© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Structure and Functions of a Central Public Procurement Institution – the Public Procurement Council, Hungary Gabriella Fribiczer, PPC Gabriella Fribiczer, PPC Regional Conference on “Public Procurement Reform in West Balkan” Pristina, September 2008

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU OVERVIEW I. STRUCTURE OF PPC II. LEGAL BASIS III. FUNCTIONS OF PPC IV. REVIEW PROCEDURES

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU I. INSTITUTIONAL SET-UP STRUCTURE OF PPC

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PUBLIC PROCUREMENT COUNCIL (PPC) I. l PPC was established in 1995 (at the same time that the first PP Act came into force) l aim: enforcing the objectives of the PP Act l centralized, autonomous body l subordinated only to the Parliament l must report to the Parliament every year l central budgetary organ l the Council convenes 7 to 8 times every year

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PUBLIC PROCUREMENT COUNCIL (PPC) II. l the PPC is constituted of 19 members: - President - President - 6 members responsible for the enforcement of the basic principles and public interest - 6 members responsible for the enforcement of the basic principles and public interest - 6 members representing the general interest of the contracting entities - 6 members representing the general interest of the contracting entities - 6 members representing the general interest of the tenderers - 6 members representing the general interest of the tenderers l PPC members are not employed full-time (except the President) l the mandate of the PPC members is for not less than a two year term

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PUBLIC PROCUREMENT COUNCIL (PPC) III. The President of the PPC l is elected with a two-thirds quorum for a five year term of service by the members of the Council (may be re-elected once) l employed full-time l independent l civil servant l entitled to salary and other benefits as due to senior state secretaries

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU STRUCTURE OF PPC SECRETARIAT l standing structure of PPC, led by the Secretary General l in charge of coordinating the activity of the Council, preparing and implementing the CPP’s decisions; l employing civil servants

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU STRUCTURE OF PPC UNITS OF THE SECRETARIAT l Legal Unit: giving legal advice (help-desk)giving legal advice (help-desk) preparing draft recommendations, briefingspreparing draft recommendations, briefings administering the list of conciliatorsadministering the list of conciliators l Unit of International Relations and Training: international representation (ACPC, PPN, EU Lab, etc.)international representation (ACPC, PPN, EU Lab, etc.) coordination and control of pp trainingcoordination and control of pp training l Editorial Board: publishing and transmitting pp noticespublishing and transmitting pp notices l Economic Analysis Group: management and analysis of statisticsmanagement and analysis of statistics

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU STRUCTURE OF PPC ARBITRATION BOARD l operates alongside the PPC l set up also in 1995 l first instance public procurement review body l independent, administrative l permanent „quasi-judicial” body l ”tribunal” entitled to make a reference to the ECJ (request for preliminary ruling)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU STRUCTURE OF PPC ARBITRATION BOARD l efficient operation of the Board is provided from the budget of the PPC l the Board consists of public procurement commissioners l the chairperson and the vice-chairperson of the Board are elected from the public procurement commissioners by the two- thirds of the members of the Council in attendance, for a five-year term (possibility of re-election is not restricted)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PUBLIC PROCUREMENT COMMISSIONERS I. l number of commissioners (staff of the Board) is determined by the PPC l commissioners are appointed and recalled by the PPC l they are full-time civil servants l strict rules on conflict of interestes related to the contracting entities and the tenderers

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU JUDICIAL REVIEW l Municipal Court l Municipal Court of Appeals l Ordinary Civil Courts (ineffectiveness + damages) – will change in the future („one court for all” concept)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU II. LEGAL BACKGROUND

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PP LEGISLATION l the former PP Act : Act XL of 1995 l present PP Act: Act CXXIX of entered into force on 1st of May 2004 as a general rule; entered into force on 1st of May 2004 as a general rule;

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PP LEGISLATION l implementation of Directives 2004/17 and 2004/18: 15th January, 2006 l implementation of Directive 2007/66: planned from 1st of January 2009 and partially from 1st of June, 2009

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU THE PP ACT IN FORCE l all the essential rules on award procedures and on review procedures, as well as on the operation of the PPC can be found in this one Act l however: certain topics (e.g. centralised procurements, order of publication, tender notices) are regulated in secondary legislation (governmental and ministerial decrees)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU III. FUNCTIONS OF PPC

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC l preparing recommendations clarifying recurring problems in applying pp law l briefings on practical issues are issued by the President l help-desk: giving oral and written opinions to contracting entities and tenderers l non of these are legally binding l briefings and recommendations are published in the PP Bulletin

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC l initiating the modification of PP legislation, involved in the consultation process l maintaining international relations l maintaining records (database) on public procurement

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC - TRAINING Training activities: first: participation in training and ‘further training’ of contracting entities and tenderers, later (from 2004): coordination and supervision of training activities in the field of public procurement.

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC - TRAINING l from 1997: training of trainers programme with the support of World Bank l training institutions were selected (University of Economy), manual was elaborated and published l 20 trainers were trained l trainers participated several trainings in the organisation of the PPC (mainly local government officers at county seats)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC - TRAINING l later on (from ): 2-3 day-long workshops – target group: local government officials who had already acquired competences in public procurement; aim: providing more extensive knowledge l in : in cooperation with Budapest Business School (an institution for higher education): 72 hour training course focusing on public procurement (also case-studies)+ legal and financial knowledge

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC - TRAINING l since 2004: max. 500 (220) hour long PP training is organized by different organizations/ accredited, state- approved training, certification in the end (requested more and more often by contracting entities when hiring pp people) l members and staff of the PPC is present during the exams monitoring the quality of training l supervision through setting out professional and examination criteria

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC - TRAINING l in the framework of coordination and supervision of PP training: PPC publishes information related to pp training activities (information on workshops, trainings together with their duration, trainers involved), as well as information about the results of the exams l PPC contacts any training organisation if detects any problems concerning the quality of the training

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC - TRAINING l training of civil servants by the Hungarian Public Administration Office – PPC participated in the elaboration of the training materials and in the selection of trainers l several universities offer public procurement courses (part of the training, e.g. Faculty of Law) or special courses – PPC participates in the elaboration of the programmes and training materials l members and staff of PPC participating at pp events (workshops, trainings) as a speaker/trainer when requested

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU FUNCTIONS OF PPC l administering lists: contracting entitiescontracting entities approved contractorsapproved contractors Official Public Procurement ConsultantsOfficial Public Procurement Consultants l publishing the Official Journal of the PPC: the Public Procurement Bulletin

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU MONITORING ACTIVITY President/Members of PPC l ex officio proceedings initiated by the President or the Members of PPC l possibility for the President to require information from any contracting entities

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU CONTROL OF NOTICES l notices related to public procurement has to be published through the PPC l before notices are forwarded or published, the Editorial Board revises all of them both regarding their form and content l strict time limits apply for this control activity

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU CONTROL OF NOTICES l if the notice breaches PP law, it is sent back for reconsideration l notices sent back to the Editorial Board with the same content are forwarded or published, but the PPC is also informed l members of the PPC are entitled to initiate ex officio proceeding of the Arbitration Board

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU CONTROL OF AMENDMENT/ PERFORMANCE OF CONTRACTS l contracting authorities shall publish a notice in the PP Bulletin regarding the amendment and the execution (completion) of the contract l two model notices: one for modificationone for modification one for executionone for execution

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU CONTROL OF AMENDMENT/ PERFORMANCE OF CONTRACTS l PP Act sets out strict conditions for amending the contract -> ‘events not foreseeable’ l the Arbitration Board has the right to settle legal disputes regarding the amendment/ performance of the contract concluded in a public procurement procedure l any interested party may initiate the procedure of the Arbitration Board based upon the information published

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU CONTROL OF AMENDMENT/ PERFORMANCE OF CONTRACTS l in addition, should emerge the suspicion of a violation of law, the PPC shall forward the notice to bodies generally controlling pp l these controlling bodies (e.g. State Audit Office, Government Control Office) may initiate the ex officio proceeding of the Arbitration Board within one year of the infringement

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU CONTROL OF NEGOTIATED PROCEDURES WITHOUT PRIOR PUBLICATION OF A NOTICE l PP Act obliges CAs to send the contract notice, along with the information and documents justifying the application of this procedure to the Chairman of the PP Arbitration Board l if the Chairman finds that the application of this procedure was unfounded, he/she initiates the ex officio review procedure of the Arbitration Board

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU CONTROL OF NEGOTIATED PROCEDURES WITHOUT PRIOR PUBLICATION OF A NOTICE l the Chairman has 15 days to take this decision l if the panel of the Commissioners finds that the application was unlawful, it sets aside of the decision of the CA concerning the choice of procedure (except the contract has already been concluded) l in the latter case the Board imposes a fine (up to the 30 % of the value of the contract)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU STATISTICAL OBLIGATIONS l PPC is obliged to report to the Parliament and fulfill statistical obligations towards the EU l sources: Centralized publication - >contract award noticesCentralized publication - >contract award notices PP Act obliges CEs to prepare an annual statistical summary, in a prescribed format, about their annual pps. This summary shall be communicated to the Council not later than May 31st following the year in question.PP Act obliges CEs to prepare an annual statistical summary, in a prescribed format, about their annual pps. This summary shall be communicated to the Council not later than May 31st following the year in question.

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU SOME STATISTICS FOR 2008 l the overall value of public procurement: 1521,3 billion HUF above the national thresholds (no information about low-value procurements yet) l 4957 procedures above the thresholds l 11 bids submitted as an average l 6% (value) won by foreign tenderers

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU IV. REVIEW PROCEDURES

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PROCEDURE OF THE ARBITRATION BOARD May be initiated l upon application or l ex officio (two types)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU EX OFFICIO PROCEDURES Ex officio procedures may be initiated by organisations defined in the PPA: l Members or the President of the PPC l the State Audit Office l the Government Control Office l the Public Administration Office of the county or Budapest l the Hungarian State Treasury (in respect of the use of tied subsidy or addressed subsidy granted to local governments) l the parliamentary commissioners l the entity providing subsidy for public procurements; l the entity authorized to conduct public procurement procedures in the scope of centralised public procurement

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU DECISIONS OF THE ARBITRATION BOARD IN 2007 l rejection (appeal unfounded): 318 l the case was terminated: 148 l appeal founded: 227 l pending proceedings: 58

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU NUMBER OF REVIEW PROCEDURES IN 2007 l number of review procedures: 751 (decrease: in 2005: 1091, 2006: 858) l among these: upon the initiative of the Chairperson of the Arbitration Board: 109

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU PUBLICATION OF THE DECISIONS AND THE RULINGS l both the decisions of the Arbitration Board and the rulings of the courts shall be published in the Public Procurement Bulletin (official organ of the PPC) l as the Bulletin is published on the Internet as well, the decisions and the rulings are also available there, free-of-charge

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU THANK YOU FOR YOUR ATTENTION tanacsa.hu