Brussels's Criticism of Hungary's Public Procurement Unjustified

The criticisms expressed by the European Commission regarding Hungarian public procurement cannot be substantiated with any cogent arguments. The picture would be entirely different if they based their evaluation on their own data. This was one of the key points Laszlo Kovacs, the president of Hungary's Public Procurement Authority discussed in an interview for Magyar Nemzet. Recently reaffirmed in his position, Kovacs stated that small and medium-sized enterprises (SMEs) in Hungary receive far more contracts—and thus public funds—than in most EU countries.

Laszlo Kovacs, President of Hungary's Public Procurement Authority (Photo: Sandor Csudai)

Do you listen to Majka?
I like the genre of music he creates, and yes, I sometimes listen to rap.

In one of his recent songs, which many believe criticizes the government, Majka sang about outsourced public procurements and essentially rampant institutionalized fraud. As the president of the Public Procurement Authority, did you take it personally?
Why would I? As the head of the authority, it’s not my role to judge musical works.
When it comes to public procurement, left-wing media, certain so-called civil organizations, and the European Commission often express similar views to the Hungarian rapper.
I can only form an opinion on public procurement based on professional criteria, and those assessments must be based on data.

Fine, then let's set aside the previous question for now and focus on the numbers. What do the statistics show?
First of all, last year, approximately 7,600 public procurement procedures were successfully concluded in Hungary. The total value was around average compared to previous years. More than 16,000 contracts were signed as a result, amounting to nearly 3,700 billion forints (about 9.24 billion euros) in expenditures.

How much of this public money went to smaller businesses?
SMEs won 77% of the contracts—over 12,000 contracts—worth almost 1,600 billion forints (over 4 billion euros). Additionally, medium- and small-sized companies often work as subcontractors even in tenders awarded to large corporations, meaning the actual amount they receive is significantly higher. These figures are outstanding even in an EU comparison.

Are they aware of this in Brussels?
When we first presented these figures, our EU counterparts could hardly believe that such a significant amount reaches small and medium-sized enterprises. The distribution of public procurement funds in other parts of the EU is very different.
How common are single-bidding tenders, where only one company submits an offer? In such cases, there’s obviously no competition.
The issue of single-bidding tenders is quite complex.

The European Commission thinks so too. Among their arguments for blocking EU funds for Hungary is that there are too many single-bidding tenders.
Let’s look at the numbers again—first, Hungary’s. In 2021, the proportion of single-bidding tenders under EU procurement rules was over 41%. Last year, it dropped to around 27%. The European Commission, however, says this is not enough and expects us to reduce the rate below 15%. While this is not impossible, the question remains whether such an expectation is justified.

Is it not?
The answer is clear from EU statistics. The average proportion of single-bidding tenders in EU member states is around 30%, yet Hungary is expected to go below 15%. And they make this demand even though only three countries in the European Economic Area currently meet this threshold: Sweden, Iceland, and Norway. In most member states, the rate is around 30%; in Greece, for example, it’s 49%, and in Poland, 54%.
Yet, in Poland, ever since the right-wing government was replaced, the European Commission says everything is fine—no issues with the rule of law. Are you implying that the expectations for Hungary are politically motivated?
What I will say is that based on substantive procurement criteria and EU statistics, there is no justification for the demand.

To rephrase my question: Is this purely a political move aimed at withholding EU funds?
Rather than making such a statement, I prefer to stick to a professional approach and comparisons based on EU data. The European Commission claims that Hungary has too many single-bidding public procurements and finds this unacceptable. However, when they examined Austria, they similarly found a high proportion of such procedures in certain sectors but concluded that it was merely a market characteristic. From a professional perspective, I see no major differences in the economic and procurement conditions of these two neighboring countries—so there is no reason to deem something unacceptable here while it is perfectly fine there.

Speaking of the number of bids per tender, what was the average in Hungary last year?
The average was 3.2 bids per tender, which is about the same as the EU average. However, we do lead the pack in one area: the number of so-called non-advertised negotiated procedures, where procurement is not publicly announced and the contracting authority selects participants in a closed process. Last year, there were only 217 such cases in Hungary, and our monitoring led to the cancellation of 27 of them. This is an exceptionally low figure.

Since you mentioned oversight, how many procurement audits did the authority conduct in 2024?
Public procurements begin and end with official notices, and modifications to contracts must also be published. These documents contain the key conditions of the procedures. Last year, we reviewed 24,000 notices, checking for legal violations or anti-competitive conditions. As a result, we issued 26,000 requests for clarification. The European Commission still demands stricter measures, so we are adjusting our oversight accordingly. The Public Procurement Arbitration Board launched 823 legal remedy procedures in 2024—far more than in previous years—issuing fines exceeding 1.15 billion forints (almost 2.9 million euros). These oversight figures are outstanding.

Do you think the public, the average news consumer is aware of this extensive oversight effort?
It doesn’t matter whether the average news consumer notices it or not. If something is functioning properly, it shouldn’t stand out. What matters is that economic actors know that the Public Procurement Authority takes its role seriously. Problems arise in about 1% of public procurement cases, but this is often exaggerated to paint the entire system as flawed. Misinformation about public procurement spreads widely, and the European Commission’s findings do not rely on its own statistics—which is the bigger problem.

Would the European Commission have a different view of Hungarian public procurement if it relied on its own statistics instead of opinions from so-called civil actors?
The European Commission periodically reviews member states’ public procurement systems based on 12 criteria. In the most recent report, Hungary ranked among the best, performing poorly in only two areas—one of which was the issue of single-bidding tenders. The Commission itself compiled this data, so it would be enough for them to just look at their own statistics. That way, we could focus on the real issues.

What are the real issues?
Ensuring that public procurement processes follow the rules, that contracts are fulfilled properly, and that subcontractors get paid.

Left-wing media may not like that statement.
Outlets focusing on procurement issues rarely reach out to us, even when a case is in the news. As a result, important facts and details are often overlooked. But let’s return to the main point: public procurement is a transparent and highly regulated process. It ensures maximum competition and, ultimately, the best quality results for publicly funded projects. Misconduct can happen anywhere, but in public procurement, it is relatively easy to uncover.

We've talked a lot about last year. What are your plans for 2025?
One of our key tasks is to provide training—an EU requirement—for small contracting authorities. We have reached out to 1,600 small municipalities around the country, offering online training. We are also tightening oversight of five-bidder procurement processes, as recent audits have revealed irregularities. Additionally, we’ll be celebrating the 30th anniversary of the Public Procurement Authority and marking the occasion appropriately.

On February 20, the Public Procurement Authority council re-elected Laszlo Kovacs as the president of the authority for another five-year term. The expert, who has more than two decades of experience in the field of public procurement, has held the position since 2020.