A new amendment to the Hungarian PPA came into force on 1 January 2023. The purpose of the amendment is linked to Hungary's obligations arising from its membership in the European Union. As a consequence thereof, the concept of financial support has been repealed, the wording “Hungary's national security interests” has been modified among the exemptions from public procurement, and the rules on access to documents and on the invalidity of certain grounds for exclusion have also been changed.
Repeal of the concept of financial support
Prior to the new amendment, the definition of “financial support” in the PPA was narrower than in Directive 2014/24/EU (the Directive) as it did not include tax benefits, which allow for a reduction in the financing costs of a contract. Since they cannot be excluded from the concept of financial support, it was necessary to repeal the Hungarian definition in Article 3(39) of the PPA to comply with the provisions of the Directive. In practice, this means that for all types of financial support (including all types of tax concessions and guarantees), the question of whether a public procurement obligation arises under Article 5(2) of the PPA must be examined on a case-by-case basis.
Clarification of the term "Hungary's national security interests"
In order to ensure consistency with the definitions set out in Article 15(2) and (3) of the Directive, the term “Hungary's national security interests” is replaced by “essential security interests” in the context of the circumstances justifying the exemption from public procurement, while the scope of the exemption affected by the amendment should continue to be interpreted restrictively.
Refusal of access to files to protect trade secrets
In cases where a contracting authority refuses access to a document resulting from a public procurement procedure on the grounds of the trade secrets rights of the economic operator concerned, in order to ensure the right to an effective remedy, the contracting authority must now clearly state the reasons why it considers that the information requested is confidential. In addition, and while maintaining the confidentiality of the information, it must disclose as fully as possible to the tenderer requesting the information its fundamental nature (i.e. the type of the information, such as know-how, technological process, source of supply), and how the disclosure of this information would harm the interests of the economic operator concerned.
Modification of the invalidity of certain exclusion grounds
Following the amendment, the fact that a subcontractor or a capacity provider intended by the tenderer to be involved in the performance of the contract has provided false information or made a false declaration pursuant to Article 62(1) (i) of the PPA, does not automatically invalidate the tender or the request to participate. In such cases, under the new provisions, a tender or a request to participate will be considered invalid only if the tenderer or candidate tenderer was aware of the false information or false declaration submitted by the subcontractor or the capacity provider. Under the amendment, the commission of acts under Article 62(1) (j) or (o) of the PPA shall not constitute immediate invalidity, but where the tenderer or candidate tenderer was aware of such acts by the subcontractor or the capacity provider, or should have been aware of them with the care normally required in the circumstances, the invalidity shall be presumed. In the case where the tenderer was not aware of the agreement restricting competition, but it cannot be proved that such agreement had no influence on the tender or the application, a ground for exclusion may also be established. Otherwise, as in the case of other grounds for exclusion, the tenderer still has the possibility to designate another economic operator instead of the excluded one pursuant to Article 71(4) of the PPA.
For more information on the updated public procurement rules, contact your CMS client partner and local CMS experts.
The article was co-authored by Daniella Huszár.