RESTRICTED
WORLD TRADE WT/WGTGP/W/9
16December 1997
ORGANIZATION(97-5517)
Original: English Working Group onTransparency
inGovernment Procurement
NATIONAL PROCEDURES AND PRACTICES ONTRANSPARENCY
INGOVERNMENT PROCUREMENT
Communication from Hungary
1. Introduction
With reference totheagreement reached atthelastmeeting oftheWorking Group onthe
proposal fromtheChair thatdelegations would provide information ontheirnational procedures and
practices relating totransparency ingovernment procurement, Hungary intends tocontribute tothe
study phase oftheWorking Group. Thesubmission follows thestructure oftheSecretariat ’ssynthesis
ascontained indocument WT/WGTGP/W/6.
TheHungarian LawonPublic Procurements isbased ontherelevant legislation oftheEuropean
Union anditsmember States; however, theUNCITRAL Model LawaswellastheWTO plurilateral
Agreement onGovernment Procurement wasalsotaken intoconsideration bythelegislators. This
paper focuses onthetransparency provisions oftheLaw.
2. Information onnational legislation andprocedures
Themajor framework ofthelegislation ongovernment procurement isarecent andmodern
Law(Law No.90of1995onPublic Procurements) thatispublished intheHungarian Official Gazette
(Magyar Közlöny). AnEnglish translation oftheLawisalsopublicly available. Alltheprocedural
decrees concerning specific aspects oftheprocedures arealsopublished intheOfficial Gazette. All
announcements concerning government procurement actions andtenders arepublished inthePublic
Procurement Bulletin (Közbeszerzési Értesít õ),thatisestablished exclusively forthepurposes ofpublic
procurements.
3. Information onprocurement opportunities, tendering andqualification
3.1 General rules onhowpublic notice isgiven
Allannouncements shallbepublished inthePublic Procurement Bulletin. Anannouncement
mayonlybepublished inanyother domestic newspaper following itspublication inthePublic
Procurement Bulletin. Ifforeign-based bidders (bidders resident abroad) maytakepartintheprocedure,
theannouncement mayalsobepublished inforeign newspapers. Inthiscase, theannouncement may
notbepublished inthePublic Procurement Bulletin prior toitsdispatch abroad.WT/WGTGP/W/9
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3.2 Notice ofinvitation totender orprequalification
3.2.1 Preliminary information onprocurement opportunities
Entities falling under thescope oftheLawmay, by31March eachyear, prepare preliminary
summary information material about theirpublic procurements planned fortheyear.
Thepreliminary summary information should contain thefollowing information:
- name andaddress oftheinviter (andtheinformation provider, ifdifferent) including
telephone, telexandtelefax numbers;
- description ofprocurement, including quality and/or value (separately described
procurement ofgoods, constructions andservices);
- expected dateoftheinitiation oftender procedures (ifknown);
- other relevant information;
- dateofposting andreceipt oftheannouncement.
3.2.2 Prequalification
(a) Thepublic procurer mayprequalify potential suppliers. Theapplication forprequalification
should precede theinvitation forbidding by25days ormore. Inthecourse ofthe
prequalification procedure, theprocurer shallnotrequest andthebidder shallnotsubmit a
bid.
(b) Theinvitation forprequalification should contain thefollowing information:
- name, address, oftheinviter ofbids(including telegraphic, telephone, telexandtelefax
numbers);
- theprocedure chosen (i.e., open tendering, selective tendering, orlimited
tendering/negotiations; accelerated selection) andreasons forselecting theprocedure;
- definition ofthecontract, subject andquantity oftheprocurement, timeandplace of
theperformance, ifsubmitting abidforapartoftheprocurement isaccepted;
- deadline forsubmitting thebids,address forsubmitting bids, language ofsubmitting
bids1;
- requirement ofestablishing aneconomic association fromthewinning jointbidders1;
- dateandplace ofopening thebids;
- conditions ofproviding thecollateral1;
- dataandfactsrequested forverifying thefinancial, economic andtechnical suitability
ofbidders;
- criteria forjudging bids;
- reference tothepreliminary summary information1;
- dates ofdispatch andreceipt oftheannouncement.
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3.3 Tender documents
3.3.1 Open tendering
(a) General transparency rules
Theinviter ofbidsshalldescribe thecertification ofthefinancial, economic andtechnical
suitability ofthebidder exclusively inamanner defined intheAct. Theinviter ofbidsshalldefine
thecriterion forjudgement chosen intheinvitation forbidding, i.e.theconsideration ofthelowest
amount, orthemost favourable bidonthewhole. Inthelatter case, theorder ofimportance ofthe
criteria aswellasanyother considerations shallalsobedefined.
(b) Information content ofnotices ofinvitation foropentendering
- name, address, oftheinviter ofbids(including telegraphic, telephone, telexandtelefax
numbers);
- theprocedurechosen(i.e.,opentender,invitationtender,orlimitedtender/negotiations);
- definition ofthecontract, subject andquantity oftheprocurement, timeandplace of
theperformance, ifsubmitting abidforapartoftheprocurement isaccepted;
- name andaddress oftheorganization providing thedocumentation, deadline ofapplying
forthedocumentation, conditions ofpurchasing thedocumentation1;
- deadline forsubmitting thebids, address forsubmitting bids,language ofsubmitting
bids1;
- definition oftheparties tobeinvited bytheinviter ofbidsforopening thebids;
- dateandplace ofopening thebids;
- conditions ofproviding thecollateral1;conditions offinancial consideration, and/or
definition oftheplace where these canbefound indetail;
- requirement ofestablishing aneconomic association fromthewinning jointbidders1;
- dataandfactsrequested forverifying thefinancial, economic andtechnical suitability
ofbidders;
- period ofbinding bythebid;
- criterion forjudging bids(lowest price, ormost favourable listconsiderations);
- whether bidsinseveral versions accepted?
- reference totheavailability ofpreliminary summary information1;
- dates ofdispatch andreceipt oftheannouncement.
3.3.2 Selective tendering
(a) General transparency rules
Theprocedure byinvitation canbeapplied, ifonlyalimited number ofbidders issuitable
forfulfilling thecontract duetotheparticular nature ofthesubject ofpublic procurement, orwith
consideration tothesubject ofpublic procurement, andbased onthelistofqualified bidders, there
areatleastfivequalified bidders suitable forsubmitting abid. Theprocedure commences withan
invitation toparticipation, which shallbepublished bytheinviter ofbidsthrough anannouncement.
Thisannouncement shallcontain thefollowing information:
- name, address, oftheinviter ofbids(including telegraphic, telephone, telexandtelefax
numbers);
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- theprocedure chosen (i.e.,opentender, invitation tender, orlimited tender/negotiations
accelerated procedure), andthereasons forselecting theprocedure;
- listofinvited participants;
- definition ofthecontract, subject andquantity oftheprocurement, timeandplace of
theperformance, ifsubmitting abidforapartoftheprocurement isaccepted;
- requirement ofestablishing aneconomic association fromthewinning jointbidders1;
- deadline forsubmitting thebids, address forsubmitting bids,language ofsubmitting
bids1;
- conditions ofproviding thecollateral1;
- dataandfactsrequested forverifying thefinancial, economic andtechnical suitability
ofbidders;
- criteria forjudging bids;
- intended number ofinvited parties1;
- reference tothepreliminary summary information1;
- dates ofdispatch andreceipt oftheannouncement.
Besides theinvited ones, referring totheannouncement, allparties suitable forfulfilling the
contract mayapply toparticipate intheprocedure. Theinviter ofbidsshallsimultaneously anddirectly
request inwriting allapplicants forparticipation, qualified assuitable tosubmit theirbids.
Theinviter ofbidsshalldetermine alimitfigure forinvited participants forthetender. This
shallallow foratleastfivebidders.
Theinviter ofbidsmaynotspecify thedeadline forparticipation asaperiod shorter than25days
reckoned frompublishing theannouncement, andthedeadline forsubmitting bidsasaperiod shorter
than40daysreckoned from thedispatch oftheinvitation forbidding.
(b) Information content ofnotices ofinvitation forselective tendering
Thetender documents shallcontain thefollowing data:
- deadline forsubmitting thebids, theaddress towhich bidsshallbesubmitted;
- reference totheinvitation toparticipation published;
- ifnecessary theplacewhere thedocumentation wasobtained, thedeadline andfinancial
conditions foritsrequest;
- conditions ofthefinancial consideration oftheinviter ofbids;
- dateandplace ofopening thebids,those invited totheopening ofbidsbytheinviter
ofbids;
- period ofbinding bythebid;
- indication ofthecertificates tobeattached;
- detailed criteria forjudging thecontracts, ifnotincluded intheinvitation to
participation.
3.3.3 Limited tendering (negotiations)
(a) General transparency rules
Theprocedure bynegotiation canbeapplied onlyinexceptional circumstances defined bythe
Law.
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Thecommencement oftheprocedure shall bepublished. Theinvitation shall contain the
following information:
- name, address, oftheinviter ofbids(including telegraphic, telephone, telexandtelefax
numbers);
- theprocedure chosen (i.e., open tender, selective tendering, orlimited
tendering/negotiations accelerated procedure), andthereasons forselecting the
procedure;
- definition ofthecontract, subject andquantity oftheprocurement, timeandplace of
theperformance, ifsubmitting abidforapartoftheprocurement isaccepted;
- requirement ofestablishing aneconomic association fromthewinning jointbidders1;
- deadline forsubmitting thebids, address forsubmitting bids, language ofsubmitting
bids1;
- conditions ofproviding thecollateral1;
- dataandfactsrequested forverifying thefinancial, economic andtechnical suitability
ofbidders;
- intended number ofinvited parties1;
- name andaddress ofthealready selected applicants1;
- reference tothepreliminary summary information1;
- dates ofdispatch andreceipt oftheannouncement.
Theparties intended tobeinvited maybeindicated intheannouncement; however, allparties
-suitable forfulfilling thecontract -mayapply forparticipating intheprocedure onthebasis ofthe
announcement. Atleastthree applicants shallbeinvited tothenegotiation (iftherearethreequalified
ones).
Inthecourse ofaprocedure bynegotiation conducted without publishing anannouncement,
theinviter ofbidsshalldirectly invite theparties selected byhimtothenegotiation. Therelevant
provisions apply topublishing theresult oftheprocedure bynegotiation conducted without publishing
theannouncement.
3.4 Clarification
Iftheinviter ofbidsprepares thedocumentation required forsubmitting appropriate bids,the
documentation shallcontain thedetailed contractual conditions. Intheinvitation forbidding, themanner
anddeadline ofmaking thedocumentation available, theplace ofobtaining, aswellasthefinancial
conditions thereof shallbespecified. Theinviter ofbidsshallmake thedocumentation available as
ofthedateofpublishing theinvitation forbidding.
Furthermore, abidder mayrequest further information fromtheinviter ofbidsinwriting not
laterthantendaysprior tothedeadline forsubmitting thebid.Thecontent oftheinformation shall
bemade available totheother bidders, aswell. Theinviter ofbidsshallprovide thesupplementary
information related tothedocumentation notlaterthansixdaysprior tothedeadline forsubmitting
thebids. Theinviter ofbidsshallprovide theinformation inamanner thatdoesnotfavour certain
bidders overothers, andwhich doesnotviolate equal chances. Ifthedocumentation isofalargevolume,
and/or ifbidsmayonlybesubmitted following theon-site checking ofthedocumentation, orthe
inspection oftheplace ofperformance, theinviter ofbidsshallsetoramend thedeadline forsubmitting
thebidswithconsideration. Theinviter ofbidsmayrequire thebidders inthedocumentation orin
theinvitation forbidding todefine thepartofthecontract theyintend toinvolve subcontractors.
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3.5 Promptness andtimeliness ofprior information andtimeliness
Theinviter ofbidsmaynotsetthedeadline forsubmitting thebids(submission deadline) as
aperiod shorter thanfortydaysreckoned frompublishing theinvitation forbidding. Injustified cases,
theinviter ofbidsmayextend thedeadline forsubmitting thebidsononeoccasion. Theinviter of
bidsshallpublish theextension ofthedeadline inanannouncement prior totheexpiry oftheoriginal
deadline,wherethereasonforextendingthedeadlineshallalsobeindicated.Thedeadlineforsubmitting
thebidsmaynotbeshortened.
Theinviter ofbidsmayamend theconditions specified intheinvitation forbidding, and/or
thedocumentation prior totheexpiry ofthedeadline forsubmitting thebids. Anewannouncement
shallbepublished ontheamended conditions, inwhich anewdeadline forsubmitting thebidsshall
beestablished. Thedeadline maynotbeshorter than40days.
4. Transparency ofdecisions onqualifications
4.1 Prequalification
4.1.1 Transparency ofcriteria
Thecriteria forprequalification arecontained intheinvitation forprequalification (see3.2.2(b)).
4.2 Notification andlisting
Results oftheprequalification should bepublished. Thenotice should contain thefollowing
information:
- name, address, oftheinviter ofbids(including telegraphic, telephone, telexandtelefax
numbers);
- theprocedure chosen;
- dateofselection;
- number ofapplicants oftheprocedure;
- names andaddresses oftheapplicants selected andreasons fortheirqualification;
- dateofpublishing theinvitation toparticipation;
- dates ofdispatch andreceipt oftheannouncement.
5. Transparency ofdecisions oncontract awards
5.1 Transparency ofcriteria
Thegeneral criteria applicable toevaluate thebidsaresetbytheLaw.
Theinviter ofbidsshalldefine thecriterion forjudgement chosen intheinvitation forbidding,
i.e.,theconsideration ofthelowest amount, orthemost favourable bidonthewhole. Inthelatter
case, theorder ofimportance ofthecriteria aswellasanyother considerations shallalsobedefined.
Fordetailed requirements onthecontent oftheinvitation see3.3.1(b).
5.2 Receipt andopening oftenders
Theclosed documents containing thebidsshallbeopened onthedateofexpiry ofthedeadline
forsubmitting thebids. Theinviter ofbids,thebidders andthepersons invited bythem, themembers
oftheCouncil, orpersons appointed bythem, furthermore, inthecaseofaninviter ofbidswhoisWT/WGTGP/W/9
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granted central budgetary subsidy forpublic procurement, theorgans andpersons defined inaseparate
legalrule,maybepresent when bidsareopened. Thenames andheadoffices (places ofresidence)
ofthebidders, theconsideration requested bythem andthedeadline ofperformance undertaken by
them shallbeannounced inthecourse ofopening thebids.
Theinviter ofbidsshallstateonopening thebids,orfollowing that,which bidsarenotvalid.
Those whosubmitted invalid bids, and/or were excluded from theprocedure maynottake
partinthefurther phase oftheprocedure.
Theinviter ofbidsshalldraw upminutes ontheopening andtheannouncement ofthebids,
theinvalid bidsandtheexcluded bidders.
5.3 Expostinformation oncontract awards
Theinviter ofbidsshallannounce thedecision onthejudgement ofthebidsinpublic. Bidders
notpresent attheannouncement shallbeimmediately informed inwriting about thedecision. Atthe
announcement ofthedecision andfollowing that,theprovisions onbusiness secrets donotapply in
respect ofthefact,solution ordata,which weretaken intoconsideration bytheinviter ofbidsinthe
course ofjudging thebidandinconnection withmaking thedecision.
Iftheinviter ofbidsaccepts thebidofanyofthebidders heshallannounce thewinner orally
andinwriting immediately.
Theinviter ofbidsshallpublish theinformation ontheresult oftheprocedure notlaterthan
within 15daysreckoned from itsannouncement.
Thepublication shallcontain thefollowing information:
1. name andaddress oftheinviter ofbids;
2. (a) theprocedure chosen
(b) reasons forapplying theprocedure inthecaseofaprocedure bynegotiation
without publishing anannouncement
3. dateofjudgement;
4. criterion forjudgement;
5. name andaddress ofthewinning bidder;
6. name andaddress ofthebidder submitting themostfavourable bidafterthewinning
bid1;
7. number ofbidsreceived;
8. name(s) andaddress(es) ofbidder(s);
9. subject andquantity oftheprocurement;
10. amount ofconsideration;
11. thepartandvalue ofthesubject oftheprocurement inrespect ofwhich thebidder
intends toconclude acontract withathirdperson1;
12. other information;
13. dateofpublishing theinvitation forbidding;
14. reference tothepreliminary summary information1;
15. dates ofdispatch andreceipt oftheannouncement.
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Bidders shallbeinformed, upon theirrequest, within 15daysreckoned from thereceipt of
therequest about thereasons fortheirexclusion, and/or therefusal oftheirbids, and/or thereasons
fortheirqualification asunsuitable intheprequalification procedure, aswellasabout theperson of
thewinning bidder. Upon thecompletion oftheprocedure, theinviter ofbidsshallprepare awritten
summary ofthebidsjudged. Theinviter ofbidsshallkeepthissummary forfiveyears, andshallrelease
ittotheCouncil, upon request. Thesummary should contain thefollowing information:
1. name andaddress oftheinviter ofbids,aswellassubject andvalue oftheprocurement;
2. names ofbidders selected andreasons fortheirselection;
3. names ofbidders refused, and/or excluded, andthereasons fortheir refusal and
exclusion;
4. name ofthewinning bidder andthereasons forselecting hisbid;
5. thepartoftheprocurement inrespect ofwhich thewinning bidder mayconclude a
contract withthirdpersons1;
6. reasons forthecondition ofapplying theprocedure inthecaseofaprocedure by
negotiation;
7. bidprice ofbidders;
8. reference totheprevious summary information1;
9. dateofpreparation oftheinformation material.
Attheendofthebudgetary year, theinviter ofbidsshallprepare anannual summary ofannual
publicprocurements,whichshallbesenttotheCouncil.Theannualsummaryshallcontainthefollowing
information:
1. number andvalue oftheannual procurements oftheinviter ofbidsinexcess ofthe
value limit;
2. details oftheannual procurements oftheinviter ofbidsinexcess ofthevalue limit,
asfollows:
(a) subjects oftheprocurement
(b) types oftheprocedure
(c) number ofdomestic andforeign winning bidders;
3. details ofprocedures bynegotiation inaccordance withthecases oftheirapplication,
specifying thenumber andvalue ofannual procurements;
4. reference totheprevious summary information.1
6. Review
TheLawestablishes thePublic Procurement Council, reporting directly totheParliament and
thePublic Procurement Arbitration Committee (hereinafter: Committee). Itsresponsibility istoact
onlegalremedy owing toissues ofdispute, ormatters related toviolations ofthelaw:
(a) conducting aprocedure instituted duetotheunlawful bypassing ofthepublic
procurement procedure;
(b) conducting aprocedure related totenders divided intosmall sub-tenders inorder to
avoid theapplication oftheLaw, aswellasinconnection withtheviolation ofthe
principles orrules ofthepublic procurement procedure;
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(c) judging anapplication submitted byanyinterested party against thedecision ofthe
inviter ofbids.
Thejudgement ofother legaldisputes related topublic procurements, notmentioned above, shallcome
under thejurisdiction ofthecourts. Three public procurement commissioners shallproceed inthe
public procurement cases, appointed bytheChairman oftheCommittee.
(1) APublic Procurement Arbitration Committee (hereinafter: Committee) actswithin theCouncil;
itsresponsibility istoactonlegalremedy owing toissues ofdispute, ormatters related toviolations
ofthelaw.
Thedecision shallbedelivered totheparties andotherinterested parties, andshallbepublished
inthePublic Procurement Bulletin.
Legal Consequences
Initsdecision, theCommittee shall:
(a) refuse unfounded applications;
(b) request theparty causing theviolation oflawtoproceed inaccordance withtherules ofthis
Actpriortothecompletion ofthepublic procurement procedure, and/or maymake thedecision
tobemade bytheinviter ofbidssubject toacondition;
(c) maydeclare nullandvoidthedecision oftheinviter ofbidsmade inthecourse ofthepublic
procurement procedure, orcompleting thepublic procurement procedure, except forthecase
ifthecontract hasalready beenconcluded onthebasis ofthisdecision;
(d) inaddition toindicating theviolated provision ofthisAct,itmayestablish theoccurrence of
theviolation oflaw;
(e) mayprohibit thebidder, fornotmore thanfiveyears, totakepartinapublic procurement
procedure;
(f) mayimpose penalty ontheorganization violating therules ofthisAct,orontheperson
responsible fortheviolation oflawandmaintaining legalrelationship withtheorganization;
(g) oblige theparty violating thelawtobearthefeeandcosts ofprocedure.
Noappeal maybelodged against thedecision oftheCommittee. Theparties whose rights orlawful
interests areviolated bythedecision oftheCommittee made withregard tothemerits ofthecasemay
request thecourt toreview thedecision intheform ofastatement ofclaim.