Closing of Administrative Audit No HAT/006/2026 – Procurement of food packages by the Directorate General for Social Affairs and Child Protection in 2026 under the EFOP Plusz 5.1.1-25 Call for Proposals

As a result of an earlier investigation conducted by the Integrity Authority (“Authority”), the Directorate General for Social Affairs and Child Protection (DGSACS; SZGYF in Hungarian) is purchasing food items for persons in need under a new public procurement procedure at prices nearly 40% lower than retail prices. In the case of the procurement procedure worth over HUF 5 billion, this resulted in more than twice as many food packages becoming available to persons in need using the same amount of European Union funds, compared to the previously applied pricing practice, under which the level of overpricing exceeded 70% in relation to retail prices.

The Authority conducted an administrative audit in relation to public procurement procedure ID EKR001714652025 (“public procurement procedure”), divided into three lots and conducted under Project ID EFOP_PLUSZ-5.1.1-25-2025-00001, titled “The provision of food and basic financial support for the target groups as specified in the call for proposals” (“EFOP project”), supported under the Human Resources Development Operational Programme Plus (EFOP Plus) of the DGSACS.

The project subject to audit received total funding of nearly HUF 10 billion gross, of which, taking into account the optionally callable quantity, the DGSACS is expected to procure food packages for persons in need (up to 390,480 packages if the option is exercised) from the winning tenderer for nearly HUF 5.1 billion gross by June 2027.

The administrative audit was conducted ex officio by the Authority, taking into account the investigation procedure (VIZSG/3/2023) concerning overpricing under the Operational Programme for Supporting Socially Disadvantaged Persons (RSZTOP), which was concluded in October 2024. These projects served as predecessors to EFOP Plus. In the course of its previous investigation, the Authority identified overpricing amounting to HUF 7.6 billion gross in relation to Project ID RSZTOP-1.1.1-16-2016-00002 (“RSZTOP Project I”), while in relation to Project ID RSZTOP-4.1.1.-16-2017-00001 (“RSZTOP Project II”), it revealed overpricing amounting to HUF 2.6 billion gross.

The Authority’s administrative audit, concluded in May 2026, found that the DGSACS had largely followed the recommendations issued following investigation procedure ID VIZSG/3/2023, as a result of which, in the Authority’s view, the DGSACS entered into a framework purchase agreement under favourable terms and conditions. This is also illustrated in the following figure, which shows how the procurement price of food items intended for persons in need compared to retail prices in the projects.

According to the analyses carried out by the Authority, whereas under RSZTOP Project I the DGSACS procured food items for persons in need at nearly twice the retail price, and under RSZTOP Project II at nearly one and a half times the retail price, it procured those food items at prices nearly 40% below retail prices under the purchase agreements concluded in April 2026. In the Authority’s view, this enables Project ID EFOP_PLUSZ-5.1.1-25-2025-00001 to provide significantly more effective assistance to persons in need.

The procurement of 1 kg of granulated sugar provides an illustrative example from the Authority’s analysis: in December 2017, the DGSACS purchased 1 kg of granulated sugar from the successful tenderer under RSZTOP Project I at a net unit price of HUF 756, whereas in April 2026 – nearly nine years later and after a period of significant food price inflation – it was able to procure the same product for only HUF 269 net. Furthermore, another illustrative example is that the successful tenderer under RSZTOP Project II , which has since entered voluntary liquidation, sold 500 g of spaghetti to the DGSACS in December 2022 at a net unit price of HUF 829, whereas the current successful tenderer is able to supply the same product at a net unit price of HUF 289 under similar terms and conditions.

The same analysis, when applied to the package as a whole, produced similar results. Even disregarding the significant effects of inflation, the DGSACS procured the same products from the successful tenderers under RSZTOP Project I at average unit prices 89% higher (for 11 of the current 16 products), and under RSZTOP Project II at average unit prices 75% higher (for 13 of 16 products), which would still constitute significant overpricing even at current prices.

Ensuring genuine competition and oversight by the Integrity Authority in the use of public funds can, in itself, result in savings of billions of forints.

The current procurement procedure demonstrates that public authorities are able to purchase the same basic food items for a fraction of the previous prices if proper market competition develops and control is stronger. Furthermore, the case highlights that previous instances of overpricing cannot be regarded merely as consequences of inflation or logistical costs; instead, they may indicate systemic issues in public procurement practices. The Integrity Authority’s findings therefore extend beyond the scope of a single project, as they indicate that the Authority’s oversight, together with genuine competition, can enable significantly more assistance to be provided to persons in need using the same public funds.

With regard to the previous RSZTOP projects, the Authority found that its estimate of nearly HUF 10.2 billion in overpricing, as recorded in investigation procedure ID VIZSG/3/2023, may even be considered conservative. The estimate at the time placed the share of delivery, packaging and other direct costs at +20% of the value of the food items; however, the tenders submitted in the procedure currently under audit – which, in the Authority’s view, was characterised by genuine competition – indicate that this share could have been no more than 12%. The EFOP Plus and RSZTOP projects concerned involve approximately the same volume of packages to be distributed within a given period; and since all of them have nationwide coverage, they are readily comparable.

Moreover, the Authority found that the project manager representing the DGSACS in the public procurement procedure currently under audit was the same individual, and that the parties involved in the previous RSZTOP projects – which the Authority considered to involve overpricing – once again appeared in the new procedure, both directly and indirectly, either as tenderers or as successful tenderers.

The Authority did not identify any infringement in the public procurement procedure currently under review; however, it has issued further preventive recommendations to the Contracting Authority.

Of the proceedings initiated by the Authority in 2024 following its previous investigation, only two have been concluded so far. In those proceedings, the Public Procurement Arbitration Board imposed fines totalling HUF 60 million on the successful tenderer under RSZTOP Project II, which has since entered voluntary liquidation. Following the Authority’s request to initiate proceedings, the Hungarian Competition Authority did not initiate competition supervision proceedings.

The irregularity proceedings initiated by the Authority in relation to both RSZTOP projects considered to involve overpricing are ongoing. In addition, following the criminal complaint filed by the Authority, the Central Department of Investigation of the Directorate General for Criminal Affairs, part of the National Tax and Customs Administration, also opened an investigation on suspicion of budget fraud and agreement in restraint of competition in public procurement procedures in relation to one of the projects.