Back
Public procurement primer

Municipal public procurement: decision-making levels, typical error patterns, layers of oversight

Who decides in a municipal public procurement, what regulation must be maintained under Kbt. Section 27, where the evaluation committee falls short on expertise coverage, and when an advisory framework contract pays off. The five recurring error patterns and the role of the four oversight bodies in one overview.

By:

Published

18 min read

Contents
  1. Who decides in a municipal public procurement: representative body, mayor, or clerk?
    1. Representative body
    2. Mayor
    3. Municipal clerk (jegyző)
    4. Evaluation committee
  2. How can the public procurement powers be delegated to the mayor?
    1. Precise identification of the delegated power
    2. The recipient of the power
    3. Value and subject-matter limits
    4. Express statement of revocability
  3. What public procurement regulation must the local council maintain?
    1. Mandatory content under Kbt. Section 27(1)
    2. Chain of responsibility
    3. Responsibilities of persons involved in the procedure
    4. Documentation regime
    5. The three regulation types: general, ad hoc, supplementary
    6. General
    7. Ad hoc
    8. Supplementary
  4. What does the evaluation committee examine in a municipal procedure?
    1. Public procurement expertise
    2. Legal expertise
    3. Financial expertise
    4. Subject-matter expertise
  5. What are the most common municipal public procurement error patterns?
    1. Missing or outdated public procurement regulation
    2. Artificial splitting of framework agreements
    3. Incorrectly determined estimated value
    4. Handling of conflict of interest
    5. Rotating tenderer selection under Kbt. Section 115
  6. When does it pay to bring in an external public procurement advisor?
    1. Bringing in an advisor pays off in three situations
    2. Small local council with 1-3 procurements a year
    3. Project funded by EU support
    4. Procurement with review risk or complex subject matter
  7. Who audits municipal public procurement procedures: the Public Procurement Authority and the three other bodies?
    1. Public Procurement Authority (KH)
    2. State Audit Office (ÁSZ)
    3. EUTAF (EU Audit Office)
    4. NFK (National Development Centre)
  8. What must a small local council do differently?
    1. Regulation type
    2. Economic logic of engaging an advisor
    3. Internal control minimum from the ÁSZ angle
  9. What does EU-funded public procurement require?
    1. The three audit bodies for the EU project
    2. NFK
    3. EUTAF
    4. Public Procurement Authority
    5. Does every local council need a public procurement regulation?
    6. Who takes the decision closing a municipal public procurement procedure?
    7. When is it mandatory to involve a FAKSZ in a municipal public procurement?
    8. What error patterns typically lead the Arbitration Board to sanction a local council?
    9. Who audits municipal public procurement after the fact?

Who decides in a municipal public procurement: representative body, mayor, or clerk?

As a general rule, the decision closing the procedure is taken by the representative body, because it is the body that acts on behalf of the local council as the contracting authority. Under Mötv. Section 41(4), the representative body may delegate its powers to the mayor, to its committees, to the municipal clerk (jegyző), or to its association, may issue instructions on the exercise of that power, and may also revoke it. Responsibility is distributed among four actors, and the authority and scope of discretion of each must be documented separately in the public procurement regulation.

Kbt. 27. § (1) Mötv. 41. § (4)

Mayor

Acts under delegated authority, typically below a value threshold set by the body or in respect of procurement subjects named in advance. The mayor's commitment authority must be read together with the budgetary rules and the regulation.

Municipal clerk (jegyző)

Provides the legality countersignature, coordinates preparation, and is responsible for maintaining the documentation regime. Keeping the regulation up to date and ensuring the internal audit trail are the clerk's obligations.

Evaluation committee

Under Kbt. Section 27(4), tenders are evaluated by a committee of at least three members who collectively possess public procurement, legal, financial, and subject-matter expertise. It prepares a written expert opinion and a decision proposal for the decision-maker.

A clear separation of the four roles must be documented in the regulation.

District example: Budapest XV procurement regulation

The Budapest XV District Local Government procurement regulation 4/2024. (XII. 18.) shows how a larger district contracting authority can settle both the value-threshold-based delegation of powers and the composition of the evaluation committee in a single internal norm.

How can the public procurement powers be delegated to the mayor?

Under Mötv. Section 41(4), the representative body may delegate its public procurement powers by a written body resolution. The delegation may be general (set out in the public procurement regulation for every procedural type) or ad hoc (by a resolution relating to a specific procedure). Typically, the delegation of powers is tied to a value threshold, and for procurements above the threshold the body retains the decision that closes the procedure.

Mötv. 41. § (4) Kbt. 98. §

The minimum content of the delegating resolution consists of four elements.

  1. Precise identification of the delegated power

    The procedural type, the nature of the decision (launching, closing, or interim decision), and the exact subject of the power must be clear.

  2. The recipient of the power

    Mayor, clerk, or committee. Where there are multiple recipients, the delineation of the sub-powers must also be settled in the resolution.

  3. Value and subject-matter limits

    What estimated value or what subject of procurement the delegation covers, and which the body retains for itself.

  4. Express statement of revocability

    Revocability follows from the wording of the Mötv. itself, but it is worth restating it in the regulation, so that the body can revoke a delegation in the future under a clear procedural rule.

Small-municipality example: Újrónafő 2025 regulation

The 2025 procurement regulation of Újrónafő Village shows that even a village handling 1-3 procurements a year can cleanly document the delegation regime.

What public procurement regulation must the local council maintain?

Every contracting authority must have a public procurement regulation. The regulation may be general, ad hoc, or general supplemented on an ad hoc basis. The mandatory content and the choice between regulation types are settled together by Kbt. Section 27(1) and the preparation guidance of 29 May 2025 from the Council of the Public Procurement Authority.

Kbt. 27. § (1)

Mandatory content under Kbt. Section 27(1)

The contracting authority must settle three areas in writing.

  1. Chain of responsibility

    Who is responsible for the preparation, conduct, and internal audit of the public procurement procedure. Decision-making levels and deputisation arrangements must be recorded.

  2. Responsibilities of persons involved in the procedure

    The precise role and authority of the members of the evaluation committee, of the subject-matter contributors, and of the external advisors must be defined.

  3. Documentation regime

    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 after the fact.

The three regulation types: general, ad hoc, supplementary

The choice depends on the volume and permanence of the local council's public procurement activity.

General

The local council sets the chain of responsibility, decision-making levels, evaluation committee composition, and documentation in advance for all planned public procurements. Preferred format for a contracting authority carrying out regular procurement activity (a city with county rights, a larger district or borough local government).

Ad hoc

Relates to a single specific procedure and is adopted before the launch of that procedure. Suitable for a small local council with only 1-3 procurements a year, where a general regulation would be a disproportionate administrative burden.

Supplementary

Tailors the general regulation to the specifics of a given procedure. Typical use is in a public procurement funded by EU support, where the funding agreement prescribes additional procedural elements.

For the procurements of municipal budgetary institutions, the Council of Public Procurement issued a separate amended guidance on the procurements of local municipal budgetary institutions, covering the decision-making level, commitment authority, and internal procedural rules.

What does the evaluation committee examine in a municipal procedure?

The evaluation committee substantively evaluates the tenders and formulates a decision proposal. Under Kbt. Section 27(4), the contracting authority is obliged to set up an evaluation committee of at least three members who collectively possess subject-matter expertise, public procurement expertise, legal expertise, and financial expertise. The four fields of expertise do not have to be covered by four different individuals, but the composition of the committee must deliver the expertise collectively.

Kbt. 27. § (4)

Public procurement expertise

Knowledge of the Kbt., the implementing decrees, and the EKR procedural rules. Typically brought into the committee by the public procurement officer or the external advisor engaged for the procedure.

Legal expertise

Interpreting statutes, contractual clauses, and conflict-of-interest situations. This role is typically taken on by the clerk or the local government legal counsel.

Financial expertise

Knowledge of the estimated value, the funding cover, and the calculation of the contractual consideration. Usually the financial director or the officer responsible for the budget.

Subject-matter expertise

Knowledge of the technical, service, or construction specifics of the procurement subject. This is the role that, under Kbt. Section 27(4), may also be covered by an ad hoc appointment.

In municipal practice the committee is set up in one of two forms: as a standing body (named in advance in the regulation) or by ad hoc appointment for each procedure. Both approaches are permitted, but the conflict-of-interest declaration and the written expert opinion are mandatory in every case. The framework for handling conflict of interest is set out in the Public Procurement Authority's conflict of interest guidance of 9 May 2024.

What are the most common municipal public procurement error patterns?

Five error patterns cover the majority of the review risk, from missing regulations to a rotating pool of invited tenderers. The source of these patterns is the case law of the Arbitration Board, the reports of the State Audit Office (Állami Számvevőszék, ÁSZ), and the practice of the Public Procurement Authority.

Missing or outdated public procurement regulation

The local council fails to comply with the regulatory obligation under Kbt. Section 27(1), or the regulation has not been reviewed against the legal framework in force for years. ÁSZ municipal audits show the scale of the risk: report 21067 examined the integrity and internal control system of 16 municipal institutions in respect of 2019, and found irregularities at 7 of them.

Kbt. 27. § (1)

According to the ÁSZ report 25006 targeted audit of Hugyag Village Local Government, in 80.0% of the audited economic events the prior recording of commitments in the register was late. This is a direct measure of the shortfall in regulation and internal control.

Artificial splitting of framework agreements

Kbt. Section 19(2) prohibits the division of a public procurement into lots where the purpose is to circumvent the statutory procedural regime. In a municipal context, the typical form is that several local councils, municipal budgetary institutions, or municipally owned companies contract separately for the same procurement subject, bypassing the aggregation rule.

Kbt. 19. § (2)
Case collection: KH-Prime Minister's Office-EUTAF-MJVSZ splitting cases

The joint splitting case collection of the KH, the Prime Minister's Office, EUTAF, and MJVSZ works through concrete cases fitting this pattern, from municipal and institutional contexts.

Incorrectly determined estimated value

Handling of conflict of interest

Kbt. Section 25 regulates conflict of interest broadly, extending to personal, economic, and family ties, and to the evaluation role of actors previously involved in the preparation of the procedure. In a municipal context, the recurring pattern is the dual role of a mayor or council member in a municipally owned company, and the presence in the evaluation stage of actors previously involved in preparation (planning, budgeting). For more detail on the relationship between conflict of interest and the exclusion grounds, see the exclusion grounds and the verification regime in public procurement article.

Kbt. 25. §
Five years of Arbitration Board case law and Kúria judicial review practice

Dr. Ákos Héder's 2025 analysis works through five years of Arbitration Board case law on this subject. The Kúria communiqué records the consistent strictness of the judicial review practice.

Rotating tenderer selection under Kbt. Section 115

A construction procurement above the national threshold but below the EU threshold, with an estimated value under HUF 300 million, may under Kbt. Section 115 be conducted at the contracting authority's choice under the rules of the open procedure or the negotiated procedure without publication of a notice, provided that the contracting authority sends a direct invitation to tender to at least five economic operators capable of performing the contract. If the invited pool repeats from procedure to procedure, competition-restricting and market-concentration risk arises.

Kbt. 115. §
ÁSZ 2021 competition analysis on the rotating invited pool

The ÁSZ competition analysis of 28 April 2021 provides a comprehensive picture of the concentration of the invited pool and the competition-restricting effect of Kbt. Section 115 procedures.

When does it pay to bring in an external public procurement advisor?

Bringing in an external advisor can follow both from statutory obligation and from economic logic. The statutory framework for the Responsible Accredited Public Procurement Advisor (FAKSZ) is set by Government Decree 257/2018. (XII. 18.), and the successor framework is set by the State Public Procurement Advisor (ÁKSZ) activity under Government Decree 478/2023. (X. 31.).

257/2018. Korm. r. 478/2023. Korm. r.

Bringing in an advisor pays off in three situations

  1. Small local council with 1-3 procurements a year

    Where maintaining in-house expertise is not economical, an advisory framework contract can be calibrated to the procurement calendar with an annual fee.

  2. Project funded by EU support

    Where the project-side risk may mean the funding is clawed back. The EUTAF ex-post regularity audit may cover the entire funded amount.

  3. Procurement with review risk or complex subject matter

    Where in-house expertise coverage at the evaluation stage is patchy. A complex technical subject or a multi-actor framework agreement typically falls into this category.

The advisory framework contract is typically on an annual fee, calibrated to a given number of procedure packages or regulation reviews. As part of the internal control, the clerk sees precisely what the service provider brings into the chain of responsibility.

Unsure which layer of your own municipal procedure is worth reviewing with an advisor?

We review the public procurement regulation, prepare the evaluation committee documents, and put together an audit-proof trail. You decide. We provide the legal framework to back it up.

Request a callback or professional consultation

Who audits municipal public procurement procedures: the Public Procurement Authority and the three other bodies?

Municipal public procurement is audited by four authorities from partially overlapping angles. Each body applies its own legal basis, evidence standard, and sanction toolkit, so passing one audit does not close off scrutiny by the others.

Public Procurement Authority Kbt. review chapter

Context

The four layers do not substitute for each other. They examine the same procedure from different sides.

  1. Public Procurement Authority (KH)

    Audit focus. Notice review and contract review, monitoring of public procurement plans, Chair's communications.

    Review impact. The Public Procurement Arbitration Board (KDB) operating within the KH is the first-instance review body and may impose a fine on the contracting authority.

  2. State Audit Office (ÁSZ)

    Audit focus. Regularity and integrity audit of municipal financial management.

    Review impact. Recommendations and action plans. In the case of serious irregularities, criminal complaints.

  3. EUTAF (EU Audit Office)

    Audit focus. Ex-post regularity audit of public procurement funded by EU support.

    Review impact. An irregularity procedure, with clawback of the entire funding or a proportionate part.

  4. NFK (National Development Centre)

    Audit focus. Project-side quality assurance for EU-funded projects during the conduct of the procedure.

    Review impact. If objections are raised, suspension of the procedure or an obligation to amend.

Inventory of ÁSZ municipal reports (20041, 21067, 25006)

The 2020 ÁSZ report 20041 examined the integrity and internal control system of Újhartyán Town, the 2021 report 21067 the integrity and internal control system of municipal institutions, and the 2025 report 25006 targeted audit covered the execution and accounting of the cash-flow expenditure of Hugyag Village.

The four layers are best read together: the lawfulness of the procedure on its own is not enough. In EU-funded projects, a separate irregularity finding may be made on the project-oversight side (EUTAF, NFK). The palyazat.gov.hu public procurement information page summarises the audit regime from the service-provider angle, and the onkormanyzatiklub summary reviews the ÁSZ recommendations for preventing irregularities. Within the service, we also carry the assembly of audit-proof documentation through the evaluation and contracting stages.

What must a small local council do differently?

A small local council has three decisions to think through before drawing up an annual procurement calendar. Working definition of a small local council: 1-3 procurements a year, no in-house expertise, typically a village or small town.

  1. Regulation type

    A village handling 1-3 procurements a year does not necessarily have any reason to maintain a full general public procurement regulation. The practical solution is a combination of a below-threshold procurement regulation and an ad hoc public procurement regulation. The Wolters Kluwer Közbeszerzési Levelek below-threshold procurement topic collection contains 23 standalone expert answers on this.

    The specific figures for the value thresholds are set out on our current national and EU value thresholds page with a calculator.

  2. Economic logic of engaging an advisor

    For a small local council, maintaining an in-house employee with FAKSZ experience is a disproportionate cost, whereas an advisory framework contract can be calibrated to the procurement calendar with an annual fee.

  3. Internal control minimum from the ÁSZ angle

    Four elements the ÁSZ audit expects. Together they protect the clerk in the event of an ex-post ÁSZ or EUTAF audit.

    • Documented chain of responsibility.
    • Procedure for collecting conflict-of-interest declarations.
    • Written record of the estimated-value calculation.
    • Keeping the public procurement plan up to date.

What does EU-funded public procurement require?

Municipal public procurement financed from EU support in the 2021-2027 programming period is governed by Government Decree 256/2021. (V. 18.), which prescribes a separate audit chain on the project side. Lawfulness under the Kbt. does not preclude an irregularity being established on the project side and the funding being clawed back.

256/2021. Korm. r.

The specific EU threshold figures and the national-to-EU delimitation can be reviewed on our current public procurement value thresholds page.

The three audit bodies for the EU project

  1. NFK

    Provides project-side quality assurance during the conduct of the procedure. Also watches for rules that depart in part from the Kbt. and for the procedural conditions of the funding agreement.

  2. EUTAF

    Performs ex-post regularity audits on closed procedures. Its findings can trigger an irregularity procedure, potentially triggering recovery of the funding.

  3. Public Procurement Authority

    Applies notice review and review control to EU projects as well. Both the KDB review procedure and the KH contract review are live on EU projects.

Managing the project-side risk depends on whether the regulation, chain of responsibility, and documentation fit the angle of all three bodies. If advisory support is needed for the joint preparation of the tender and the public procurement, our project-side service framework is set out in our grant writing service, and the public procurement side of the support is provided within our contracting-authority public procurement consulting.

Legal state Verified on against the legislation in force.

← Back to the blog