Changes in the act on the public procurement in Hungary

Transcription

1 AARMS Vol. 4, No. 1 (2005) ECONOMICS Changes in the act on the public procurement in Hungary SZILÁRD LAKATOS Miklós Zrínyi National Defence University, Budapest, Hungary The author summarizes the changes in the Act on Public Procurement after the accession to the Union and analysis their effects on the practice of the public procurement in the Republic of Hungary and that of the possible trends and problems. Introduction An important theoretical issue of Europe laying on a single economic basis is the law of public procurement. Its purpose is to ensure equal treatment for business organisations in the Member States. For open contracts, chances shall be established that not only the national interests and advantages can play significant roles. According to the Economic and Social Committee of the European Union, 18% to 20% 1 of the GDP of the EU come from the procurements under public procurement (Act CXXIX of 2003). The Act on Public Procurement of the Republic of Hungary was enacted on 1st of May 2004, however prior to its effective date the EU had issued 2 new directives on 2nd of April These directives shall be adapted to the national law of Hungary within 21 months till 31st of January In this way, after the accession the business organisations will have chance to take part in tendering procedures launched in any of the Member States with equal opportunities by the application of transparent procurement procedures. Received: February 14, 2005 Address for correspondence: SZILÁRD LAKATOS Miklós Zrínyi National Defence University H 1581 Budapest, P.O. Box 15, Hungary lakatos.szilard@zmne.hu Changes after 1st of May Public procurements exceeding the value limits of the EU shall be published in the Official Journal of the EU. contracts that can be concluded with government agencies, contracts concluded with public utilities, transport and telecommunications companies, financial value limits of water and energy supply contracts concluded by government agencies and private entities.

2 Changes to be introduced before 2006 establishment of a national supervisory authority, introduction of EGT (electronic public procurement), introduction of open public procurement procedures to be applied for post-office services. The law of public procurement is very complicated and it is the aggregate of detailed rules of law. Values defined in its two systems (EU and national rules) shall be applied. The value limits of the EU, and then those of the nation, will be established, and the availability of their possible legal remedy. The rules of the EU (which are adapted from the national rules of law by the Act on Public Procurement) shall be applied when all the Directives, EEC Directive 93/3 on Bidders, EEC Directive 43/36 on Procurement of Goods or EEC Directive 92/50 on Service Provision, together Directives on Procurement, are applied. These value limits, which are normative, are as follows: for service contracts, EUR 200 thousand, for construction contracts, EUR 5,000 thousand. Contracts for procurement of goods apply to purchase and lease of goods together with their building in and installation. Construction contracts include general constructional design engineering works, such as installation of lines and construction, demolition and installation of roads, bridges, and railways. The directives establish rules of different types for service items in the Appendix to the Act of Public Procurement. Contracts for several objects are only limited, e.g. construction contracts are completely excluded from the application of directives. The directives use the classical denomination of inquirer for the organisations for which the rules of the community public procurement shall be applied. In this context, it is important to define the denomination of the classical inquirer: government, regional or local authorities, public bodies or unlimited companies with legal entity established by any of the above-enlisted organisations, in which the financing and control are made from the state budget. However this definition can be interpreted very well, there are several extreme cases, with which the Amendment of April 2004 deals, too. The Public Private Partnership can also be the object of the rule of law, the legal frame of which has to be filled in with proper content (involvement of private capital in penitentiary facilities and 58 AARMS 4(1) (2005)

3 dormitories in Hungary). The enlisting of examples also proves clearly that this problem is already in front of our door. The procurement procedures are detailed in the Directive on Procurement: open procedure, restricted procedure, negotiated procedure simple procedure In each case, it is the inquirer that can make decision on choosing the procedure to be applied, of course, value limits and the complexity of the procurement shall be taken into consideration. It is the value limit that defines in what paper of public procurement (EU or Hungarian) the public procurement shall be published. The significant difference between the open and restricted procedures is that, in case of open procedure, any organisation can apply, and in case of restricted procedure, minimum 5 firms shall be invited, and it can be preceded by a pre-qualification, the basis of which is the eligibility of firms. The invitation of bids shall be published in the Közbeszerzési Értesít (Bulletin of Public Procurement). Though, other firms can also apply, it is the inquirer that shall declare whether it accepts these bidders, and, if not, give the reasons for the refusal. This can happen at the Hungarian Defence Forces, when an applicant is proven not eligible during qualification. In both cases, the essential issues of the conclusion of contracts shall be included in the documentation, but negotiation on contracts and prices are excluded. The object of negotiation with participants can only be the number of points, and in this case, questions and answers shall be in written form, and the dates for putting questions and for giving answers shall be defined in such a way that all the parties concerned in the procedure should be informed. The so-called negotiated procedure differs from the previous two ones. This procedure can only be applied in very special cases with or without publication and with the approval of the Közbeszerzési Bizottság (Public Procurement Committee). Procedures with publication shall be applied when, for example, there is no possibility for a preliminary pricing or when a service cannot be described, etc. 2 Procedures without publication can be applied when the inquirer can agree with service providers, for example, on copyright of arts or when there are exclusive rights of technical solutions. The criteria of awarding contracts: the inquirer can award contracts for procurement of goods, service provision or construction on the basis of the lowest price on the basis of bids, which are best-value-for-money. AARMS 4(1) (2005) 59

4 For the best-value-for money bids, the inquirer shall give the weighting points of evaluation, i.e. how the individual requirements are weighted, and the proportions of price, deadline, technological value, functional and aesthetic features, cost-effectiveness and after-sales services and technical assistance are also to be given. Public utilities It is of high importance to define the interpretation of public utilities in the sense of public procurement. According to the Directive on Public Utilities, public utilities are undertakings that have special or exclusive rights for utilization and operation of e.g. telecommunications and transport facilities. These mean rights that can restrict competition due to their technological network (e.g. water supply, procurement or distribution of goods, railway and tramway and bus service networks), and cases when, on the basis of the authorisation of a legal entity, given geographical territories, government concession (e.g. gas, oil production, operation of airports and ports) are utilised. The directives enlisted up to this, EEC Directive 90/53 as amended by EEC Directive 93/38, establish more flexible legal frameworks for this sector for public and private organisations working according to the above interpretations. This means that those acting in the representation of legal entities can freely choose among the individual procedures; the only difference is that the value limits are different: in case of procurement of goods, provision of services: EUR 400 thousand, in case of water and energy supply: EUR 600 thousand, in case of construction contracts: EUR 5,000 thousand. The national regulations of public procurement slightly differ from those of the EU only. This is due to the comprehensive and code nature of the Act on Public Procurement. Of the procedures, open and restricted procedures can be applied. At the end of restricted procedures prices can be negotiated when the bid prices exceed the estimated values of the inquirer, however bid invitations shall be published in the Közbeszerzési Értesít (Bulletin of Public Procurement) of Hungary. These procedures apply to procurements that can exceed the following value limits (in 2005): procurement of goods: HUF 25,000 thousand, provision of services: HUF 20,000 thousand, investment of construction: HUF 70,000 thousand, concession of construction: HUF 100,000 thousand, 60 AARMS 4(1) (2005)

5 In case of public utilities: for procurement of goods: HUF 50,000 thousand, for construction works: HUF 100,000 thousand 3 In case of procurements the value of which is under these limits, simple procurement procedure shall be applied (without obligatory publication of invitation and bids), where the value limits are as follows: for procurement of goods and provision of services HUF 2,000 thousand and for construction works HUF 10,000 thousand. Legal defence According to the legal defence concerning the law of public procurement, legal entities can make complaint at the board of public procurement of the state in which invitation was launched, independently of the total amount. In Hungary, this board is the Közbeszerzési Döntbizottság (Arbitration Board for Public Procurement). The Board can 1) take interim measures, 2) make cancellation and amendments, 3) levy fines. Appeal can be brought against the decisions of the Arbitration Board for Public Procurement before the court. In case of disputable national questions, of course, it is the European Commission that is competent. If no contract has been concluded yet, the European Commission informs the competent board of the government of the infringement, in fact, asks the board to give the reasons of or intervene in the procedures, make corrections, give warning or effect sanction. Should the European Commission not agree with the decision of the board, it can condemn the Member State concerned for not meeting its obligations of the Community Law. References 1. O. VÁRHELYI, K. VARGA, P. KEREKES: Közbeszerzés az Európai Unióban, ITP Hungary, Bp., Európa füzet, p Act CXXIX, Articles 125 and 131 through 135, Act CXXIX, Paragraph (2) of Article 402, 2003 AARMS 4(1) (2005) 61