The Conditionality Mechanism and Public Procurement Reforms in Hungary
21 Oct 2022

With the European Commission having officially triggered the conditionality mechanism against Hungary, the country now seeks to implement several reforms in its public procurement system. The mechanism was put into use on 27 April 2022 in response to breaches in the principle of the rule of law in Hungary.

As the triggering of the conditionality mechanism means that Hungary may be denied vital EU funds, of which it is one of the largest net recipients, the Hungarian government is now acting to prevent this. In July, the Commission gave Hungary a month to address the concerns about the rule of law. Shortcomings in public tender procedures was one of the grounds listed for the decision to adopt this measure, with Hungary offering to cut the number of public tenders with only one participant in the bidding process to 15%.

This is but one of the many measures that would need to be adopted to address the corruption and lack of competition in public procurement. TPPR’s partner in Hungary, K-monitor, recently published a detailed analysis of the existing problems in this area. One of the chief concerns raised by K-monitor was the lack of transparency and consultations with stakeholders around the measures and bills proposed by the Hungarian government.

Moreover, the public procurement reforms that have been proposed are deemed to be inadequate at addressing the systemic problems facing the system in the country as it stands. The analysis provides a detailed breakdown of issues in single-bidding and lack of competition, various kinds of exempted procurements, conflicts of interest, lack of oversight, and many other systemic challenges.

According to the most recent results of the Transparent Public Procurement Rating, Hungary ranked 23rd out of the 42 participating countries. Hungary had particular deficiencies in the Efficiency, Integrity, and Accountability and Integrity components, the latter achieving a 23.71% result. The assessment at the time was also done by K-monitor.

Many of the problems in Hungarian public procurement are also present in other systems across the world, some of which have been assessed within the framework of TPPR. We hope that the feedback from K-monitor and other civil society organizations will be taken into account when the reforms are finalized.

To see K-monitor’s full analysis, follow the link.