Improving Competitive Practices in Hungary’s Public Procurement

5. Recommendations for enhancing competition in public procurement in Hungary

Abstract

This chapter lists key recommendations to enhance competition in public procurement in Hungary, including potential measures to improve the action plan for intensifying competition and reducing single-bidding.

 

Category	Recommended action	Timeframe (short, medium, long term)
Horizontal	Improving public procurement data governance, data availability The Government should take actions to further improve public procurement data governance: All data regarding public procurement (procurement procedures, contracts registry, qualification of bidders) should be integrated into EKR to create a single comprehensive data source and ensure better access to information (while ensuring the access to historical public procurement data, too.) To get a comprehensive view of the public procurement system and operations in Hungary, the Government should address the major data gap identified regarding contracts awarded by centralised purchasing bodies (who have their own platforms) based on framework agreements as this data (e.g. call-offs or mini-tenders under framework agreements) are not available in the EKR. This also means that centralised procurement as well as contract awards within all framework agreements should be included in the EKR database. Data quality and comprehensiveness should be thoroughly checked and if needed, corrected. Making the full public procurement data available in EKR in a machine-readable format (i.e. using csv file format rather than a combination of tabular and pdf formats). To ensure better data governance, EKR should take full advantage of the implementation of eForms. Improving the search functions in the different public procurement database to enable a more structured data search and analysis (e.g. the mass download of contracts).	Medium/Long
	Improving coordination among key public procurement stakeholders Hungary should ensure better coordination among key stakeholders, such as MPASD, Integrity Authority, PPA and the Competition Authority regarding reporting of breaches of the public procurement, e.g. setting up communication channels.	Long
	Taking stock of the public procurement control and monitoring system The Government should take stock of the public procurement control and monitoring system and if necessary, streamline the system to avoid overlaps, and ensure that interpretation of the law is harmonised among the different control bodies.	Medium
Advancing the knowledge base and analysis on the low level of competition in the Hungarian public procurement system	Understanding the impact of the centralised purchasing system on the level of competition in public procurement The Government should conduct an in-depth analysis on the procurement practices of the centralised purchasing bodies (CPBs) to better understand the impact of the operation of the centralised purchasing system on the level of competition in public procurement. This analysis should include participation from SMEs, market concentration, length of framework agreements, etc. The analysis should also cover the practices of CPBs regarding procurement planning, as they are not required to publish procurement plan.	Medium
	Analysing the impact of mandatory preliminary market consultations on competition The Government should carry out an analysis of the impact of mandatory market consultations on the number of bids (and on competition in general) in these procedures to assess the effectiveness of this measure and to better tailor its conditions (and to avoid applying this tool only as a tick the box exercise by the concerned contracting authorities).	Short
	Assessing the impact of contracting authorities’ action plans on curbing single-bidding The Government should carry out an impact assessment to measure the real impact of contracting authorities’ action plans to curb single-bidding, and to understand whether they had any effect on competition at the contracting authority’s level. This measure could include individual follow-ups with CAs by MPASD or creating a reporting mechanism for contracting authorities on an annual basis.	Medium
Reducing administrative burden related to public procurement procedures	Supporting contracting authorities with speeding up the decision-making for bid evaluation The Government should consider policy initiatives/guidance to ensure that the decision-making speed for bid evaluation and contract award is short and reasonable (e.g. 30 to 60 days), and any exception to this speed must be duly justified.	Medium
	Considering policy interventions to make Article 115 of the PPL more competitive The Government should consider proposing a modification of the PPL in order that the non-competitive procedure as per Article 115 of the PPL is abolished, or alternatively introducing policy interventions that ensure that its use encourage the participation of SMEs, especially for contracts of lower value.	Medium
	Enhancing contracting authorities’ planning capacities in order to reduce the number of unnecessary conditional procedures The Government should consider capacity-building to contracting authorities in order to implement sound planning before using conditional procurement.	Medium
Promoting better access to business opportunities for business sector	Enhancing access to information about public procurement opportunities in the e-procurement system EKR should offer light registration through email (or push notification) to economic operators in order for them to access procurement opportunities, changes to tender specifications or to have an opportunity to ask the contracting authority questions.	Short
	Stakeholder engagement for procurement support by leveraging pre-procurement consultations The Government or the PPA could initiate pre-procurement consultations and set up communication channels or dedicated platforms (in the form of a committee, working group or task force) with sectoral stakeholders (private companies, associations, etc.) to better support less experienced companies and acquire essential (sector-specific, technical) knowledge.	Short
	Promoting good procurement practices for contracting authorities that make procurement opportunities more attractive for the business sector The Government, alongside with the PPA should promote good procurement practices to ensure that contracting authorities are preparing, planning and conducting their procurement procedures in a way that makes the public procurement opportunities more attractive for the business sector, including the following: Strategic procurement planning for seasonal trends: Contracting authorities should develop procurement plans more strategically in order to take into account the impact on seasonality on procurement processes, such as summer holidays (especially in August), or end-of-year spending (November and December). Improving the role of procurement plan as a market engagement tool in providing information about future procurement opportunities to the market players: In addition to procurement plans to be published, contracting authority should develop more detailed internal procurement plans with key information on the stakeholders involved, the chain of approvals, available budget, etc. Contracting Authorities should be bound by their procurement plans. They may not launch a procurement process if it was not foreseen in the procurement plan, unless they have amended said procurement plan, and published the amended version onto EKR. A monitoring/control mechanism should be put in place regarding these modifications. CPBs should also be obliged to prepare procurement plans (or similar market engagement tool) and publish them as they are now excluded from the scope of Article 42 of the PPL. Balancing tender details in technical specifications: Contracting authorities should be discouraged to use overly detailed descriptions or too short descriptions of the tender specifications and requirements. Extending bid preparation timeframes: Contracting authorities should allow potential bidders longer and more reasonable time to prepare comprehensive and elaborate bids. Enhancing responsiveness to bidder queries: Contracting authorities should be responsive to potential issues flagged by interested bidders in order to modify unclear or mis-specified tender information. Using lots to promote SME participation: Contracting authorities should try to split tenders into multiple lots with lower estimated contract values in order to better tap into SME bidding potential and encourage SME participation.	Short/Medium
	Government initiatives to boost SME engagement The Government should pursue its efforts to increase SME participation in procurement. Several measures can be implemented such as specific legislative provision or policy to encourage participation from SMEs in procurement; specific unit dedicated to SMEs is placed at the central government level; training and workshops for SMEs; documentation or guidance focused on SMEs available online; SMEs benefitting from preferential financial treatment, etc.	Long
	Facilitating consortium and subcontracting opportunities A tool should be developed to help economic operators find consortium and subcontracting opportunities.	Long
	Enhancing bidder anonymity in EKR EKR should be modified in order to ensure that the identity of the bidders would not be revealed to the contracting authorities before the bid submission deadline.	Short
Improving procurement capabilities of the different stakeholders	Improving the capabilities of control bodies Improving the capacity of the control bodies and their staff regarding public procurement processes.	Long
	Improving the capabilities of the Competition Authority Enhancing the scope of activities of the Competition Authority, especially by doing in-depth sectoral studies that can support contracting authorities in preparing market studies.	Medium
	Improving capabilities of Central Purchasing Bodies (CPBs) Further enhance the capacities of CPBs regarding competition and understanding of the market through targeted trainings. CPBs should benefit from exchange of practices with other countries across Europe: KEF could be a more active member of the European Central Purchasing Bodies Network; In addition to KEF, DKÜ and NKH should consider joining the European Central Purchasing Bodies Network or the Big Buyers Network (“Big Buyers Working Together”) in order to benefit from exchanges with their peers in Europe.	Medium
	Developing a more coherent approach to the professionalisation of the public procurement workforce The Hungarian Government could take stock of the current professionalisation initiatives in Hungary and develop more coherent approach to professionalisation of the procurement workforce, and eventually developing a professionalisation strategy. This strategy should streamline the certification system for procurement consultants and have a comprehensive vision for the development of public procurement expertise in the national public procurement market.
	Enhancing the capability of contracting authorities and improving the support to contracting authorities
	MPASD, PPA, or the Integrity Authority should provide further guidance and capacity building activities to contracting authorities regarding market analysis, including better use of public procurement data for market and spend analysis.	Short
	MPASD, PPA and other relevant stakeholders (potentially involving business and professional associations) could develop model contracts in order to curb the practice of imbalanced contracts and build capacity of contracting authorities regarding sound contract conditions and risk allocation.	Medium
	MPASD, PPA, the Competition Authority (and other relevant stakeholders) should train contracting authorities on key topics impacting competition, such as the use of MEAT criteria, collaborative approaches, collusion, and corruption, etc.	Medium
	MPASD, PPA and other relevant stakeholders should encourage practical training and collaboration among contracting authorities (on-the-job training, job-swapping, mentoring, etc.), so that larger or more experienced contracting authorities could help build capacities of smaller contracting authorities.	Medium
	MPASD and PPA should take stock on the number and types of guidelines, as well as collecting feedback from procurement officers on the usefulness of these guidelines in order to develop better support for contracting authorities.	Short
	MPASD and PPA should create practical standardised templates for contracting authorities to use in their procurement processes.	Short
	MPASD, PPA, or other relevant stakeholders should explore options for introducing a special programme/initiative that offer direct support to smaller contracting authorities throughout their procurement cycle.	Medium
	Promoting collaboration among contracting authorities Collaborative approaches (such as joint procurement or joint preparation of tenders) among contracting authorities (especially for small contracting authorities) in public procurement should be encouraged by policymaking authorities, through awareness-raising campaigns, trainings, etc.	Medium
	Organising a workshop on market engagement good practices MPASD and PPA could organise a workshop on preliminary market consultations and other forms of market engagement with the involvement of all stakeholders and inviting representatives from other OECD members to share best practices, address challenges and seek solutions.	Short
	Leveraging professional organisations for procurement support MPASD and PPA should better leverage professional organisations in supporting less-experienced firms and aiding contracting authorities in acquiring essential knowledge.	Short