ANALYSIS OF USING A CENTRAL PURCHASING MODEL

A CASE STUDY OF HUNGARY FOR MEDIA AND ADVERTISING TENDERS

DR MARGARTA MOLNR LLM
DEPUTY HEAD, PUBLIC PROCUREMENT DEPARTMENT AT THE
NATIONAL COMMUNICATION OFFICE, GOVERNMENT OF HUNGARY
ABSTRACT
This paper is analysing the centralised procurement system, its advantages and
disadvantages for use in advertising purchases. In addition, this paper is describing
the system and the applicable legal regulations regarding communication purchases of
the state sector in Hungary and comparable systems in other EU states, including how
they harmonize and carry out communication procurements (advertising and other) in
the state sector.
In 2014, the Hungarian Parliament passed a law establishing a new Hungarian National
Communications Office.
This autonomous agency is intended to be the consolidated body for issuing public
procurement tenders relating to media and advertising for all Hungarian Public
Agencies, national organizations, government offices, universities, state-owned
entities (SOE).
This paper seeks to compare the above approach to similar structures across the EU
and illustrates the challenges to the application of the Directive by the streamlined
Office.
This study also looks at the application of E-procurement systems within the Office,
and makes some observations surrounding opt-outs, barter exchanges and
exceptions to the Directive.
INTRODUCTION
Public procurement legislation in the EU is aimed at creating a common market by
ensuring free movement of goods, persons, services and capital, and promoting
effective competition in the Internal Market. Harmonised rules are thought to lead to
greater transparency, participation, objectivity and non-discrimination in procurement
markets. It is believed that this increases competition and cross-border trading,
resulting in a better price/quality ratio for public authorities (i.e. a more efficient use of
public funds), while it increases the productivity in the industry and improves the
participation and access to such markets by SMEs. 1
The Procurement Directives emphasize the coordination of national procedures in
order to guarantee that these principles are achieved. The harmonised rules regarding
advertising, procedures, deadlines, selection and award criteria and reporting are
thought to lead to greater transparency, participation, objectivity and nondiscrimination in procurement markets. It is believed this would increase competition
and cross-border trading, resulting in a better price/quality ratio (value for money) for
public authorities, while increasing the productivity in the supplying industries and
1Available at:
http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/estima
ting-benefits-procurement-directives_en.pdf - Estimating the Benefits from the
Procurement Directives A Report for DG Internal Market Europe Economics Chancery
House 3. chapter
1

improving the participation and access to such markets by SMEs. A more efficient use
of public funds coupled with competitive industries would have obvious economic
benefits for the economy.2

Centralised purchasing activity and centralised purchasing body in Directive

2014/24/EU
In the 2014/24/EU Directive Article 2 (14) is a definition of centralised purchasing
activities, which means activities conducted on a permanent basis, in one of the
following forms:
a) the procurement of supplies and/or services intended for contracting
authorities,
b) the award of public contracts or the conclusion of framework agreements for
contracting authorities.
In the 2014/24/EU Directive Article 2 (15) is a definition of ancillary purchasing
activities, means activities consisting in the provision of support to purchasing
activities, in the following forms;
a) technical infrastructure;
b) advice on the conduct or design of public procurement procedures;
c) preparation and management of procurement procedures on behalf and for
the account of the contracting authority concerned.
Article 2 (16) determines the central purchasing body, which is a contracting authority
providing centralised purchasing activities and possibly ancillary purchasing activities.
Article 37 (about centralised purchasing activities and central purchasing bodies) says
EU Member States may provide that contracting authorities may obtain supplies
and/or services from a central purchasing body offering the centralised purchasing
activity.
EU Member States may also provide that contracting authorities may obtain works,
supplies and services by using contracts awarded by a central purchasing body, by
using dynamic purchasing systems operated by a central purchasing body; or by using
a framework agreement concluded by a central purchasing body offering the
centralised purchasing activity.
EU Member States may also provide that certain procurements are to be made by
having recourse to central purchasing bodies or to one or more specific central
purchasing bodies.
A contracting authority fulfils its obligations pursuant to the 2014/24/EU Directive
when it obtains supplies or services from a central purchasing body offering the
centralised purchasing activity.
The contracting authority concerned shall be responsible for fulfilling the obligations
pursuant to the 2014/24/EU Directive in respect of the parts it conducts itself, such as:
a) awarding a contract under a dynamic purchasing system, which is operated
by a central purchasing body,

2Available at:
http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/estima
ting-benefits-procurement-directives_en.pdf - Estimating the Benefits from the
Procurement Directives A Report for DG Internal Market Europe Economics Chancery
House 2.19. chapter
2

b) conducting a reopening of competition under a framework agreement that

has been concluded by a central purchasing body,
c) determining which of the economic operators, party to the framework
agreement, shall perform given task under a framework agreement that has
been concluded by a central purchasing body.
All procurement procedures conducted by a central purchasing body shall be
performed using electronic means of communication. 3
Centralised and decentralised procurement
A decentralised approach to public procurement in which contracting entities in state
bodies covered by the relevant legislation are responsible for conducting procurement
activities is widely accepted as the preferred solution to public purchasing policy. 4
Contracts in centralised system, where a government organisation representing the
collective needs of ministries and other state bodies, carries out procurement
functions, too.
The logical response to a decentralised approach is that by placing the procurement
function closer to the needs of the final user, it is likely to be more economically
efficient and better in promoting the development of the private sector, including
small and medium-sized enterprises (SMEs).
There are many different mechanisms for organising procurement operations on a
centralised basis: national purchasing groups, regional and local procurement groups,
joint ventures and partnerships, cross-border procurement agreements, specialised
agencies concentrating on one or more fields of supplies or services, and framework
contracts.
The key arguments in support of centralised procurement are:
Significant reductions in prices of goods and services
Better services at lower cost
Increased purchasing power for the centralised agency
Need for technical standardisation (e.g., within the area of IT systems and
software applications) and the setting and inclusion of environmental standards
for government procurement
Non-cost benefits including greater attention to contract management and
better problem resolution (for example, faulty items, below specification
services, after sale maintenance)
Lower costs of training staff because they are fewer in number and centrally
located
Easier performance management of staff
3 Available at: http://eurlex.europa.eu/legalcontent/EN/TXT/HTML/?

uri=CELEX:32014L0024&from=EN Directive 2014/24/EU of the European Parlament

and of the Council of 26 February 2014 on Public Procurement and Repealing Directive
2004/18/EC

4 Available at: http://www.oecd-ilibrary.org/docserver/download/5kml60w5dxr1.pdf?

expires=1457889105&id=id&accname=guest&checksum=9437A7A3F0726ECF536D0
409969D5A2D - OECD (2000), Centralised and Decentralised Public Procurement,
SIGMA Papers, No. 29, OECD Publishing
3

 Encouragement of good transparency provisions such as efficient recording

and reporting of procurement contracts and transactions, effective management
controls, clearer audit trail.
The key arguments in support of decentralised procurement are:
Reduced incentives for corruption via large-scale protectionism or favouritism
A closer matching of goods and services delivered to the detailed
requirements of end users
Reduced scope for mistakes affecting large volume purchases that result in
unnecessary over-spending
Less bureaucracy because of shorter periods and fewer forms for both
purchasers and suppliers
Greater possibilities for SMEs to compete successfully for contracts
Opportunities for local purchasers to obtain lower prices for locally
manufactured goods
More scope for employees to take individual responsibility and develop a
service mentality.
There are a number of possible procurement strategies available to public agencies in
EU and the choice of strategy depends on the culture and circumstances of the
country concerned, including the level of economic and market development. A
system that mixes elements of decentralisation and centralisation is likely to work well
in many countries and in long-term the system needs to consider e-comerce
requirements too.5
Recitals of Directive 2014/24/EU (60)-(62) paragraphs say the instrument of framework
agreements has been widely used and is considered as an efficient procurement
technique throughout Europe. Certain aspects need to be clarified, in particular, that
framework agreements should not be used by contracting authorities, which are not
identified in them. For that purpose, the contracting authorities that are parties to a
specific framework agreement from the outset should be clearly indicated, either by
name or by other means, so that the contracting authorities concerned can be easily
and unequivocally identified. Likewise, a framework agreement should not be open to
entry of few economic operators once it has been concluded.
Contracting authorities should be given additional flexibility when procuring under
framework agreements, which are concluded with more than one economic operator
and which set out all the terms.
In such cases, contracting authorities should be allowed to obtain specific works,
supplies or services, that are covered by the framework agreement, either by requiring
them from one of the economic operators, determined in accordance with objective
criteria and on the terms already set out (direct award), or by awarding a specific
contract for the works, supplies or services concerned following a mini-competition
(reopening competition procedure mini competition) among the economic operators
parties to the framework agreement. To ensure transparency and equal treatment,
contracting authorities should indicate in the procurement documents for the
framework agreement the objective criteria that will govern the choice between those
two methods of performing the framework agreement. Such criteria could for instance
relate to the quantity, value or characteristics of the works, supplies or services
5 Available at: http://www.oecd-ilibrary.org/docserver/download/5kml60w5dxr1.pdf?
expires=1457889105&id=id&accname=guest&checksum=9437A7A3F0726ECF536D0
409969D5A2D - OECD (2000), Centralised and Decentralised Public Procurement,
SIGMA Papers, No. 29, OECD Publishing
4

concerned, including the need for a higher degree of service or an increased security
level.
Framework agreements should not be used improperly in such a way as to prevent,
restrict or distort competition.
Contracting authorities should not be obliged to procure works, supplies or services
that are covered by framework agreement, under that framework agreement.
Though contracts are awarded within the term of the framework agreement, they need
not coincide with the conclusion of that agreement. The length of term of the
contracts should be dictated by other factors, such as the expected length of time
required for implementation.
It should also be clarified that there might be exceptional cases in which the length of
the framework agreements should be longer than four years. Such cases, which should
be duly justified, in particular by the subject of the agreement, might for instance arise
where economic operators need to dispose of equipment the amortisation period of
which is longer than four years and which must be available at any time over the
entire duration of the framework agreement.6
Article 33 of Directive says a framework agreement means an agreement between
one or more contracting authorities and one or more economic operators, the purpose
of which is to establish the terms governing contracts to be awarded during a given
period, in particular with regard to price and where appropriate, the quantity
envisaged.7
Centralised and collaborative procurement as a soft system of public-public
cooperation: relieving the public-public cooperation or in relation to cooperate to buy
decisions instrumented through either centralised procurement or occasional joint
procurement.
Directive 24/2014/EU regulates certain possibilities that go beyond the basic rules on
centralisation of purchases and certain central purchasing bodies contained in Article
11 of Directive 2004/18.
The centralisation of procurement activities may create significant risks within the
context of competition.
With that in mind, two separate roles are assigned to the central bodies. One is as a
supporter of the contracting authorities, and the second being a pseudo-wholesaler of
products. Although these two roles come under the auspices of the Directive
2014/24/EU (via Article 37), member states may choose to continue to make the
involvement of the central procurement authority an obligation.
If this happens, then competition arising from the procurement process can be suboptimal due to the parallel structures. It should usually or even, always be preferable
to cut-out the central authority.
6 Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?

uri=CELEX:32014L0024&from=EN Directive 2014/24/EU of the European Parlament

and of the Council of 26 February 2014 on Public Procurement and Repealing Directive
2004/18/EC

7 Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?

uri=CELEX:32014L0024&from=EN Directive 2014/24/EU of the European Parlament

and of the Council of 26 February 2014 on Public Procurement and Repealing Directive
2004/18/EC
5

If the process does involve the central body, then exemptions are included unless the
body also carries out other segments of the tendering process. This also then allows
the body to charge for some of the services it carries out in the procurement process.
Under the rules of Directive 2014/24/EU, centralisation of procurement seems to be a
clear device to allow (small) contracting authorities to achieve savings, as well as
higher standards of professionalism, and to reduce the administrative burden of
procurement procedures by having services of the central purchasing body. 8
METHODOLOGY
Hungarian National Communication Office (further referred to as The
Office)9
In 2014, the Hungarian Parliament passed a law establishing a new National
Communication Office.
This autonomous agency is intended to be the consolidated body for issuing public
procurement tenders relating to media and advertising for the state sector, for all
Hungarian public agencies, national organizations, state-owned entities, ministries,
government agencies, universities, hospitals, state-owned economic organizations,
etc.
The Office aims to achieve cost-effective government communication tasks based on
247/2014. (X.1.) Government Decree, in order that the Office enacts government
communication tenders in centralized public procurement system. Besides, the Office
coordinates government communication procurements and approves and supervises
communication (media, advertising, PR, etc.) procurements and sponsorships and
barter exchanges of the state sector. To this end, all national organizations, SOE,
agencies of the state sector must ask for permission from this Office, in order to obtain
communication procurements. There is no financial threshold for procurement, which
means every communication procurement of the state sector is required to have the
Office approve its license request.
The Office is working as a central purchasing organization, which concluded a
framework agreement for communication purchases on 10th of August 2015, and it is
valid until 11th of August 2016, although it may be extended by 12 months if the
financial allocation has not been depleted.
The framework agreement covers services within government communication tasks,
such as research services, strategic planning and consulting. In addition graphic
design, integrated advertising services, PR communication services, online
communication, media planning & producing and media surfaces purchasing and
sponsorship, purchasing press-monitoring services are also included in this framework.
Also included are ticket sales, theatre program advertising and passenger information
of state-owned transport companies and they are required to have the Office approve
its license request. In other words, they cannot make any advertisement like the
above mentioned without having the Office approve.
In Hungary in the framework agreement procedure, initially bidders made offers for
the services listed above and as a result of the procedure. The Office concluded
framework agreement (multi-supplier framework) with the three winning consortia,
8 Available at: Albert Snchez Graells: Public Procurement and the EU Competition
Rules Hart Publishing Oxford and Portland, Oregon 2015 255-256. pages
9 Available at: http://nkoh.kormany.hu/ - Nemzeti Kommunikcis Hivatal
6

composed entirely of media agencies. In the secondary part of the procedure, that is
when the competition procedure is re-opened, only the three consortia are competing
with each other. The winner is that consortium which offers the lowest price because in
these secondary procedures the lowest price is the award criteria.
In this section, the remaining consortia can only bid the same or improved prices
compared to the first part and furthermore the scope of the services in this procedure
cannot be supplemented or otherwise changed. If one of the three consortia bid a
higher price than in the first part of the procedure (in the framework agreement
procedure) the bid is deemed invalid.
With reference to the operation of the Office, it can approve communication
procurements in its own competence of state sector organizations (national
organizations, SOE, ministries), if this is not achievable in reopening competition
procedure of the framework agreement. For example, the framework agreement does
not cover those services that the organization wants to purchase.
In addition, it achieves the procurement within the framework agreement, in
reopening competition procedure and it has the power of veto to reject an application
for procurement if the purchase is gratuitous, that is, if it is not related to the
government communication strategy.
National organizations of the state sector have to submit their quarterly and annual
procurement communication plans for approval to the Office. The Office inspects these
procurement communication plans and from that point decides whether the tender
procedure shall move to the next stage.
If the Office decides to continue the public procurement tender with the reopening of
the competition procedure, based on the framework agreement, based on the national
organizations/SOEs/public agencys communication acquisition announcement then
the signed contract and its certificate of completion must be sent to The Office.
Nevertheless even though the reopening competition procedure is conducted by the
Office in its entirety, in all cases the contract is concluded by the national
organizations/SOE or Ministry.
It is important to note that during the preparation of technical requirements of the
framework agreement procedure it was difficult for the Office to determine and
implement commercial/media services, advertising, press services, etc. into the
central procurement system, because these services generally are not easy to specify.
The advertising campaign, of course, is multi-faceted encompassing the entire
spectrum of media and advertising methods including, but not limited to citylights,
billboards, vehicle advertisement, press services, and leaflets.
Every possible service must be noted in the first part of framework agreement
procedure because in the second part of the procedure, the contracting authority, in
this part the Office, can judge only the prices of the first part determined services
regarding the lowest price criteria. In summary, there is no way to change the
services or products.
The Office has not implemented e-procurement yet, but in February 2016 introduced
an electronic platform where state sector organizations can fill up their communication
procurement plans, their communication purchase announcements, communication
contracts and certificates of completion and barter exchanges.
The Office supervises and decides about communication purchases and procurement
procedures on this platform.
Every state organization has to register in the above-mentioned electronic platform
and they have to announce their communication procurements, communication barter
exchanges, sponsorships and their quarterly & annual procurement plans.
7

The Office informs them about the approval through this electronic platform and in
Hungary, only this platform has information about every communication purchase,
procurement, sponsorship, barter exchanges of the state sector, their value and
objectives.
In addition to the above, the Office coordinates, supervises, reviews the advertising
procurement needs of the state sector and provides guides and official opinions for the
state sector actors too.
Regarding ted.europe.eu (Ted Tenders Electronic Daily) there were 18.701 public
procurement notices between 12.04.2011 and 26.03.2016, including Archives, from
across the whole EU in advertising, marketing services and advertising campaign
services, public opinion polling services and similar themes.
Regarding ted.europe.eu there were 737 valid public procurement notices in this
sector between 05.04.2012 and 26.03.2016.

In some countries in Europe similar central governmental organizations to

the Hungarian National Communication Office (the Office) with the goal to
harmonize and carry out communication procurements of the state sector
(national organizations, public agencies, state-owned entities, ministries,
etc.)
Italy
Government purchases, including communication purchases are regulated by public
procurement legislation. In particular, Section 15 of Law No. 150/2000 and Annex IIA to
the Legislative Decree No. 163/2006 (Codice degli Appalti, the Public Procurement
Code) provide that public administration bodies can carry out communication
purchases in accordance with the provisions of the Public Procurement Code.
In Hungary this part is operated centrally by the above mentioned Office, because the
Office conducts every communication purchases based on the above mentioned
247/2014 (X.1.) Governmental Decree.
In Italy, there is no central organization, which is similar to the Hungarian Office, but
some institutions should be considered relevant with regard to communications
activities carried out by public administration bodies.
Ufficio Stampa e del Portavoce del Presidente (the Press Office)
The Press Office constituted within Presidenza del Consiglio dei Ministri (Presidency of
the Ministry Council) is in charge of all the press services with regard to the activities
of the Italian Prime Minister, carrying out the following main activities:

organization of communication activities, conferences, etc.,

drafting of the notes and communications,

organization and functioning of the website of the Presidency,

organization of the press review and archiving of the documents,

collaboration with the press offices of each Minister and harmonization of the
communication initiatives.10

10Available at
http://presidenza.governo.it/AmministrazioneTrasparente/Organizzazione/Articolazione
8

The Press Office carries out the press service only with reference to the Prime Minister
and not with reference to all the public entities.
In Hungary, press services are also involved to the framework agreement therefore if
any public administration body needs this service they have to ask the permission of
the Office, which will use reopening competition procedure for this purchase. This
means in Hungary the Office carries out press services to all public entities.
Dipartimento
Department)

per

linformazione

leditoria

(Communication

and

Publishing

The Department supports the Presidency with reference to all the activities related to
the institutional communication, the publishing industries and copyright. 11
The Department is a division of the Presidency, which carries out a consultancy
activity with regard to public administration bodies, and executes framework
agreements with service providers of media spaces.
By contrast, in Hungary the above-mentioned Office signed the framework agreement
with the three consortia, media agencies, which are working as sales houses of media
spaces, i.e. not directly with providers of media spaces.
The regulations rather ambiguously set out that the framework agreements shall
contain general criteria with regard to radio, television or press communication as well
as the applicable fees. The service providers of media spaces are required to apply to
the Presidency the most favourable rate as applicable in the market at the signing of
the framework agreement. (Section 5 of the Law Decree No. 63/2012).
Austria
The procurement of media services by or behalf of public bodies on the background of
Austrian law:
The general regulation for purchases of goods and services by public bodies is
provided in Austria by the public procurement regulation. Regarding procurement
proceedings, there are no media specific legal provisions regarding procurement of
media services, but rather the general procurement law applies.
The procurement law in Austria is not centrally regulated, but rather separately
regulated at a federal level (in the Federal Procurement Act 2006) and at a provincial
level through local procurement acts. The applicable law is determined on the basis of
the body/entity, and the Federal Procurement Act 2006 is applied otherwise the
relevant provincial act shall apply.
In 2011, Austrian legislators adopted, new media transparency legislation, effective as
of July 1 of 2012, in the form of the Federal Constitutional Act on Transparency in
Cooperation with Media and Media funding (MedKF-T or the Constitutional Media Act).
This law regulates the constitutional media transparency principles and the
constitutional basis for further legislation and the corresponding implementation in the
Federal Act on Transparency in Cooperation with Media and Media Funding (MedKF-TG
or the Media Transparency Act).
The MedKF-TG is particularly aimed at creating greater transparency in media
announcements by the government or other public bodies. To this end, the institutions
concerned are obliged to disclose their cooperation with the media, i.e.,
advertisements, other advertising orders and support for periodical publications and
Uffici/UfficiDirettaPresidente/ufficio_stampa.html
11 Available at: http://presidenza.governo.it/die/
9

electronic media, radio and television broadcasters (Arts. 1(1) and 2(1, 2 and 4)
MedKF-TG).12
This Act is actually similar to the above-mentioned 247/2014 (X.1.) Hungarian
Governmental Decree in that point to aim creating greater transparency in media
announcements and to disclose their co-operation with the media.
The relevant media regulatory authority, i.e. KommAustria is required to publish the
information, including the total amount paid to each named media company, on a
quarterly basis.13
In Hungary the Office also owns information about the total amount paid to each
named media, but it has not published yet since its establishment (October of 2014),
but it has information about all media purchases before its foundation and following.
The Rechnungshof (National Audit Office) checks that the published
information is complete (Art. 1(1) MedKF-TG). Official announcements and job
advertisements are expressly excluded (Art. 2(2) MedKF-TG). Infringements of
the obligation to disclose information can be punished with a fine of up to EUR
20,000 (up to EUR 60,000 for repeat offences) (Art. 2(5) MedKF-TG). Article
2(3a) MedKF-TG also sets out the content-related requirements for admissible
audio-visual communication and announcement paid for by public authorities,
and instructs the Federal Government to adopt more detailed content-related
guidelines.14
In Austria, there is no central organization that is similar to the Hungarian National
Communication office, i.e. a central procurement office specialized for procurement of
communication and media services. Nevertheless, there is a central office for
procurements of goods and services, the Austrian Central Purchasing Body, Public
Procurement Agency Ltd (Bundesbeschaffung GmbH, BBG).
BBG carries out central public procurement procedures in relation to media services
too. Any service and advertisement procured through the BBG for a relevant public
body will have to observe the requirements of the media transparency legislation.
The Ministry of Finance created the BBG, defining goods and services that have to be
centrally purchased.15
In Hungary, this is issued by the Office, based on 247/2014 (X.1.) Governmental
Decree, defining the communication goods and services which have to be purchased
centralized (framework agreement) by the Office.

12 Available at: http://www.dbj.at/publications/overview-austrian-public-procurementlaw

13 Available at: http://www.dbj.at/publications/overview-austrian-public-procurementlaw
14Available at: http://merlin.obs.coe.int/iris/2012/3/article8.en.html-Anne YlinivaHoffmann Institute of European Media Law (EMR), Saarbrcken/Brussels- Act on
Transparency of Media Cooperation Announced
15 Available at: www.ujn.gov.rs/download/files/cms/attach?id=293 Wolfgang Pointner
The Austrian Central Purchasing Body Public Procurement Agency Ltd BBG
10

The main goal of the BBG is to optimise the federal procurement in respect of quality
and value of the procured goods & services, to improve efficiency of public
procurement, and reduce public expenditure. 16
This aim is similar to the goal of the Hungarian Office because it also aims to reduce
public expenditure, to improve efficiency and transparency and to harmonize
procurements but only in communication, i.e. media purchases.
Finland
Basic rules for government purchases, including communication purchases, are laid
down in the national public procurement legislation. There are no media specific legal
provisions in addition to the general procurement laws.
The strategic advertisement and/or marketing communication goals of public bodies or
publicly owned companies are not regulated in Finland.
All public authorities must follow general rules on administration.
Finland has established a central purchasing organisation for government bodies,
Hansel, which is a non-profit limited company owned and controlled by the state.
Hansels operation are governed by the Hansel Act (1096/2008).
The Hansel Act lays down provisions on Hansels duties and customers.
The general public procurement rules apply also to Hansels procurement procedures.
Hansel organises public procurements in all fields and is not solely focused on media
services so it differs from the Hungarian Office, which is focused only in media
services.
Hansel has approximately 70 framework agreements covering wide variety of goods
and services, including a framework agreement for marketing communications. It is
not obligatory to use Hansels services. A procurement unit may choose to use it if it
is suitable to its requirements. Governmental bodies can choose whether they want to
use Hansels framework agreements.
The only exceptions to this are the framework agreements, and those are
subject to the obligation to use a joint procurement procedure.This means that
the product and services covered by the joint procurement procedure must be
purchased using framework agreements.17
The Hungarian Office has some similarities with Hansel regarding above mentioned
viewpoints but in Hungary there is obligatory for public bodies to use the Offices
services and the Office has only one framework agreement which covers almost all
communication goods and services.
The Hansels framework agreements are included in the Directive 2004/18/EC.
Hansel forwards information about new units to the suppliers so that they can contact
the respective unit about the products and services covered by the framework
agreement.
Hansel finances its operations through service fees, paid by suppliers based on the
value of purchases. Currently the maximum service fee that can be charged is 1.5
percent of the contract value.
Hansels customers include:
16 Available at: www.ujn.gov.rs/download/files/cms/attach?id=293 Wolfgang Pointner
The Austrian Central Purchasing Body Public Procurement Agency Ltd BBG
17 Available at: https://www.hansel.fi/en/
11

Central government agencies and bodies

Unincorporated government enterprises

Off-budget funds

Universities

The Finnish Parliament and units operating under the mandate and
supervision of, and associated to, Parliament

Certain bodies governed by public law and controlled by the Finnish government can
also access Hansels services.18
The Hungarian Office finances its operation through service fees too, paid by the
customer state-owned entities. It is charged 2% of the contract value.
Hansel is not an obligatory trading partner for the governmental bodies, which can
procure services also independently.
Hansel promotes a functioning market and equal treatment of suppliers. It
seeks to offer the opportunity to become a central government supplier to as
many companies as possible. All suppliers of goods and services are entitled to
participate in the competitive tenders Hansel carries out. It selects the suppliers
for its framework agreements based on the competitive tendering process. 19
The Netherlands
Basic rules for government purchases, including communication purchases are laid
down in public procurement legislation.
In the Netherlands, the Dutch Media-purchase Regulation was ratified in 2004.
According to this Regulation, all media purchases for Ministries go through the Dutch
Public and Communication Service (DPC). This agency is part of the Ministry of
General Affairs. All media purchases are accordance with procedures and conditions
set or agreed by DPC (Public Information and Communications Service).
DPC can also act on behalf of all organizations related to the central government as
well as of subnational authorities.
According to the Dutch Media Purchase Regulation 2004, the Ministries, the
organizations related to the central government and the subnational authorities are
responsible for the content and purchase of information and other communications.
The DPC is responsible for all media purchase of the central government. This relates
to all types of media purchase (print, radio and television, etc.).
For central government bodies it is mandatory to purchase via the DPC. The DPC can
also purchase on behalf of all organizations related to the central government, as well
as of subnational authorities. However, this procedure is not mandatory for these
organizations; they are allowed to purchase media independently. This is different to
Hungary where it is mandatory for subnational authorities to purchase media services
via the Hungarian Office only, not just for central government bodies and
organizations.
DPC provides services to all ministries and central government implementing bodies
for communication with members of the public and professionals.
It does this in two ways:
18 Available at: https://www.hansel.fi/en
19Available at: https://www.hansel.fi/en/
12

DPC carries out a number of central government communication tasks itself. It

publishes central government information on the website Government.nl and
coordinates national campaigns.
DPC is responsible for central government media procurement too.
It also supports internal communication through the central government intranet site
and helps to professionalise communications further through knowledge exchange and
research.
DPC helps the various parts of central government in their communication activities by
providing shared communications services and as a Communications Procurement
Centre.
DPC is an agency of the Ministry of General Affairs and, as such, is a separate
entity in the Ministry's budget and financial statements. Around 140
communication professionals with knowledge of the market and understanding
of the subject work at DPC.20
Communications Procurement Centre
Since 2014 DPC has been one of central government's 20 procurement centres, it
concludes framework agreements for communication services among central
government bodies.
Central government agreements for:

research: public opinion polling, communications research, web research and

media analysis

photography and video

campaigns

media strategy and planning

hiring web editors and outsourcing web editing

hiring communications professionals

In Hungary, contrastingly, there is a unified agreement covering the whole gamut of

communication services.
DPC has four main areas of responsibility:

Central Government Information

Campaigns and Media

Knowledge and Professionalism

Public Information

DPC/Public Information provides information on behalf of central government. It is

responsible for developing and managing the websites Rijksoverheid.nl,
Government.nl and Rijkshuisstijl.nl.
In Hungary the Office doesnt provide any information on behalf of the government
only about the Office activities and the framework agreement and it has only one
webside and an electronic platform.
DPC/Public Information has three groups:

Online Advice

20 Available at: https://www.government.nl/ministries/ministry-of-generalaffairs/contents/organisational-structure

13

Editing

Enquiries

DPC/Online Advice supplies products and services for the websites of central
government organisations, including the central government online platform (PRO),
the multimedia library and a website statistics system. It also translates the ministries'
wishes into functionalities for the PRO and ensures that the platform fits all the
requirements and guidelines for websites.
Again, as a contrast, in Hungary, the centralised body only works to re-open
competition procedures. The only aspect in common with the above is the supply of
products and services for communication contracts.
Editing
DPC/Editing supplies information for the websites Rijksoverheid.nl, Government.nl and
Rijkshuisstijl.nl. It ensures that the information is comprehensible, correct, up to date,
accessible and easy to find. It writes and manages content and advises the ministries
on how to make sure that information is easy to find.
Enquiries
DPC/Enquiries is responsible for the Public Information Service. Members of the public
and professionals can contact the Public Information Service if they have a question
about central government policy.
Campaigns and Media
DPC/Campaigns and Media ensures that communication tools are used effectively and
efficiently.
It has three groups:

Campaign Management

Media Procurement

Government Audio-visual Media Centre

DPC/Campaign Management coordinates central government information campaigns.

It oversees the entire development process, from planning to post-campaign
evaluation, and manages contracts for the development and execution of campaigns.
The centralised body in Hungary does not co-ordinate the campaign it allows the
contracting authorities to do that, however permission must be sought by those
authorities, from the Office.
Media Procurement
DPC/Media Procurement is responsible for all central governments media buying,
including newspaper, radio and television advertising, as well as the administration
that goes with it.
Government Audio-visual Media Centre
The Government Audio-visual Media Centre offers advice on visual communication and
the central government visual identity. It coordinates production and assists in the
conclusion of framework agreements for photography and video. All ministries and
implementing organisations can request visual material to fit their communication
needs.
Knowledge and Professionalism
DPC/Knowledge and Professionalism strengthens central government's communication
function through research, training and knowledge exchange.
It has three groups:
14

Communications Research

Academy for Government Communications

Rijksportaal (central government intranet)

Communications Research
DPC/Communications Research advises the ministries on how to carry out and use
background research. It concludes framework agreements with research agencies that
can be used by ministries.
Academy for Government Communications
The Academy for Government Communications assists central government in
developing the communications function. It helps communications staff maintain their
professional knowledge, alerting them to trends in their field of work, developing
learning pathways and interministerial knowledge networks and organising meetings. 21
Rijksportaal:
DPC manages and develops Rijksportaal, the central government intranet, as
well as providing a news service. Rijksportaal is an internal communications
platform for all civil servants featuring news and information on a wide variety
of topics, such as HR, facilities and procurement. 22
The similar website in Hungary (kormany.hu) is simply a news site and is not used in
any practical fashion. The Dutch system is much further advanced and allows much
more interaction between centralised body, other contracting authorities and the
product suppliers.
Germany
Basic rules for government purchases, including communication purchases, are laid
down in public procurement law.
There are no media specific legal provisions, next to the general procurement laws,
which further detail the procurement of media purchases by state entities in Germany.
In Germany, each public body is responsible for its own public relations issues.
In Germany, federal entities have their own press office, which is responsible for all
press, internet and public relations matters. If these offices intend to purchase
external public relations services, the general public procurement law provisions apply.
In Germany, there is no similar organization to the Hungarian Office. In Germany
several central purchasing bodies exist, however, there is no central media purchasing
body to carry out the PR and communication procurements of the state sector.
One of the central federal purchasing bodies is the Procurement Office of the Federal
Ministry of the Interior, or BeschA. Purchases are carried out by BeschA, but it is not
obligatory for State Organisations to use it.
Customers of the BeschA are

various public agencies in the sphere of the Federal Ministry of Interior,

21 Available at: https://www.government.nl/ministries/ministry-of-generalaffairs/contents/organisational-structure

22 Available at: https://www.government.nl/ministries/ministry-of-generalaffairs/contents/organisational-structure
15

the Federal Office for Information Security,

German Federal Office of Criminal Investigation.23

The BeschA organises public procurements in all fields and is not concentrated only on
media services.
BeschA is not an obligatory trading partner for the governmental bodies in the sphere
of the Federal Ministry of Interior. Each public body also procure services
independently.
The main task is to advise the customer authorities in matters of public procurement,
pooling purchases and centralize the processing. 24 In this way, BeschA is similar to
the Hungarian Offices objectives.
In addition to the above points the differences between the Hungarian Office and
BeschA is that there is no obligatory for government bodies to use BeschA.
Furthermore, in Germany, each public body is responsible for its own public relation
issues and the customers of BeschA are various public agencies. Finally, BeschA is not
focused on only media services unlike the Hungarian Office.
Ireland
In Ireland, the basic rules for the state owned entity purchases of goods and services
are laid down in national public procurement legislation.
The Broadcasting Act 2009 (The Act) sets out the regulatory framework for
broadcasting services in Ireland. The Broadcasting Authority of Ireland (the BAI) is
responsible for the supervision of public service broadcasters and distribution of public
funding and its establishment.
Amongst other things, the Act sets out objectives over the direction of programming
and reminding the public service broadcasters of their objectives, such as catering to
minorities, whilst developing all aspects of Irish culture.
The Act aims to increase transparency in the governance of broadcasting in Ireland,
thereby promoting legitimacy, accountability and fair procedures. 25
In Ireland, there is no central procurement body specifically responsible for
advertising, but in January 2014, the Irish Government established the Office of
Government procurement (OGP), with aim of rationalization and improving
procurement process of goods and services by public bodies.
The OGP is operating together with four key sectors (Health, Defence, Education and
Local Government); take responsibility for sourcing all goods and services on behalf of
the Public Service; and also takes full responsibility for procurement policy and
procedures.
The OGP has produced information leaflets for buyers and suppliers to guide them
through the website, to cover the scope of the OGP and has specific focus on assisting
SMEs in the process (relevant to Circular 10/2014).
23 Available at:
https://de.wikipedia.org/wiki/Beschaffungsamt_des_Bundesministeriums_des_Innern
24 Available at:
https://de.wikipedia.org/wiki/Beschaffungsamt_des_Bundesministeriums_des_Innern
25 Available at: http://www.procurement.ie/about-us
16

It manages a designated website for all public sector contracting authorities to

advertise procurement opportunities and award notices.
The OGP centralises and/or supports public procurement procedures in Irish public
sector. It is not obligatory for a public body to use the centralised procurement service
of the OGP for purchasing advertising, i.e. OGP is to promote and support public bodies
in achieving cost savings in their procurement procedures. 26
It is worth noting the objectives of the Advertising Standards Authority for Ireland
(ASAI).
The ASAI is the independent self-regulatory body set up and financed by the
advertising industry and committed, in the public interest, to promoting the highest
standards of marketing communications that is, advertising, promotional marketing
and direct marketing.
Self-Regulation means the adoption by the advertising industry of standards drawn up
by and on behalf of all advertising interests. It involves the enforcement of those
standards through the commitment and cooperation of advertisers, agencies and
media.
The objective, set out via a Code of Standards document, is to ensure that all
commercial marketing communications are legal, decent, honest and truthful, The
strength of this approach is the inclusiveness and co-operation between the
contracting authority, the centralised body and the other main players in the
Procurement process, namely the advertising and media companies. 27
Romania
It is worth familiarising with the Government Emergency Ordinance no. 34 of 2006
regarding the Award of Public Contracts, Public Works Concession Contracts and
Services Concession Contracts, (GEO no. 34) that provides rules to the public
procurement of communication purchases.
In Romania, there is no authority with the specific purpose to carry out communication
procurements of the state sector, however there is ANRMAP (National Authority for
Regulating and Monitoring Public Procurement).
Public Procurement Agency (PPA) was established by GEO no. 13/2015 on the
establishment, organization and functioning of the National Agency for Public
Procurement (NAPA), as a public institution with legal personality, by the Ministry of
Finance.
NAPA took office activities, posts and staff of ANRMAP. Also under NAPA are the
department for Coordination and Verification of Public Procurement (UCVAP) of the
Ministry of Finance and the regional departments of procurement. All of this is led by a
President appointed by the Romanian Prime Minister.
NAPA has a fundamental role formulating the level of design, promotion and
implementation of policy in the field of public procurement. In addition, it establishes
and implements a verification system and enforces uniform legal provisions and
26 Available at: http://www.procurement.ie/about-us
27 Available at: http://www.asai.ie/about-us/
17

procedures in public procurement and monitors the efficient operation of the

procurement system.
Under Romanian law (GD. 634/2015), the National Procurement Authority (NAPA) has
four primary functions. That is over implementation strategy, over regulation, over
verification and enforcement, and over monitoring of the process.
In addition and under those four areas, comes a number of secondary tasks, which
include the development of EU policies within Romania, to advise on smaller
institutions and local government bodies on the application of the EU directives and to
publish guidelines to assist in this. The Authority is also responsible for collating,
analysing and publishing data that helps all parties in improving the efficiencies of the
system. It help to train internal and external personnel involved in the Public
Procurement sphere.
Finally, the Authority represents Romania in consultative
committees at EU level.28
Summary of comparison of EU states
Summarizing the above-mentioned rules and law of EU countries, we can see that in
most states there is no obligation to use a centralised purchasing body. It is more like
an option with the aim to make the purchases more efficient, to harmonize the
purchases and to reduce the costs. One further objective of all is to increase the
levels of transparency.
In those countries no centralised public purchasing body exists which is a direct
function to the Hungarian Office. All of them organize procurements in all fields and
they are not solely focused on media services.
In Hungary, there are also a few centralised procurement bodies but there is only one,
which is responsible only for communication/media/advertising purchases. We can say
that it is unique, because in most countries in EU there are centralised bodies for all
fields of procurements, not only for media services.
In Hungary, it is mandatory for all public bodies, public agencies, state-owned entities,
state-owned universities, etc. to announce their communication (media/advertising)
purchases to the Office.
We can say the goals of centralised bodies are very similar across all of Europe. These
goals may include supporting public procurement procedures, centralising
procurements in order to reduce public costs, transparency and harmonizing
procurement.
In brief, the difference between the above-mentioned countries and Hungary is that in
the states analysed there is no obligation for public bodies to use centralised
procurement of their media/advertising purchases.
It is hard to state which European centralised system is better. Using one centralised
system for all fields of goods and services or to set up centralised offices for different
services and goods.
In Hungary where more centralised procurement bodies exist, there is one Office for all
communication, advertising and media services. In addition, there is only one
framework agreement, which covers almost all fields of communication services. Thus
because the Office has only one framework agreement, it facilitates the procurement
procedures through one reopening competition procedure it is possible to purchase
many different media/advertising/PR/printing/press services and goods for one
communication campaign or more. The Hungarian Office does not have to conduct
many different procurement procedures for one communication campaign in order to
purchase different communication media/advertising, etc. services.
28 Available at: http://anap.gov.ro/web/
18

In Hungary, the three consortia media agencies are providing services. This means
the media service providers are offering their services only through them. For example
if any public body needs printing services for their media campaign, they can purchase
via reopening competition procedure (which is conducted by the Office) only through
the three consortia. The successful consortium mediates the press office, which
supplies printing services. In other words, public bodies (in the end of reopening
competition procedure) cannot have direct contract with, for example, press offices
but only through the state administered intermediary (one of the three consortia of the
framework agreement).
In Hungary the involved organizations, whether they be public bodies, public agencies,
state-owned entities, ministries, universities, hospitals, subnational bodies, must use
the services of the Office, i.e. they can purchase advertising or media only via the
Office.
Usually these involved organizations (in the end of the reopening competition
procedure) have one framework contract for communication service package and they
do
not
have
to
use
public
procurement
tenders
for
every
communication/advertising/media purchase requisitions, they just order from their
contract.
It cannot be stated categorically that it is better to have only one framework
agreement for every media/advertising services than to have multiple agreements but
it is worthwhile to think about this in terms of competition because if you have more
multi-supplier framework agreements in theory this should ensure a much wider
market for suppliers. However it is easier for administration and cost efficiencies, to
handle one multi-supplier framework agreement than more, thus a singular agreement
is preferred.
Media purchases as exceptions of 24/2014/EU Directive
The Recitals of Directive 2014/24/EU (23) paragraph say the awarding of public
contracts for certain audio-visual and radio media services by media providers should
allow aspects of cultural or social significance to be taken into account. This renders
the application of procurement rules inappropriate. For those reasons, an exception
should therefore be made for public service contracts, awarded by the media service
providers themselves.
These contracts may be pertaining to the purchase,
development, production or coproduction of off-the-shelf programmes and other
preparatory services, such as those relating to scripts or artistic performances
necessary for the production of the programme. It should also be clarified that
exclusions should apply equally to broadcast media services and on-demand
services. However, that exclusion should not apply to the supply of technical
equipment necessary for the production, co-production and broadcasting of such
programmes.
Article 10 of 24/2014/EU Directive among specific exclusions for service contracts says
this directive shall not apply to public service contracts for the acquisition,
development, production or co-production of programme material intended for audiovisual media services or radio media services. In addition this exclusion will also apply
to those contracts that are awarded by audio-visual or radio media service providers,
or contracts for broadcasting time or programme provision that are awarded to audiovisual or radio media service providers. For the purposes of this point, audio-visual
media services and media service providers shall, respectively, have the same
meaning as pursuant to points (a) and (d) of Article 1(1) of Directive 2010/13/EU of the
European Parliament and the Council. Programme shall have the same meaning as
pursuant to point (b) of Article 1(1) of the Directive, but shall also include radio
programmes and radio programme materials. Furthermore, for the purposes of this
provision, programme material shall have the same meaning as programme.
19

Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010
on the coordination of certain provisions laid down by law, regulation or administrative
action in Member States concerning the provision of audio-visual media services
(Audio-visual Media Services Directive) (OJ L 95, 15.4.2010, p.1.).
Article 1 of 2010/13/EU Directive determines:
(a) Audio-visual media service means:
(i) a service as defined by Articles 56 and 57 of the Treaty on the Functioning of the
European Union which is under the editorial responsibility of a media service provider
and the principal purpose of which is the provision of programmes, in order to inform,
entertain or educate, to the general public by electronic communications networks
within the meaning of point (a) of Article 2 of Directive 2002/21/EC. Such an audiovisual media service is either a television broadcast as defined in point (e) of this
paragraph or an on-demand audio-visual media service as defined in point (g) of this
paragraph;
(ii) audio-visual commercial communication;
(b) Programme means a set of moving images with or without sound constituting an
individual item within a schedule or a catalogue established by a media service
provider and the form and content of which are comparable to the form and content of
television broadcasting. Examples of programmes include feature-length films, sports
events, situation comedies, documentaries, childrens programmes and original drama
(c) Editorial responsibility means the exercise of effective control both over the
selection of the programmes and over their organisation either in a chronological
schedule, in the case of television broadcasts, or in a catalogue, in the case of ondemand audio-visual media services. Editorial responsibility does not necessarily imply
any legal liability under national law for the content or the services provided
(d) Media service provider means the natural or legal person who has editorial
responsibility for the choice of the audio-visual content of the audio-visual media
service and determines the manner in which it is organised
(e) Television broadcasting or television broadcast (i.e. a linear audio-visual media
service) means an audio-visual media service provided by a media service provider for
simultaneous viewing of programmes on the basis of a programme schedule
(f) Broadcaster means a media service provider of television broadcasts
(g) on-demand audio-visual media service (i.e. a non-linear audio-visual media
service) means an audio-visual media service provided by a media service provider for
the viewing of programmes at the moment chosen by the user and at his individual
request on the basis of a catalogue of programmes selected by the media service
provider.
About media providers and mass communication No. CLXXXV of 2010 Hungarian Law
in accordance with the above mentioned Directive determines the audio-visual media
service and media service provider, media service and broadcaster concepts.
In the new Hungarian Public Procurement Act (CXLIII of 2015), under Article 9 (8b), it is
determined that there are a number of exceptions to the general rules of
procurement, with reference to the centralised media Office. This include the
acquisition of radio or audiovisual media service whose subject is purchase,
development or production of a programme or radio service of audiovisual media
service provider; a joint production of radio or audiovisual media service; and any
contracts of contracting authorities for production purchase or track time from
audiovisual media or radio service providers.
This means in Hungary, following 24/2014/EU Directive the exceptions are the
contracts of programme material or track time of contracting authorities only from
audio-visual media or radio service providers.
In addition, the acquisition,
20

development, production or co-production of programme material of audio-visual

media or radio service provider are exceptions of the Hungarian Public Procurement
Law. However, the producing of programmes or purchase of assets and technical
equipment of any contracting authorities are not exceptions of Hungarian Public
Procurement Law.
In Hungary if any contracting authority wants to purchase programme material,
programme or track time from the audio-visual media or radio service provider, they
can do using direct procurement, without public procurement thresholds. However, if
they want to order them from any other media or radio service providers in the
market, they need to use public procurement, subject to public procurement threshold.
In Hungary, the only audio-visual media or radio service provider is Duna
Mdiaszolgltat Zrt. (Duna Media Service Provider Ltd). This means in Hungary this
provider is the only one who can use direct procurement, without public procurement
thresholds, for programme material, programme or track time purchases.
In Hungary, if any state-owned entities, national organizations, government agencies
want to purchase advertising, media planning or producing, PR, press service, etc. in
the market they are obliged to use public procurement, public procurement threshold
dependent. This means advertising, PR or any other communication services are not
exceptions of the above-mentioned Hungarian Public Procurement Law.
If any government agencies in Hungary want to order advertising services from the
audio-visual media or radio service provider (Duna Mdiaszolgltat Zrt.) they have to
use public procurement procedure, public procurement threshold dependent, because
these services are not exceptions of the Hungarian Public Procurement Law.
In practice state-owned entities or national organizations and ministries, have
contracts of multi-faceted communication (media, advertising, etc.) service purchases
with media agencies, they do not have contracts directly with media or radio service
providers to buy media surfaces.
In the payment stage, media or radio service providers invoice to the responsible
media agency that collected the invoice to the customer, in this case the state-owned
entity or national organization, etc.
In practice these organizations dont have direct contracts with media or radio service
providers, which is why they must pay only through media agencies. Media agencies
have commercial mediation contracts with media or radio service providers. They
have contracts with customers (the above-mentioned organizations) too. Based on
contracts of the above-mentioned customers, media agencies represent these
customers when they order commercial and advertising services for them from media
or radio service providers.
Usually, if any customers from the state sector want to order complex commercial,
advertising or campaign services, they order through media agencies. In this case,
these organisations must pay a uniform rate mediation commission to those agencies.
In practice, media agencies have to pay for booking media surfaces to media or radio
service providers earlier than they can get their payment/costs from the customer, as
these media surfaces must be booked in advance. It causes difficulties for media
agencies to pay to media or radio service providers earlier in order to book media
surfaces in advance because many times they need to give large value payment in
advance.
It is important to state that based on No. XLVIII of 2008 Advertising Law, media
agencies are entitled to a uniform rate of 15% of the commercial publication fee from
the advertiser (state-owned entity, national organization, etc. as customers).
Media agencies are not just buying media surfaces, they are planning media
campaigns, making strategy, providing expertise, and knowledge too.
21

Based on No. XLVIII of 2008 Advertising Law in Hungary any customers can order
advertising or commercial services directly from media or radio service providers too
without using media agencies. In this case these services are mostly simple
commercial or advertising services not complex commercial campaign services when
customers dont need media strategy or other related media services (services of
media agencies) for their campaigns.
It is important to mention most media or radio service providers in Hungary have sales
houses, which are selling media surfaces. Media agencies representing the abovementioned customers can order commercial, advertising services (media surfaces)
only through them (sales houses).
In Hungary, in practice, there are no legal cases in media purchases as specific
exclusions in public procurement.
Furthermore, it is worth mentioning some comparisons of direct procurement of media
in some countries in the European Union.
In Austria
Here it is permissible for public service media to receive orders from the state sector,
i.e. using direct procurement similar to the role of Duna Media Service Provider Ltd. in
Hungary.
The Austrian public television and radio organisation (ORF) is in general obliged to act
on the market in a way that does not jeopardize competition. In particular, to the
extent the ORF uses the monies obtained from the collection of television and radio
fees.
In Finland
Yleisradio, the Finnish Broadcasting Company, is a state-owned company and is
engaged in public service with an obligation to provide versatile and comprehensive
television and radio programming with related additional and extra services for all
citizens under equal conditions.
Yleisradio is the only state owned media company in Finland. The Finnish state does
not own any other media companies.
Yleisradio is not allowed to show advertising on its radio or television channels, as this
is prohibited by law. Further Yleisradio is not allowed to produce sponsored
programmes.
This is different in Hungary because in Hungary, the public media service providers
television and radio channels are allowed to show advertisements.
In The Netherlands
In the Netherlands, there are many public service broadcasters (In Hungary there is
only one Duna Media Service Provider Ltd.) All sales of advertising space for public
service broadcasters go via STER, the Dutch Radio and Television Advertising
Foundation, the entity that is solely responsible for the sale of advertising space for
public service broadcasters and that is subject to the rules set out in the Dutch Media
Act.
STER is responsible for the sale of advertising space for public service broadcasters
and is subject to the rules set out in the Dutch Media Act. 29
29 Available at: https://en.wikipedia.org/wiki/Dutch_public_broadcasting_system
22

Summary
It can be said that in some countries in the EU there are state owned media
companies, which are acting in the market but without jeopardizing the competition.
One can also state that in some countries public media service providers are not
allowed to show advertising or sponsored programmes.
In general, all public media service providers have to respect the public procurement
law in EU.
Some thoughts about barter exchanges in public procurement
In Hungarian Civil Law, No. V. of 2013, in Article 6:234, an exchange contract is
determined when one party offers ownership, rights or other assets to commit to a
mutual transfer when the rules of sale shall be used properly. In this case, each party
is seller of its own services and customer of other partys services.
Furthermore, the subject of exchange contracts may not only be the same service
type, but ownership of goods & services can be replaced by a claim and transfer of a
claim against a law in the same way which constitutes replacement. Those barter
exchanges considered exchange contracts whose subject is property assets, perhaps
rights or claims, transfer the rules of purchase contracts shall be applied. Those barter
exchanges which subject is other mutual commitment from the parties are not
exchange contracts.
From a public procurement perspective, barter exchanges are onerous agreements if
the services and the considerations have a value.
24/2015/EU Directive, in Article 2 (5) there is a definition of public contracts whereby
contracts for pecuniary interest concluded in writing between one or more economic
operators and one or more contracting authorities have, as their object, the execution
of works and the supply of products or the provision of services.
This Directive does not determine the concept of onerous. In Hungary, the civil law
determines the presumption of onerous, which means if services are confirmed in a
contract, consideration must be involved too. Therefore every agreement in which the
contracting authority is giving consideration regardless of whether this is in money or
another value service in kind. These are onerous contracts, i.e. public contracts
regarding public procurement law.
One of the most important differences between barter exchanges and public contracts
is that in barter exchanges there is no money transfer.
In practice, most barter exchanges/agreements are in the cultural sphere, such as,
performing arts.
For example, a mutual media sponsorship agreement between a radio and concert
company (The Filharmony Company). In this agreement the Filharmony Company is
undertaking to provide media sponsorship exposure to radio (showing logo) on media
surfaces like on the webpage of Filharmony Company and, in turn, this Company is
providing complimentary tickets to performances for Radio.
Besides the Radio station as the media sponsor of the Filharmony Company, they are
undertaking radio advertising time in an acceptable time period to the Filharmony
Company.
In these agreements, the value of the services must be determined, the values must
be the same, and it must be agreed there is no money transfer in the agreement.
Another Hungarian example for barter agreements is between a radio station and the
Hungarian Post Office. The station is providing advertising time in an acceptable time
23

period and the post office is providing logistics storage services to the radio station.
The post office is providing storage of prizes offered on the radio, making and
wrapping gift packages according to the radio instructions and delivering the packages
for the winners. The value of these services is the same and must be determined in
the agreement.
CONCLUSIONS
In conclusion using a centralised public procurement system within a framework
agreement procedure for communication (media and advertising) purchases can offer
many advantages such as:
-

wide range of products and services in the same procedure,

saving time and money,
benefits from large procurements volumes and good contracts,
sustainable and transparent public procurement system.

In general based on the evidence, we can say the centralised procurement system is
useful for media and advertising purchases too because contracting authorities of the
state sector can have only one contract for all communication demands. They do not
have to have separate public procurement tenders for every communication demand,
they can collect these demands and the Hungarian National Communication Office
conducts one tender (reopening competition procedure) and, ultimately, the stateowned contracts with media agencies.
In this system it is quite efficient to have one framework contract because in this
contract they can confirm an allocation and for the expense of the allocation they can
order contract determined services.
This is particularly useful in advertising
campaigns, when a variety of services are required, like press services, media
planning, media strategy, creative services, and graphic services and the contracting
authority dont have to have separate tenders for every required services.
In addition, the Hungarian National Communication Office runs the tender and the only
task of the contracting authority communication services customers is to contract
with media agencies.
The disadvantages of using this system are in the second part, in the reopening
competition procedure. This is because the first part determined services could not
subsequently be changed. Consequently they cannot cover every, or special demands
or changing circumstances.
Further, in this system, the prices are set at the commencement of the agreement,
and thus be disconnected from the market set prices by the time the process is
complete, especially when the re-opening procedure takes place. In practice, prices
are pitched at a higher level in the beginning, to take account of the length of the
agreement and also the possibility to reduce prices in the re-ropening phase.
However evidence shows that these price reductions are not occurring and are
remaining at a higher level than might be expected.
Again, it is important to note regarding to the above mentioned 247/2014 (X.1.)
Government Decree in Article 11 (7) paragraph, that it is determined the state-owned
business organizations must pay public procurement fee for the Hungarian National
Communication Office. The fee is 2% of the value of the procurement. This fee covers
the costs of the procedure of Hungarian National Communication Office.
This fee is paid only by state-owned business organizations, not by national
organizations, such as Universities, Ministries and Government Agencies.
These framework agreements cannot cover every communication service and
therefore some media services are purchased using other procurement procedures,
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either via public procurement procedures or other procedures, depending on the

thresholds involved.
Following the new 24/2014/EU Directive, the goal for the future is to have more multisupplier framework agreements for special communication services, including media,
advertising and PR demands. Furthermore it will enable the provision of more direct
offers (direct award in multi-supplier framework agreements), for example for
promotional gift purchases, in the second part procedure of the framework
agreements, and not just using the reopening competition procedure which is a more
lengthy process. This means there would be an option either to use single- supplier
framework or multi-supplier framework with direct award in the second part for these
procurements.
A final advantage to mention is the Hungarian National Communication Office has the
right to supervise all communication and advertising, PR purchases of the state sector
and thereby has right to set conditions for efficient purchases.
NOTES
The opinions in this paper are personal, and are not to be viewed as representing
official views of Hungary or the Government of Hungary.
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12.https://www.hansel.fi/en/ - HANSEL
13.https://www.government.nl/ministries/ministry-of-generalaffairs/contents/organisational-structure - Government of Netherlands, Ministry
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Broadcasting system

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