According to Government Decree No. 48/2020 effective from March 20, direct purchases from Hungarian sources (not including those from EU sources) that directly relate to protection against the coronavirus or serve the operation of defence agencies in the pandemic are exempt from the usual processes of the Public Procurement Act (PPA). Exceptional emergency procurements no longer even require contracting authorities to request three offers.
Besides the Government Decree, a Public Procurement Authority Guidance was issued on the coronavirus epidemic, including the following key points:
- Procurement procedures not exempted must continue to follow usual PPA rules.
- Ongoing public tenders have not been suspended, and the emergency per se cannot serve as a 'trump card' for contracting authorities to cancel ongoing public procurement procedures. Careful analysis on a case-by-case basis is required.
- Parties should conduct electronic communications where permitted by the PPA. The Guidance is silent on how to ensure access to winning bids in this way, which is notable since the PPA generally prohibits electronic access in this case and usually requires the personal presence.
- Given the uncertainty as to how the emergency will evolve in the future, contracting authorities may conclude agreements with a suspensive condition (e.g. the agreement becomes effective upon the end of the emergency).
- Regarding performance-related difficulties, the Guidance emphasises that non-performance or exemption from liabilities must be evaluated according to the Civil Code, and are not matters of public procurement, while contract modifications due to the pandemic must still be assessed according to the PPA. The pandemic has not yet created any general excuse for contract modifications. Reference to the emergency situation by itself is not sufficient. A case-by-case analysis is required, and parties must be able to prove that the epidemic or measures enacted in response to the epidemic rendered performance impossible. Only centralised framework agreements are an exception. Contract modification rules related to these agreements were eased substantially since the Government Decree encourages pandemic-related procurements to be ordered from existing framework agreements.
- As for modifications, the Guidance stresses that whether a contract was concluded before or after the emergency declaration in Hungary on 11 March 2020 is of fundamental importance when the circumstance of the case are evaluated.
For further information on public procurement in Hungary during the current crisis, contact your regular CMS advisor or local CMS expert: