Closing of investigation No VIZSG/26/2023 – “Preparation of a sustainable urban development strategy for the town of Gyula and surroundings”

The Integrity Authority has completed an investigation into Project ID TOP_PLUSZ-1.3.1.-21-BS1-2022-00001 based on a whistleblower report. The HUF 80 million project aimed at the preparation of sustainable urban development documents for the town of Gyula.

In the course of the investigation into the project, the Integrity Authority uncovered several infringements and irregularities that jeopardised the lawful and efficient use of European Union funds.

The Authority has established that the total value of the procurement procedures related to urban development exceeded the amount above which conducting a public procurement procedure would have been mandatory. In spite of this, the local government procured several documents without conducting a public procurement procedure.

At the same time, the Authority has also established that within the same project, the municipality (correctly) applied public procurement procedures to certain purchases; however, it did so in an unjustifiably restrictive manner with regard to competition. According to the Authority’s findings, the municipality, acting as the contracting authority, did not to allow tenderers to submit offers for individuals segments of the assignment, required ISO certificates that were not directly related to the subject matter of the procurement, and accepted a tender lacking formal and substantive content as a genuine offer only to classify the procedure as successful.

Because of this, the Integrity Authority initiated the opening of irregularity proceedings. As a result of the irregularity proceedings, the amount of funding eligible under the project was reduced by HUF 23.5 million.

The Authority also issued recommendations regarding future public procurement procedures, in particular advising the municipality not to impose ISO certifications unjustifiably as contractual requirements and not to require multiple certifications simultaneously where they are not necessary for contract performance.

Afterwards, the Integrity Authority monitored the municipality’s next public procurement procedure and established that not only had it not taken the recommendations into account, but it had also committed new infringements. As a result, the Authority launched a follow-up investigation and, based on its findings, turned to the Public Procurement Arbitration Board.

In its decision, the Arbitration Board found that the municipality had committed an infringement, annulled the entire public procurement procedure (including the call for tenders, the documents, and all decisions made to date), and imposed a HUF 1.2 million fine.