Public procurement regulation in Hungary

October 2018

• Public Procurement Bulletin, the Official Journal of the Public Procurement Authority; available online under www.kozbeszerzes.hu – This also contains the notifications sent to TED as a matter of information.
• Electronic Public Procurement System, the central IT system supporting the conclusion of public procurement procedures operated by the Cabinet Office of the Prime Minister, available under https://ekr.gov.hu/portal/kezdolap. The public procurement notifications may be searched after registering on the system.
• A contracting authority may publish its notification in any way it prefers (e.g. on its webpage) provided that it does not contain data differing from the version sent for publication to TED or the Public Procurement Bulletin.

• The relevant thresholds for public procurements by contracting authorities other than public service providers are:
  • For supply contracts: HUF 15m (approx. EUR 46,200);
  • For services contracts: HUF 15m (approx. EUR 46,200);
  • For public works contracts: HUF 25m (approx. EUR 76,900)
  • For works concession: HUF 100m (approx. EUR 307,700);
  • For services concession: HUF 30m (approx. EUR 92,300).
• The relevant thresholds for public procurements by public service providers as contracting authorities are:
  • For supply contracts: HUF 50m (approx. EUR 153,800);
  • For services contracts: HUF 50m (approx. EUR 153,800);
  • For public works contracts: HUF 100m (approx. EUR307,700);
  • For works concession: HUF 200m (approx. EUR 615,400);
  • For services concession: HUF 100m (approx. EUR 307,700).

• The contracting authority is free to choose among the open and the restricted procedure – Section 49(1)-(2) of Act CXLIII of 2015 on public procurements (“PPA”). These are the referred to as “general procedures” for which no special circumstances are required.
• There are two types of negotiated procedures. A negotiated procedure may be launched (i) with or (ii) in exceptional cases without prior publication of a contract notice. The applicability of these procedures may depend on the existence of certain special circumstances set out in the PPA as follows:
• A negotiated procedure with prior publication of a contract notice and competitive dialogue can be carried out (Section 85(2) of the PPA):
  • if the needs of the contracting authority cannot be met without adapting on the market readily available solutions;
  • if the object of the procurement includes design or innovative solutions;
  • the best offer cannot be identified without prior negotiations because of specific circumstances related to the nature, the complexity or the legal and financial make-up of the contract or because of the risks attached to it;
  • the technical specifications cannot be established with sufficient precision by the contracting authority with reference to a standard, European Technical Assessment, common technical specification or technical reference within the meaning of specific other legislation; or
  • where a previous open or restricted procedure was declared unsuccessful because only unacceptable tenders had been submitted, or the procedure was declared unsuccessful as all tenders submitted exceeded the funds at the contracting authority’s disposal.
• A negotiated procedure without prior publication of a contract notice can be carried out (Section 98(2)-(5) of the PPA):
  • if an open or restricted procedure or has failed and the conditions of the procurement are substantially the same;
  • if open or restricted procedure has been unsuccessful because no tenders or requests for participation have been submitted or only unsuitable bids were submitted, provided that the conditions of the procurement did not change substantially;
  • if technical or artistic reasons or exclusive rights apply;
  • if extreme urgency applies and the time limit for other procedures cannot be adhered to;
  • for public works and public service contracts if new works or services are ordered that are similar to or the same as the ones already ordered from the winner of a previous public procurement, provided that the new works or services are in harmony with the previous base project awarded in an open or restricted procedure;
  • in case of a supply contract:
    • goods are procured exclusively for R&D, experimental or educational purposes;
    • it is not technically feasible to change the supplier of previously procured goods;
    • if the goods are listed and procured from the stock market;
    • if the goods are procured in the course of liquidation or a winding-up judicial enforcement procedure under particularly advantageous conditions;
  • in case of a services contract:
    • if the procurement takes place after the award of a design contract and the contract must be concluded with its winner or one of its prize winners.
• Negotiated procedures without prior publication of contract notice can also be carried out below the EU public procurement thresholds (Section 114(9) of the PPA) if it is possible to procure supplies taking advantage of a particularly advantageous opportunity available to all interested persons for a very short period of time at a price considerably lower than the normal market prices, and where such an opportunity would not otherwise be available in the procedure.

• All contracting authority decisions (e.g. the call for tender, the decision of revocation, the contract award decision, etc.) can be appealed; it is not specific to a certain type of procedure. However, there is a distinction with respect to time limits between (i) decisions on the conclusion of the award procedure and (ii) all other contracting authority decisions (see below).

• The appeal must be filed within 15 days of the petitioner becoming aware of the infringing decision of the contracting authority, or within ten days for unlawful decisions adopted after the conclusion of the award procedure (subjective time limit) (Section 148(3) of the PPA).
• After 90 days following the date of the infringement no petition may be lodged (objective time limit). Further appeals are precluded after the expiration of the 90-day period (Section 148(3) of the PPA).
• If in procedures under the EU threshold, the contracting authority decides upon the application of its own procedural rules as prescribed by Section 115 of the PPA, the appeal regarding the decisions on the conclusion of the award procedure may be filed within five days (Section 148(4) of the PPA).

• Generally, the standstill period is ten days (if the contracting authority’s own procedural rules are used in compliance with Section 115, five days) from the date of dispatch of the written report on the evaluation process. (Section 131(6) of the PPA)
• The contract may be concluded before the standstill period expires in the cases listed in Section 131(8) of the PPA.

• In case of breach of public procurement rules:
  • The Public Procurement Dispute Board of Hungary is the administrative review body (in Hungarian: Közbeszerzési Döntőbizottság);
  • The judicial review body is the Administrative and Labour Court.
• For other contractual breaches, competency resides with the ordinary Hungarian courts.

• Yes. The basis of the filing fee is calculated as follows:
  • in case of procurements above the EU threshold, the basis of the filing fee amounts to 0.5% of the estimated value of the procurement, but not less than HUF 200,000 (approx. EUR 615) and shall not more than HUF 25m (approx. EUR 76,900);
  • in case of procurements below the EU threshold, the basis of the filing fee is 1% of the estimated value of the procurement, but not less than 200,000 (approx. EUR 615) and not more than HUF 6m (approx. EUR 18,500).
• The actual filing fee is subject to the number of requests contained within the appeal. In case of 1-3 requests, the actual fee is equivalent to the basis of the filing fee (100%). The fee increases gradually until 16 requests. In case of 16 or more requests in the appeal, the actual fee amounts to 200% of the basis of the filing fee.
• It is possible to reimburse the filing fee (if the decision is favourable to the applicant), or part of it (in the ratio of winning) but HUF 300,000 (approx. EUR 925) remains with the Public Procurement Dispute Board and shall be borne in compliance with the general rules of administrative proceedings.

A review application itself does not have a suspensive effect.
The Public Procurement Dispute Board may impose interim measures upon request or ex officio and it may order the suspension of the public procurement procedure (Section 156(1)-(2) of the PPA). In case of public interest of extreme importance, the Public Procurement Dispute Board may authorise the conclusion of the contract despite the ongoing review procedure.

• A contract shall be deemed ineffective (null and void) if: (i) it was concluded by the unlawful omission of a public procurement procedure; (ii) the contracting authority concluded a procurement procedure without prior publication of a contract notice, where the conditions of such a procedure were not satisfied; (iii) the parties entered into the contract in breach of the provisions relating to the standstill period. The ineffectiveness of the contract is decided by a review procedure before the Public Procurement Dispute Board.
• As part of this procedure, the Public Procurement Dispute Board may impose a fine for certain unlawful acts of the contracting authority or the economic operator (Section 165(2)-(7b) of the PPA).

• The Hungarian PPA enlists the exclusive legal grounds for the modification of public procurement contracts (Section 141(2)-(6) of the PPA). These provisions of the PPA have retroactive effect, i.e. they can be used as legal grounds for the modification of public procurement contracts that were concluded before the effective date of the PPA.
• Public procurement contracts may be amended if:
  • The modification does not alter the overall nature of the contract, is in line with the nature of the initial contract and the amount of the modification (in case of several modifications, their net total value) is below (i) the EU thresholds, if the initial contract price reached the EU thresholds and (ii) 10% of the initial contract value for service and supply contracts and for works and service concessions and below 15% of the initial contract value for works contracts.
  • The modification has been provided for in the contract, which was known to all tenderers in advance, in clear, precise and unequivocal review clauses, including options, provided that they do not provide for modifications that would alter the overall nature of the contract;
  • Additional works, services or supplies by the original contractor that have become necessary and that were not included in the initial procurement where a change of contractor (i) cannot be made for economic or technical reasons and would cause significant inconvenience or substantial duplication of costs for the contracting authority; (ii) any increase in price (or in case of several modifications, their net total value) shall not exceed 50% of the value of the original contract.
  • The need for modification has arisen from circumstances that a diligent contracting authority could not foresee and (i) the modification does not alter the overall nature of the contract and (ii) any increase in price shall not exceed 50% of the value of the original contract.
  • The modification is not considered to be substantial. A modification to a contract is considered substantial if it renders the contract materially different in character from the one initially concluded.

• Since 15 April 2018 all public procurement procedures must be mandatorily concluded through the centralised Electronic Public Procurement System (abbreviation in Hungarian: EKR, available at: https://ekr.gov.hu/portal/kezdolap) operated by the Cabinet of the Prime Minister through a fully state owned company (NEKSZT Kft.). Exceptions apply for very limited cases.
• The Electronic Public Procurement System enables the use of e-signatures. However, the contracting authority may not require bidders to use e-signatures during the procedure and almost all documentation can be submitted without them. The use of e-signatures may only be prescribed by the contracting authorities when asking bidders to supply documents that directly serve as basis of enforcing claims, especially for statements of guarantee (bank guarantee) and statements of suretyship. In this case, a qualified e-signature and time stamp must be used.