with CMS Hungarian Public Procurement Team: