Closing of Investigation No VIZSG/24/2024 – Budapest District XXI Municipality of Csepel Project “Rehabilitation of Csillagtelep for Social Purposes”

The Integrity Authority conducted an investigation into Project ID VEKOP-6.2.1-15-2016-00006, titled “Rehabilitation of Csillagtelep for Social Purposes”, based on a whistleblower report. Nearly HUF 1.59 billion in EU funding was utilised as part of the Project.

In the course of the investigation, the Integrity Authority found public procurement irregularities that jeopardised the proper and efficient use of EU funds.

The joint contracting authorities conducted public procurement procedures by directly inviting five tenderers instead of publishing a contract notice; however, they failed to comply with their obligations to ensure competition and with the rotation requirements applicable to the invited economic operators. The Authority found that in three of the PPA Section 115 procedures subject to investigation in connection with the project (“Lanscape Planning and Landscape Design on the Courtyard of the Csodakút and Vénusz Kindergarten Branches in Csepel – Part 2 – Vénusz Kindergarten Branch”, „Renovation of Public Spaces in Csillagtelep, Csepel”, as well as „Energy Efficiency Modernisation of Residential Buildings – Part 1 and 2”) Csepeli Városfejlesztési és Gazdaságfejlesztési Nonprofit Kft. and Budapest District XXI Municipality of Csepel acted as joint contracting authorities. Furthermore, the Authority established that the residential buildings concerned conducted their public procurement procedures by inviting only minimally differing sets of economic operators to submit tenders despite the availability of a wide range and large number of suitable market participants.

The low number of tenders submitted in the procedures, along with the recurring circle of the same successful tenderers, resulted in a lack of effective competition and a breach of the principle of equal treatment. In procurement procedures of this subject matter where a contract notice is published, the number of tenders is typically exceptionally high.

Considering the uncovered infringements, the Authority initiated ex officio proceedings with the Public Procurement Arbitration Board. The Public Procurement Arbitration Board granted our remedy initiatives (see Decisions No D.453/19/2025, No D.454/19/2025, No D.456/17/2025), found infringements in all three cases, and imposed a fine.

No judicial review of the Arbitration Board’s decisions was requested.

The Authority, owing to suspected infringements involving non-EU funded public procurement procedures that came to its attention in the course of the investigation, submitted a notification to the President of the Public Procurement Authority requesting the initiation of ex officio proceedings.

The Authority forwarded the whistleblower report it had received, along with its investigation report, to the competent investigating authority as well for any potentially necessary action, thereby complying with its statutory obligation as set out in the Integrity Authority Act.