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Thursday, August 8, 2013

Hungary for disclosure

Zoltan Kovacs of firm SZECSKAY - Attorneys at Law reports, on the Mondaq website, on some changes in the rules governing Hungarian public procurement procedures. One such change involves greater disclosure of bids.

Hungary: Changes In Hungarian Public Procurement Law
During public procurement procedures, participants/bidders were in the habit of declaring that – except for the information sheet containing their basic data – their entire submission qualified as a business secret and that, as such, they expected the entity calling for bids to treat the entire submission as a business secret which was not open for review for other participants/bidders. In practice, this oftentimes made it impossible for the other participants/bidders to seek remedy (since they could not even review the submission of their competitors and, therefore, could not tell if the submission made was in compliance with the applicable laws and tender requirements).

Even though, in our view, the practice described above was definitely not in line with the provisions of the Public Procurement Act and of the Civil Code governing business secrets, unfortunately the entities calling for bids and even the Public Procurement Board (which is the authority in charge of making administrative decisions based on requests for remedy filed with it) accepted and agreed to this practice and did not challenge it in any way.

The law-maker recognized the above discrepancy concerning business secrets and adopted a change in the provisions of the Public Procurement Act. Under the new rules, also with regard to the definition of business secrets under the Civil Code, only that information, the publication of which would cause a considerable harm to the participant's/bidder's business, may qualify as business secrets. Taking the new rule into account, it is expected that the entities calling for bids and the Public Procurement Board will no longer follow their previous practice and that, as a consequence, participants/bidders will be able to review the bids of their competitors to the extent that they do not qualify as a business secret. As a result, participants/bidders will hopefully be put in a position to seek remedy if, based on the findings of their review of a bid, they detect a violation of the public procurement rules and/or the tender requirements.
Guam procurement regulations, based on the ABA Model Regulations, requires a bit more transparency for bids. 2 GAR § 3109(l) spells them out.

Subsection 3109(l)(2) requires that,
The opened bids shall be available for public inspection except to the extent the bidder designates trade secrets or other proprietary data to be confidential as set forth in Subsection 3109(l)(3) of this section. Material so designated shall accompany the bid and shall be readily separable from the bid in order to facilitate public inspection of the nonconfidential portion of the bid. Prices and makes and models or catalogue numbers of the items offered, deliveries, and terms of payment shall be publicly available at the time of bid opening regardless of any designation to the contrary.
Subsection 3109(l)(3) puts the onus on the government to affirmatively examine claimed confidential information to verify it qualifies as a trade secret or proprietary data.
The Procurement Officer shall examine the bids to determine the validity of any requests for nondisclosure of trade secrets and other proprietary data identified in writing. If the parties do not agree as to the disclosure of data, the Procurement Officer shall inform the bidders in writing. If the parties do not agree as to the disclosure of data, the Procurement Officer shall inform the bidders in writing what portions of the bids will be disclosed and that, unless the bidder protests under Chapter 9 (Legal and Contractual Remedies of this Guam Procurement Regulations, the bids will be so disclosed. The bids shall be opened to public inspections subject to any continuing prohibition on the confidential data.
One large international corporation doing a substantial amount of government contract work on Guam has had the habit in recent times of declaring practically its whole bid to be confidential, including contract terms it tries to unilaterally impose as part of its bid. I have had two occasions to protest that circumstance, at the appeal level, because the government agency has bent unquestionably to the designation. Fortunately, the administrative review tribunal has not been so reluctant, in contrast to the circumstances in Hungary as reported in the article above, that " unfortunately the entities calling for bids and even the Public Procurement Board (which is the authority in charge of making administrative decisions based on requests for remedy filed with it) accepted and agreed to this practice and did not challenge it in any way."

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