Contents
- Who decides in municipal public procurement: the municipal council, the mayor or the clerk?
- How can procurement powers be delegated to the mayor?
- What internal procurement rules must a municipality maintain?
- What does the evaluation committee examine in a municipal procedure?
- What are the most common error patterns in municipal public procurement?
- When does it pay to bring an external expert into municipal procurement?
- Who oversees municipal public procurement procedures?
- What should a small municipality do differently?
- What does procurement funded by EU grants require?
- Frequently asked questions
- Does every municipality need internal procurement rules?
- Who takes the decision closing a municipal procurement procedure?
- When must a FAKSZ be involved in municipal procurement?
- Which error patterns usually lead the KDB to find against a municipality?
- Who audits municipal procurement after the event?
Who decides in municipal public procurement: the municipal council, the mayor or the clerk?
As a rule, the decision closing the procedure is taken by the municipal council, because the council acts on behalf of the municipality as contracting authority. Under Section 41(4) of the Mötv., the council may delegate its powers to the mayor, to its committees, to the municipal clerk (jegyző) or to a local government association (társulás), may give instructions on the exercise of those powers, and may withdraw them. Responsibility is shared among four actors, and the powers and room for manoeuvre of each must be documented separately in the internal procurement rules.
Municipal council
As a rule, the municipal council decides on launching the procedure, on the choice of procedure and on the decision closing it. According to Márton Gerse's 2023 analysis in Jogászvilág, which reviewed around 25 sets of municipal procurement rules, the smaller the settlement, the more decisions go up to the council, and the approaches to delegating powers vary considerably.
Mayor
Acts under delegated powers, typically below a value limit set by the council or for procurement subjects specified in advance. The mayor's power to enter into financial commitments has to be read together with the budgetary rules and the internal procurement rules.
Municipal clerk (jegyző)
Countersigns for legality, coordinates preparation and is responsible for maintaining the documentation procedures. Keeping the internal rules up to date and ensuring an internal audit trail are the clerk's duties.
Evaluation committee
Under Section 27(4) of the Kbt., tenders are evaluated by a committee of at least three members with combined expertise in public procurement, law, finance and the subject matter of the procurement. It prepares a written expert opinion and a recommendation for the decision-maker.
District example: the Budapest District XV procurement rules
The procurement rules of the Budapest District XV Local Government, 4/2024 (XII. 18.), show how a larger district contracting authority can settle both threshold-linked delegation of powers and the composition of the evaluation committee in a single internal instrument.
How can procurement powers be delegated to the mayor?
Under Section 41(4) of the Mötv., the municipal council may delegate its procurement powers by a written council resolution. The delegation may be general (set out in the internal procurement rules for every type of procedure) or case by case (by a resolution on a specific procedure). Delegation is typically tied to a value limit, and for purchases above that limit the council keeps the decision closing the procedure for itself.
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Precise identification of the delegated power
The type of procedure, the nature of the decision (launching or closing the procedure, or an interim decision) and the exact subject of the power must be clear.
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The recipient of the power
The mayor, the clerk or a committee. Where there are several recipients, the resolution must also draw the line between their respective powers.
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Value and subject-matter limits
Which estimated values or which procurement subjects the delegation covers, and which the council keeps for itself.
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An express statement that the delegation can be withdrawn
The power to withdraw follows from the text of the Mötv., but it is worth restating in the internal rules so that the council can withdraw a delegation in future under a clear procedure.
Small-municipality model: Újrónafő's 2025 procurement rules
The 2025 procurement rules of Újrónafő village show that even a village running 1-3 procurement procedures a year can document its delegation arrangements cleanly.
What internal procurement rules must a municipality maintain?
Every contracting authority must have internal procurement rules. These may be general, ad hoc, or general rules supplemented on an ad hoc basis. The mandatory content and the choice between the types are governed jointly by Section 27(1) of the Kbt. and the preparation guidance of 29 May 2025 issued by the Council of the Public Procurement Authority. The general requirements that also apply to non-municipal contracting authorities are summarised in our guide to internal procurement rules and the annual plan.
Mandatory content under Section 27(1) of the Kbt.
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Allocation of responsibilities
Who is responsible for preparing, conducting and internally auditing the procurement procedure. Decision-making levels and deputising arrangements must be recorded.
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Responsibilities of the persons involved in the procedure
The rules define the precise role and powers of the evaluation committee members, the professional support staff and any external consultants.
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Documentation procedures
Which documents must be produced at each stage of the procedure, where they are kept, and how the contracting authority ensures that the procedure can be reconstructed afterwards.
The three types of internal rules: general, ad hoc and supplementary
General
Sets out in advance, for all of the municipality's planned procurements, the allocation of responsibilities, the decision-making levels, the composition of the evaluation committee and the documentation. The preferred form for a contracting authority that procures on an ongoing basis (a city with county rights, or a larger district-centre or Budapest district local government).
Ad hoc
Covers a single, specific procedure and is adopted before that procedure is launched. Suits a small municipality with only 1-3 procurements a year, for which general rules would be a disproportionate administrative burden.
Supplementary
Adapts the general rules to the particular features of a specific procedure. Typically used for procurement in a project funded by an EU grant, where the grant agreement prescribes additional procedural elements.
For purchasing by municipal budgetary bodies, the Council of Public Procurement has issued separate amended guidance on purchasing by local government budgetary bodies, covering the decision-making level, financial commitments and internal procedures.
We take on the drafting of municipal internal procurement rules, or their review, aligned with the municipality's organisational and operating rules (SZMSZ).
What does the evaluation committee examine in a municipal procedure?
The evaluation committee assesses the tenders on the merits and makes a recommendation for the decision.
Public procurement expertise
Knowledge of the Kbt., its implementing decrees and the procedural rules of the Electronic Public Procurement System (EKR). Typically brought to the committee by the procurement officer or the external consultant engaged for the procedure.
Legal expertise
A grasp of statutory interpretation, contract clauses and conflict-of-interest situations. This role is usually taken by the clerk or the municipality's in-house legal counsel.
Financial expertise
Knowledge of the estimated value, the available budget cover and the calculation of the contract price. Usually the head of finance or the officer responsible for the budget.
Subject-matter expertise
Knowledge of the technical, service or construction features of the subject of the procurement. This is the role that, under Section 27(4) of the Kbt., may also be covered by an ad hoc appointment.
In municipal practice the committee is set up in one of two ways: as a standing body (named in advance in the internal rules) or by ad hoc appointment for each procedure. Both are permitted, but a conflict-of-interest declaration and a written expert opinion are mandatory in every case. The framework for handling conflicts of interest is summarised in the Public Procurement Authority's conflict-of-interest guidance of 9 May 2024.
What are the most common error patterns in municipal public procurement?
Five types of error account for most of the risk of a review procedure, from missing internal rules to the rotation of the pool of invited tenderers. The patterns are drawn from the case law of the Public Procurement Arbitration Board (KDB), the reports of the State Audit Office (ÁSZ) and the practice of the Public Procurement Authority.
Sugallat's analysis of KDB decisions from 2022 to 2026 (3,113 decisions) shows that the applicant wins in 73.3 per cent of KDB cases that end in a decision on the merits. In other words, if a review procedure is brought over one of the error patterns below, the municipality faces a roughly three-in-four chance of a KDB decision going against it. That rate shows the practical weight of the five error patterns discussed in this section.
Missing or outdated internal procurement rules
The municipality has not complied with its obligation under Section 27(1) of the Kbt. to adopt internal rules, or the rules have not been reviewed against the legal framework in force for years. The ÁSZ's audits of municipalities show the scale of the risk: report 21067 examined the integrity and internal control systems of 16 municipal institutions for 2019 and found irregularities at 7 of them.
The ÁSZ targeted audit report 25006 on Hugyag village local government found that, for the economic events audited, commitments were recorded late in the advance register in 80.0 per cent of cases. This is a direct measure of gaps in the internal rules and internal controls.
Splitting framework agreements to avoid the rules
Section 19(2) of the Kbt. prohibits splitting a procurement into parts where the aim is to circumvent the procedural rules of the Act. In a municipal context, the typical form is that several municipalities, municipal budgetary bodies or municipally owned companies each contract separately for the same subject matter, thereby avoiding aggregation of the contract values.
Case collection: splitting cases compiled by the KH, the Prime Minister's Office, EUTAF and MJVSZ
The joint case collection on splitting by the KH, the Prime Minister's Office, EUTAF and the Association of Cities with County Rights (MJVSZ) works through concrete cases that follow this pattern, drawn from municipal and institutional settings.
Incorrectly determined estimated value
Handling conflicts of interest
Section 25 of the Kbt. regulates conflicts of interest broadly. It covers personal, economic and family ties, as well as the involvement in evaluation of anyone who took part earlier in preparing the procedure. In a municipal context, the recurring pattern is the dual role of a mayor or councillor with ties to a municipally owned company, and the presence at the evaluation stage of people involved earlier in preparation (design, budgeting). For more on the link between conflicts of interest and exclusion grounds, see our article on exclusion grounds and the evidence rules in public procurement.
Five years of KDB case law and the Kúria's judicial review practice
Dr Ákos Héder's 2025 analysis covers five years of KDB case law on this subject. A press release from the Kúria, Hungary's supreme court, records the consistently strict approach taken on judicial review.
Rotation of invited tenderers under Section 115 of the Kbt.
ÁSZ 2021 competition analysis on rotating the pool of invited tenderers
The ÁSZ competition analysis of 28 April 2021 gives a comprehensive picture of how concentrated the pool of invited operators is in Section 115 procedures, and of the resulting restriction of competition.
Among the cases decided on the merits in our KDB decision analysis, the construction sector has the highest applicant success rate, at 84.6 per cent (165/195), 11.3 percentage points above the overall average of 73.3 per cent. This sector risk profile matters in a municipal context too, because the Section 115 procedure with its rotating selection of tenderers is the typical procedure for works contracts that reach the national threshold but are below HUF 300 million. The competition risk of the invited pool and the sector's high rate of adverse findings together explain why a municipality should rotate the economic operators it invites from one Section 115 procedure to the next.
When does it pay to bring an external expert into municipal procurement?
For a municipality, engaging an external consultant is not a legal obligation but an economic decision. The legal framework for the Responsible Accredited Public Procurement Advisor (FAKSZ) is set by Government Decree 257/2018 (XII. 18.), and the framework for the successor system is the State Public Procurement Advisor (ÁKSZ) activity under Government Decree 478/2023 (X. 31.).
Engaging a consultant pays off in three situations
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A small municipality with 1-3 procurements a year
Where keeping the expertise in-house is not economical, a consultant engaged under a framework contract can work for an annual fee calibrated to the procurement calendar.
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A project funded by an EU grant
Where the risk on the project side may mean the grant is reclaimed. EUTAF's ex-post regularity audit can extend to the entire grant amount.
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A procurement exposed to review risk or with a complex subject matter
Where the municipality cannot cover all the expertise needed at the evaluation stage from its own resources. A complex technical subject or a framework agreement with several parties typically falls into this category.
A consultancy framework contract is usually on an annual fee, calibrated to a set number of procedure packages or reviews of the internal rules. As part of internal control, the clerk can see exactly what the provider contributes to the allocation of responsibilities.
Not sure which layer of your municipality's procedure is worth having a consultant review?
We review your internal procurement rules, prepare the evaluation committee documents and assemble an audit-proof trail. You take the decision; we set out the legal framework alongside it.
Who oversees municipal public procurement procedures?
Municipal public procurement is overseen by four authorities whose perspectives partly overlap. The four layers do not replace one another; they examine the same procedure from different angles.
Context
The four layers do not replace one another; they examine the same procedure from different angles.
According to the same KDB decision analysis, in KDB cases initiated ex officio that end in a decision on the merits, the initiator wins in 90.8 per cent of cases, against a success rate of 71.3 per cent for applications brought by private parties. The gap of 19.5 percentage points shows that when one of the oversight bodies listed below initiates proceedings ex officio, an adverse finding is considerably more likely than in proceedings brought on a private party's application.
| Oversight body | Focus of scrutiny | Consequences |
|---|---|---|
| Public Procurement Authority | Notice review and contract review, monitoring of procurement plans, communications from the President of the Public Procurement Authority. | The KDB, which operates within it, is the first-instance review body and may fine the contracting authority. |
| State Audit Office | Regularity and integrity audits of municipal financial management. | Recommendations and action plans. In cases of serious irregularity, a criminal complaint. |
| EUTAF (Directorate General for Audit of European Funds) | Ex-post regularity audit of procurement funded by EU grants. | Irregularity proceedings, with recovery of all or a proportionate part of the grant. |
| NFK (National Development Centre) | Quality control of EU projects while the procedure is under way. | If it raises an objection, suspension of the procedure or an obligation to amend it. |
Inventory of ÁSZ municipal reports (20041, 21067, 25006)
The 2020 ÁSZ report 20041 examined the integrity and internal control system of the town of Újhartyán, the 2021 report 21067 the integrity and internal control systems of municipal institutions, and the 2025 targeted audit 25006 covered the execution and accounting of cash expenditure by Hugyag village.
The four layers should be read on the basis that a lawful procedure is not enough on its own: in projects funded by EU grants, a separate irregularity can be found on the project-oversight side (EUTAF, NFK). The palyazat.gov.hu page on public procurement summarises the oversight arrangements from the service provider's perspective, and the Önkormányzati Klub summary reviews the ÁSZ's recommendations for preventing irregularities. As part of the service, we also see the compilation of audit-proof documentation through the evaluation and contract award stages.
What should a small municipality do differently?
A small municipality needs to think through three decisions before drawing up its annual procurement calendar. Our working definition of a small municipality: 1-3 procurements a year, no in-house expertise, typically a village or small town.
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Type of internal rules
A village running 1-3 procurements a year does not necessarily need to maintain a full set of general internal procurement rules. The practical solution is to combine internal rules for purchases below the thresholds with ad hoc procurement rules.
We have set out the current figures on our page on the national and EU thresholds in force, together with a calculator.
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The economics of engaging a consultant
For a small municipality, employing an in-house member of staff with FAKSZ experience is a disproportionate cost, whereas a consultant engaged under a framework contract can work for an annual fee calibrated to the procurement calendar.
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Minimum internal controls from the ÁSZ's perspective
Four elements an ÁSZ audit expects. Together they protect the clerk in the event of a later ÁSZ or EUTAF audit.
- A documented allocation of responsibilities.
- A procedure for collecting conflict-of-interest declarations.
- A written record of how the estimated value was calculated.
- An up-to-date procurement plan.
What does procurement funded by EU grants require?
Municipal procurement financed by EU grants in the 2021-2027 programming period is governed by Government Decree 256/2021 (V. 18.), which requires a separate chain of controls on the project side. Lawfulness under the Kbt. does not rule out an irregularity being found on the project side and the grant being reclaimed.
You can check the EU threshold figures and the line between national and EU procedures on our page on the public procurement thresholds in force.
Managing the risk on the project side depends on whether the internal rules, the allocation of responsibilities and the documentation match the perspective of the oversight bodies. If you need consultancy support to prepare the grant application and the procurement together, our project-side support is covered by our grant writing service, and the procurement side is handled within our service covering the preparation and full management of the procedure.
Frequently asked questions
Yes. Under Section 27(1) of the Kbt., every contracting authority must have internal procurement rules. They may be general, ad hoc, or general rules supplemented on an ad hoc basis. A small municipality running 1-3 procurements a year can also operate lawfully with ad hoc rules, provided it adopts separate rules before each specific procedure.
As a rule, the municipal council, because the council acts on behalf of the municipality as contracting authority. Where powers have been delegated under Section 41(4) of the Mötv., the mayor or another recipient of the delegation decides, and the evaluation committee prepares the decision with a written expert opinion and a recommendation.
A municipality is not required to involve either a FAKSZ or an ÁKSZ. Section 27(3) of the Kbt. requires ministries, central purchasing bodies, the State and budgetary bodies to involve an ÁKSZ above certain values or where EU funds are used, with the exception of local government budgetary bodies. A FAKSZ may be involved until 31 December 2026, but this is not mandatory (Section 197/E of the Kbt.). The successor role is the State Public Procurement Advisor (ÁKSZ).
Five recurring error patterns emerge from the KDB's case law: missing or outdated internal procurement rules, splitting within a municipal framework, an incorrectly determined estimated value, conflicts of interest (the dual role of a mayor or councillor with ties to a municipally owned company), and failure to rotate invited tenderers in Section 115 procedures.
Four bodies, with partly overlapping perspectives: the Public Procurement Authority carries out notice and contract reviews, the KDB acts as the first-instance review body, the State Audit Office audits regularity and integrity, EUTAF audits the ex-post regularity of EU funding, and the NFK checks the quality of EU projects. The four layers do not replace one another.