The role of domestic SMEs in public procurement has increased

The Public Procurement Authority organised a press event on the occasion of the publication of the 2023 Fast Track Report, which presents the main indicators and trends of the public procurement market. According to the report, last year contracting authorities carried out a total of 7,964 successful public procurement procedures, leaving the number of procedures unchanged at only 0.9% compared to the previous year. The total value of successful procurements amounted to HUF 2 869.1 billion, around two thirds of the 2022 figure.

As the event showed, the breakdown of the number of public procurement procedures by subject in 2023 was similar to the previous year. Most of the procedures, 2,918 in total, were related to works, which together accounted for 36.7% of the total number of public procurement procedures. 2,814 procedures were related to supplies, which accounted for 35.3% of the total number of procedures. A further 28.0% of the procedures, with 2232 contracts, were for services.

Construction investment down, SME share up

The breakdown of the total value of public procurement by type of object shows significant changes compared with previous years. While the value share of goods purchases doubled in 2023 (to 41.11TTP1835T) compared to the previous year, the total value of works, which previously accounted for the largest share, accounted for less than one third (31.71TTP1835T) of the value of the resulting procedures.

"In terms of overall value, the volume of the public procurement market decreased in 2023, mainly due to a decline in the value of construction works. On the one hand, the SME sector is gaining ground in the market: in 2023, 80 out of every 100 procedures successfully conducted were won by SMEs, while 58 out of every 100 forints spent on public procurement went to SMEs. This is 8 percentage points more than a year earlier. On the other hand, the figures also confirm the Authority's increasingly rigorous, consistent and intensive control work: last year, for every 27 316 notices, a record 28 441 notices of deficiency were issued. The number of negotiated procedures without prior publication of a contract notice has also stabilised at a low level" - said Dr László Kovács, President of the Public Procurement Authority.

Secure the competition

The Public Procurement Authority publishes a number of indicators in its reports that characterise the intensity of competition in public procurement, and therefore the Authority continuously monitors data on the proportion of such competition, the press release issued on the occasion of the press conference stressed.

One such measure is the evolution of single-bid public procurement. The share of single tender contracts in the number of contracts awarded under the EU procedure has decreased compared to a year ago, while the share in value has increased; under the national procedure, in line with the trend of the last 5 years, single tender contracts have continued to decrease both in number and in value. "The more modest decrease in the number of single tender procedures and the increase in their value ratio over the last year may be explained by the concentration of the world market for energy products and the consequent reduction in the sources of supply", the President of the Authority noted.

Another measure of the competitive situation is the evolution of the number of negotiated procedures without prior publication of a contract notice (HNTs). Compared to 2022, the number and value of completed HNTs remained little changed: i.e. low in both the EU and national procedural systems. The number of HNTs has been below the European Commission's threshold of 5% for many years.

The average number of bids, i.e. the number of bids per procedure, was approximately 8 in 2023 (7.6), a marked increase after stagnation in previous years.

The green switchover is gaining momentum

The number and value of public procurements with environmental and social aspects in the national procurement procedures increased significantly in 2023 compared to the previous three years, indicating that contracting authorities are paying more and more attention to the application of sustainability considerations in domestic public procurement. The Public Procurement Authority continues to aim at increasing the integration of sustainability considerations in public procurement, which can contribute to the strengthening of environmental, climate, economic and social sustainability.