PUBLIC TENDERS LAW IN TURKEY
BY ATTORNEY ARZU ONGUR L.LM
The public tenders became a significant market, for both national and international service providers in terms of their scale and attractivity in Turkey. The necessity of technical knowledge and the public service character of the business have given rise to the search of foreign participants as well. However, it is a fact that for a foreign contractor, the laws and procedures of a different country is always complex issue. Therefore, the necessity of providing some brief information emerges regarding the general terms and conditions of public tenders in Turkey.
Currently there are two laws in force which regulates public tender namely 2886 numbered State Tender Law and 4734 numbered Public Tender Law. The Law numbered 4734 entered into force at the date of 01.01.2003 and abrogated some articles of the Law numbered 2886. On the other hand, these two laws are different in terms of their scope. Below, in scope of these two laws public tenders will be discussed generally and with their basic characteristics. Additionally, the differences between these two laws numbered 2886 and 4734 will be analyzed.
Pending public tender announcements can be found from Public Administration Authority’s web page at https://ekap.kik.gov.tr
THE PROCEDURE OF JOINING PUBLIC TENDERS IN SCOPE OF THE LAW NUMBERED 4734
The Law numbered 4734 has entered into force on 01.01.2003 in line with EU harmonization process. The Law is broad in scope both in manner of the business type and the public administration which issues the tender. The scope of the law is defined under the Art 2 as tenders made by public administrations for procurement of goods, services and construction works. However, there are also some exclusions regulated under the Art.3 of the Law; for example, tender of tools, arms, military materials, equipment and systems for national defense, security and intelligence and tender of goods, services or works which are to be realized with foreign financing pursuant to international agreements.
The Art.2 also regulates the tenders of which public administrations covered by the Law. For example, according to the Art.2 paragraph 2, tenders made by public administrations in the scope of general budget, public economic enterprises or social security institutions are dependent on the Law numbered 4734.
Differently from the Law numbered 2886, 4734 has made it difficult for public administrations to issue tenders. According to the Art.5 sub section 5 of the Law numbered 4734 the procurement proceedings shall not be initiated unless there is a sufficient budget allocation. There are also some other principals regulated under this article of which its text indicated below:
Unless there is an acceptable natural connection between them, purchase of goods, services and works cannot be consolidated in the same procurement.
Procurement of goods, services or works cannot be divided into lots with the intention of avoiding threshold values.
For the procurements to be held in accordance with this Law, the principal procurement methods are open and restricted procedures. Due to the nature of the services of the Presidency and the requirement of compliance to security procedures, tenders carried out by Presidency for purchase of goods, services and works can be held according to Article 21 paragraph 1-c of this law. The other methods may be used under the special conditions set out in the Law.
The procurement proceedings shall not be initiated unless there is a sufficient budget allocation.
Where the related legislation requires an Environmental Impact Assessment (EIA) Report for a works project, a positive EIA report must be obtained before the initiation of procurement proceedings. However, in works procurements to be made urgently due to natural disasters, EIA report shall not be asked.
As it is seen above in the text of the Art.5 paragraph 3, the Law numbered 4734 has regulated threshold values for public tenders. These threshold values will be applied in scope of the articles 13 and 63 of the Law. According to the Art.13 “In procurements to be conducted by restricted procedure whose estimated costs equal to or exceeding the threshold values, it is compulsory to provide a letter of invitation to tender, not less than forty days in advance of the deadline for the submission of tenders to candidates that are qualified as a result of the pre-qualification proceedings”. To the Art.63 “The contracting authorities may insert some provisions to the tender documents with regard to; in procurement of services and works, a price advantage would apply to domestic tenderers up to 15%, and in procurement of goods, a price advantage up to 15 %, would apply to domestic tenderers who offer products which are accepted as domestic products by the Authority by taking the opinions of Ministry of Industry and Trade and of other relevant organizations and institutions, and in cases where the estimated costs are below the threshold values, only domestic tenderers can participate in procurements. In order to be deemed as domestic tenderers, all partners of the joint ventures must be domestic tenderers”. Thus with this provisions the Law brings some price advantages up to 15% for domestic tenderers and implies that in cases where the estimated costs are below threshold values, only domestic tenderers can participate in procurements. Additionally, for a foreign tenderer which is part of a joint venture it is not possible to be deemed as a domestic tenderer.
Domestic tenderer advantage can be materialized by a simple example,
Company A, Company B and Company C participate to a tender. The companies offer 245.000, 210.000 and 200.000 consecutively. Companies A and B offer domestic products. Price advantage is determined as 9% in the tender documents. Company C’s offer thus becomes: 200.000 × (109 ÷ 100) = 218.000 TL When the offers are put in order: 210.000 (B) < 218.000 (C) < 245.000 (A) As a result, Company B wins the tender.
The Law numbered 4734 has defined four different tender procedures; which are open tender procedure, restricted tender procedure, negotiated tender and direct supply procedure. Between all these procedures “direct supply” possesses importance with being a procedure newly regulated by the Law numbered 4734 and its similarity to bargain sale contracts. In this procedure no announcement is made before the tender and no guarantee is asked to the bids.
The procedure of joining to the public tenders is regulated in between the Articles 30-35. According to the Art 30 “The documents required for joining tender including letter of tender and bid bond have to be put in an envelope. The name, surname, commercial name and correspondence address, the subject of the tender offer and the address of the administration of which tender made by have to be written on the envelope. The adherend part of the envelope has to be signed and sealed by the bidder. Letter of tender has to be signed and must be in written form. In the letter it should be indicated that the tender document is read and accepted. In addition, the bid price should be written in both number and writing, there shouldn’t be any defacement, erasure or correction on it and it should be signed by authorized people with their names, surnames and commercial names. In goods procurement tenders, if it is indicated on the tender document that an alternative bid can be given, the same procedures will be also applied to that bid. After completing these procedures tender offer will be given until tender hour to the administration in exchange of a rotation number”. According to the Art.40 of the Law numbered 4734 after receiving the offers, public administration starts to review the offers in accordance with Articles 37 and 38 and the tender is left to the bidder who has gave “the most advantageous bid economically”. The measure of “the most advantageous bid economically” has entered newly in the Law numbered 4734.
The result of the tender will be declared to the person whose bid is accepted and to the other bidders within three days after the approval of tendering official in accordance with the Art.41.
The issue of contract is regulated under the Art.42. Within ten days after the conclusion of the period in the Art.41 (three days), the person whose bid is accepted will be invited to sign the contract in condition of giving the contract bond. For “foreign bidders” twelve days more will be added to this period.
THE PROCEDURE OF JOINING PUBLIC TENDERS IN SCOPE OF THE LAW NUMBERED 2886
Effective as of the date that the Law numbered 4734 has entered into force the provisions of the State Tender Law numbered 2886 are not applicable in the public tenders which are within the scope of Law No. 4734. The subject of tenders that are in scope of the Law numbered 2886 are purchase, sale, service, building, rent, barter, establishment of incorporeal rights on property and transportation defined as under the Art1. Again the same Article regulates the administrations of which its tenders are dependent on the Law as, the administrations in scope of the general budget, annexed budget administrations, special administrations and municipalities.
According to the Art.2 paragraph 4 of the Law numbered 2886 “the tenders issued in the seasons when the most reasonable prices can be achieved, unless needed otherwise”. This provision makes it easier for public administrations to issue tenders.
There are five procedures of tender regulated in the Law 2886 as sealed bidding, restricted tender procedure, open tender procedure, negotiated tender procedure, competition procedure.
According to the Art.16 bidders should give the documents completely requested in the tender specifications and declare an address in Turkey for notification. Differently from the Law numbered 4734, the Law numbered 2886 regulated different application procedures for each tender procedure.
According to the Art.37, in the sealed bidding, offers should be given written in an envelope. On the envelope the bidder’s name, surname and correspondence address should be written as well. The adhered part of the envelope should be signed and sealed by the bidder. This envelope should be put in another envelope with the letter of guarantee and other requested documents. On the second envelope the name, surname, address of the bidder and the subject of the offer should be written. The letter of offer should be signed by the bidder and he/she should write that the tender specifications are read and accepted by him/herself. Offers which are not in conformance with these issues or have defacement, erasure or correction on it are not accepted valid. According to the Art.38 the offers should have given until the hour of tender in exchange of a rotation number. After making a review in accordance with the Art.40 public administration gives one of the decisions partaking in the Art.41. and declares it to those present.
It is regulated under the Art.44 and it is just a procedure applied in certain tenders existing in Art.44 as plane, warship, armament, airports, highways, railways etc. In this procedure the tender can be made between minimum three bidders who are accepted technically competent and powerful by public administration. According to the same Article in this procedure the names of the bidders should be declared to the regarding Minister and should be approved by him/her. It is not obligated to make an announcement in this procedure. If appropriate the invitation of the bidders should be made notwithstanding the Art 17,18, 19 with a pre-selection announcement.
This procedure is regulated under the Art. between 45 and 49. According to the Art 45, this procedure can be applied in tenders regulated under the Art.1 of which its amount is under the amount determined by the General Budget Law, each year. In this procedure tender offers are made orally in front of bidding commission, also bidders can send their offers with an envelope in conformance with provisions in Art.37. After the review of required documents by commission president, the bidders accepted to join the tender are declared and in pursuit of it the bidders accepted are invited to sign tender specifications and declare their bids orally. In the end of the declaration of bids the tender concluded accordingly to the Art.41.
Negotiated tender procedure is regulated under the Articles 50 and 51 of the Law numbered 2886. According to the Art. 50 taking the offers do not depend on a certain form. In this procedure tenders can be made by taking oral and written offers and by agreeing on a tender price. In the decision of tender, the form of offers, the tender price and the issue of why the awarded party is preferred must be written. In the Art.51 the subjects of negotiated tender procedure are regulated as clauses “(a) to (p)”. For the subjects existing in the clauses (a), (b), (c), (d), (i), (l) and (p) it is not obligated to arrange the tender specifications document, to get a guarantee and to make a contract. For the subjects existing in the clauses (i), (l) and (p) the assent of the Ministry of Finance is required.
If appropriate public administrations can make done works regarding etudes, plans, projects and fine arts, with a competition in accordance with the Art.52 of the Law numbered 2886. To the same Article, public administrations arrange regulations regarding the works existing in their establishment law and Presidency decisions. Regulations regarding an architecture or a construction project arranged by Ministry of Public Works.
All the contracts made in accordance with these procedures have to be signed by each public administration’s authorizing officer.
The last issue about the Law numbered 2886 is the Art.82. According to the article, works will be made in scope of an International Treaty and paid by foreign states or International Organizations will depend on special law, legal decision and treaty’s provisions. Thu s if there is a work in question of an International Treaty and paid by foreign states, the special provisions about it will be applied.
After the entrance in force of the Law numbered 4734, the provisions of the Law numbered 2886 became non applicable which are in scope of the Law numbered 4734. The Law numbered 4734 aims to harmonize public tender legislation with the EU Law. However it is usually criticized in manner of making differences between foreign and local tenderers.
Towards the explanations made above, implementation of these two Laws (numbered 4734 and 2886) depends on the subject of the tender and of which administration is the tender made by. They have also differences in terms of tender procedures. Accordingly, to the scope of work, the procedures given above can be followed by the bidders.