VIZSG/18/2023 – EFOP system review – summary

The system review titled “EFOP Call for applications ‘Iskola 2020’ [School 2020]” focused, on the one hand, on the significant delays affecting projects under the Iskola 2020 Call for applications and, on the other hand, on the substantial amount of additional funding provided to beneficiaries.

The projects were delayed because the technical preparations began only during the implementation phase. This was further compounded by additional external issues, such as difficulties in cooperating with the organisation designated by law and the COVID19 pandemic. During this period, the construction industry experienced significant price increases; and as a result, the initially awarded funding proved to be insufficient for the implementation of the projects.

The Authority has made several recommendations in its report:

1) The Authority proposes that the Managing Authority initiate, with regard to Section 123(1) of Government Decree No 256/2021 of 18 May 2021, the reduction of the HUF 5 billion gross threshold applicable to commitments for construction projects, or the extension of its application by other means, in order to ensure that in the case of developments predominantly involving infrastructure investments, the projects are already adequately prepared at the time of submission of grant applications.

2) The Authority proposes that calls for applications issued during the 2021–2027 programming period require grant applicants to enclose – at the time of submission of grant applications – the entire technical design documentation related to construction projects, including final construction drawings and design cost estimates.

3) To ensure transparency and accessibility, the Managing Authority should upload all documents generated in relation to requests for additional funding and their approval to the EUPR [System of European Union Programmes], within the relevant contract modification documents.

4) The Authority makes the following recommendations to the Managing Authority regarding the oversight and control points within its processes:

4.1 The Managing Authority should review, specify and supplement the risk factors in the risk analysis methodology for on-site audits.

4.2 The Managing Authority should consider integrating the occurrence of negative press articles or media reports into its methodology/procedures.

5) The Authority makes the following main recommendations to the Managing Authority regarding the risks identified in its processes:

5.1 The Managing Authority should establish a pre-screening registration practice under which all suspected irregularities are recorded. The objective of the register is that the analysis of a circumstance giving rise to suspicions of irregularity, or the aggregate of such circumstances recorded therein, may lead, in relation to a given project, to the conclusion – following the actual emergence of a suspicion of irregularity – that the submission of an irregularity report is warranted.

5.2 In relation to significant advance payments disbursed to procurement entities/contractors without the requirement of guarantees, the Managing Authority should conduct periodic on-site audits – whether carried out online or in person – initiated with the beneficiary and involving the relevant procurement entities/contractors in order to examine their actual operations, active participation in the project, and, if available, the actual performance of project deliverables and their supporting documentation.