4. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Dual System of Public Procurement Review
Two separate paths of review:
1. a specialized review body (first instance)
appeal against its decision to administrative court
(second instance)
remedies other than damages
2. civil courts
damages
render the contract ineffective in a given case
But: no direct way to civil courts!
5. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Prior Complaint to the Contracting
Authority
BUT:
• possibility to complain directly to the
contracting authority as well
• optional - not a precondition for judicial review
• getting more and more frequent way of dispute
settlement in public procurement cases in
Hungary (and most complaints do not go any
further)
6. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
First-instance Review Body
PUBLIC PROCUREMENT ARBITRATION BOARD
• operates in the framework of Public Procurement
Authority (PPA)
independent part of PPA + independent from the
government, from Contracting Authorities
BUT: there is a risk of collusion
• permanent body, founded by law in 1995
• takes decisions on the basis of legal rules
• its decisions are legally binding, subject to an
appeal in administrative courts
7. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Public Procurement Arbitration Board
• specialized for public procurement cases -
experience and expertise!
• members:
civil servants (appointed by the PP Council)
must fulfil almost the same requirements such as
judges (e.g. not having been convicted for a criminal
offence)
minimum criteria: higher education degree, 3 years
working experience + for lawyers: bar exam
BUT: not only lawyers are members - panels include
public procurement experts with economic, transport,
IT, construction or engineering background as well
8. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Public Procurement Arbitration Board
• Members (cont.)
Strict conflict of interests rules:
• members cannot assume other paid occupation except
scientific, teaching, artistic or other legally protected
intellectual activity
• no membership with financial obligation in business
companies
• no political membership
• no financial interest above a certain threshold in a
business company
shall act in an independent and impartial manner
are not subject to any kind of instruction but solely to
law
9. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Second Instance Review
• Appeal against the decision of the PPAB:
Administrative Courts
(unfortunately no special procurement panel within
the court)
• Administrative court may change or annul the
decision of PPAB
BUT: the general rule is to change the decision (and
finish the debate)
annulment only in specific cases
02-May-2014 9
13. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Scope of the Review System
The review system applies equally to
contracts below and above EU thresholds
all contracting authorities and entities (utilities)
defence procurements as well
Any act relating to the award procedure before and after
the contract has been concluded may be challenged
(most frequently in practice:
• conditions of the contract notice, esp. selection
and award criteria
• technical specifications
• Designation of the winner or unsuccessful
termination of the tendering procedure)
14. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Initiation of proceedings
Who has the right to make a claim?
1. Bidders, candidates – but they have to show a special
interest in the context of the contract in question
2. Economic operators who are not bidders but whose
right or legitimate interest has been harmed or is likely
to be harmed by an activity or default which is in conflict
with the PPL (e.g. potential bidders, candidates)
3. Chambers or interest representation organisations
with an activity related to the subject-matter of
procurement
but only against the illegal nature of the contract
notice, the documentation or the amendment thereof
15. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Initiation of proceedings
4. Contracting authorities
5. Entities, institutions authorized in PPL, e.g.:
President of the Public Procurement Authority
State Audit Office
Government Control Office
Hungarian State Treasury
Commissioner for Fundamental Rights (Ombudsman)
Entity granting subsidy for a procurement
Hungarian Competition Authority
the public prosecutor, etc.
16. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Time Limits for Filing a Complaint
• applicants have to initiate proceedings within
certain time limits
• reason for time limits: to achieve a balance
between the private interests of tenderers and
the public interest in legal certainty and in
commencement of the execution of the
contract
17. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Time limits for filing a complaint
• Applications shall be lodged within 15 days from
the occurrence of the infringement, 10 days in
cases of unlawful contract award decisions
• If the infringement become known at a later date,
time limit shall begin at that date
• But no claim admissible after 90 days following the
occurence of the infringement
• Special time limits:
illegal direct award of the contract: 1 year following the
conclusion of the contract/beginning of performance
applications against the contract notice, invitation to
tender: 5 days before the expiry date of submitting
tenders
19. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Time limits for decision making
• PPAB has to take decisions rather quickly:
within 15 days when there is no hearing,
within 30 days if a hearing is necessary
within 60 days, if the proceedings initiated against the
amendment or performance of procurement contracts
an additional 10 days (in the third case 30 days)
extension can be granted if justifiable circumstances
arise
• courts require considerably more time to issue a
judgement – there are no mandatory time limits
for courts to make decisions
20. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Costs, Fees and Deposits
• the complaint to the contracting authority is free
of charge.
• proceedings before the PPAB are subject to an
administrative service fee – the amount of which
depends on several circumstances;
the value of public procurement
the content of the application (the number of the
elements of the plea)
• the losing party has to bear all or part of the
costs of the winning party
21. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Communication of Decisions
PPAB decisions are
• delivered to the parties and other interested
parties by regular mail
• also published in the Public Procurement Bulletin
(official press of PPA, only on-line version)
• published on its own website as well:
Judgements of the court are also published on the
website
The most important decisions are also published and
commented in Közbeszerzési Szemle, which is a
monthly legal publication.
23. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Unified application of law within the PPAB
• The PPAB shall operate a college for the cases
and groups of cases set out in the organizational
and operational regulations.
• The college shall examine the practice of the
PPAB and express its opinion on the disputed
legal issues in order to enhance a uniform
practice of review.
26. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
General level of knowledge
• Wide range of training opportunities for lawyers,
judges, tenderers, contracting officers
• Post-graduate programmes in public procurement
law and procurement management
• Policy and research institutes
• Websites and specialised journals on public
procurement
• National associations on public procurement:
• e.g. Hungarian Official Public Procurement Advisors’
Association (HOPPAA)
(But it is the result of a lengthy development…)
26
27. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
The Operation of Review and Remedies
Systems in Practice
Annual (public) reports on the operation of the
PPAB give us an overview:
• how frequently is the review system “used”by
tenderers?
• are first instance decisions appealed in a second
or even third instance?
• are tenderers successful and satisfied with the
outcome of proceedings overall?
• which remedies are actually awarded in
practice?
28. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Attitudes Towards Review Proceedings
• Some bidders see review proceedings as a
matter of last resort
• Others intend to obstruct procurement through
review proceedings (previously it was rather
frequent – current answer for it: high fees, but:
high fees may deter from seeking judicial
review…)
• In some cases, bidders do not turn to the PPAB
but ask the delegate of the relevant professional
organisation which is represented at the Public
Procurement Council with a request to submit a
complaint instead of the company.