Hungary Ministry of Defense paid own company $40 per man-hour to build border fence

October 27, 2015

fence

Hungary’s Ministry of Defense awarded a HUF 2 billion (USD 7.4 million) no-bid contract to build the 175-kilometer fence along the Serbian border.  The Ministry of Defense Electronics, Logistics, and Asset Management company (Honvédelmi Minisztérium Elektronikai, Logisztikai és Vagyonkezelő Zrt.) reportedly billed the Ministry of Defense for a range of services related to the construction of the border fence at hourly rates ranging from $40 to over $370, writes index.hu.

Nor is this the first time HM El has won a no-bid contract according to the news portal.

The fence, which was justified to Hungarian taxpayers on the grounds that it was necessary to prevent migrants from entering the country illegally, reportedly cost the Hungarian government over HUF 100 billion.

Not only was the contract awarded without soliciting bids from other companies.  The undersecretary for government procedure at the Ministry of Defense, István Dankó, awarded the contract to a company over whose board of directors he presides as chairman.

Index.hu writes that as the head of the work group within the Ministry of Defense responsible for building the fence, Dankó was also responsible for procurement.  The ministry claims that by awarding a HUF 2 billion no-bid contract to his own company, Dankó did not engage in a conflict of interest because allegedly “regulations permit this”.

Index.hu reports that the ministry contracted with HM El for HUF 10,795 ($40) an hour to erect the fence.  The company charged a modest HUF 24,130 ($89) an hour to remove brush and over HUF 100,000 ($370) an hour for work performed by machine.

In addition to the conflict of interest which isn’t a conflict of interest, Index.hu claims the following irregularities took place:

  • Work began on July 30th, that is, several weeks before HM El concluded an official contract with the Ministry of Defense
  • It was necessary to modify the government decree regulating public procurement in the case of the Ministry of the Interior or the Ministry of  Defense to allow the use of a company.  index.hu reports that this took place in under a day
  • HM El was pronounced the winner the same day the decision was made not to hold a public tender or solicit bids from other companies.

According to Index.hu, HM El was previously awarded a HUF 1.5 billion (USD 5.5 million) contract to perform work deemed too complicated and complex for the Hungarian military, such as repairing roofs, maintaining buildings, and renovating target ranges.