Public Procurement in Turkey: overview
A Q&A guide to public procurement law in Turkey.
The country-specific Q&A gives a high level overview of applicable legislation, scope of rules, procurement procedures and enforcement, recent trends and proposals for reform. In particular, it examines entities and contracts covered, concessions, privatisations and PPPs, contract award criteria, alternative bids, and changes to an existing contract.
This Q&A is part of the multi-jurisdictional guide to public procurement. For a full list of jurisdictional Public Procurement Q&As visit www.practicallaw.com/publicprocurement-mjg.
The principal provisions regulating public procurement are:
Law No 4734, Law of Public Tender. It establishes the principles and procedures to be applied in any procurement held by public authorities and institutions governed by public law, under public control or using public funds (Article 1, Law No 4734).
Law No 4735, Law on Public Procurement Contracts. It sets out the procedures and process for public procurement contracts.
There are also several relevant international and supra-national provisions regarding public procurement:
United Nations Commission on International Trade Law (UNCITRAL). Turkey is not a contracting state of the Model Law, which aims to modernise a country's national procurement laws and legislation. However, UNCITRAL's publications on public procurement were considered by the legislators during the drafting of Law No 4734 above and other related legislation.
World Trade Organization (WTO) Agreement on Government Procurement 1994. Turkey has been a member of WTO since 26 March 1995. Almost all WTO Agreements are multilateral. The Agreement on Government Procurement is one of the few that does not require members to sign. Turkey did not sign and has held observer status since 4 June 1996. Several developed countries, for example, the US, Canada, Japan, Israel, Korea, Norway and Switzerland, have signed the agreement.
Developments regarding public procurement in the EU are of interest particularly since Turkey is a candidate state for EU membership:
Directive 2004/18/EC on the co-ordination of procedures for awarding public works, supply and service contracts (Consolidated Public Sector Directive). The EU has published several directives regarding government procurement but this aims to consolidate the regulations on all government procurement in particular in respect of goods and services. The Consolidated Public Sector Directive introduces a new method "Competitive Dialogue", which includes the principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency.
Directive 2004/17/EC co-ordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (Utilities Directive). The Directive aims to simplify and modernise previous rules regarding the basic principles of domestic markets.
As a result of these Directives, the Council of Ministers of Turkey decided to modernise Turkish law and undertook the EU Community Acquis on 10 November 2008 with Decision No.2008/14481.
The Public Procurement Authority is the main regulatory authority. It is:
Administratively and financially autonomous.
Independent in the fulfilment of its duties.
Mandated and authorised to closely implement the principles, procedures and proceedings of Law No 4734.
The overriding principles of the legislation referred to in Question 1 include:
Contracting authorities are responsible for ensuring in respect of tenders conducted in accordance with Law No 4734, Law of Public Tender (Article 5):
appropriate and prompt fulfilment of needs;
efficient use of resources.
There must be an acceptable natural connection between the purchase of goods, services and works for consolidation in the same procurement application.
Procurement of goods, services or works cannot be divided with the intention of avoiding threshold values.
For procurements in accordance with Law No 4734, the principal procurement methods are:
(See Question 11). Other methods may be used under special conditions set out in Law No 4734.
The procurement proceedings must not be initiated unless there is a sufficient allocated budget.
Where the related legislation requires an Environmental Impact Assessment (EIA) report for a works project, a positive EIA report must be obtained before the start of procurement proceedings. However, in works procurements to be made urgently due to natural disasters, an EIA report is not required.
Regulation of specific industries
The following industries are subject to specific regulation:
The Saving Deposit Insurance Fund and banks whose shares are partially or fully owned by the Fund.
Banks covered by Law No 4603.
Halk Bankası, which is a Turkish state-owned bank.
Companies with over 50% of their capital, directly or indirectly, together or separately owned by banks mentioned above (excluding the procurement of works within Law No 4603).
Real estate investment trusts subject to the Capital Market Law.
Enterprises, establishments and companies involved in the following sectors:
On 1 September 2010, Turkish public procurement legislation introduced the Electronic Public Procurement Platform (EPAK) to provide:
The EPAK aimed to save 20% of the public procurement budget by the integration of the procedure for the:
Social security institution.
Central civil registration system.
Banks association of Turkey.
General directorate of public accounts.
Republic of Turkey medical devices and drugs databank.
Although it is not compulsory to subscribe to the EKAP system, there has been a tremendous increase in the number of tender applications made through the EKAP.
Scope of rules
The following entities must comply with the procurement rules (Article 2, Law No 4374):
Public administrative organisations that engage in the procurement of goods, services or works where the cost comes from their general budget.
Administrative organisations with a special budget.
Special provincial administrative organisations and municipalities and their related revolving funds organisations.
Associations (except those operating as professional organisations and their supreme institutions).
State economic enterprises consisting of public companies and state economic establishments.
Social security establishments, funds and legal persons that are established in accordance with special laws and assigned with public duties (except for professional organisations and foundation institutions of higher education).
Institutions with independent budgets.
Institutions, organisations, associations, enterprises and companies with over 50% of their capital, directly or indirectly, together or separately owned by the state-owned banks established under Law No 4603.
The procurement of works by banks within Law No 4603 and by the corporations that have over 50% of their capital, directly or indirectly, together or separately owned by those banks (see Question 3).
There are a wide number of exemptions contained in Article 3 of Law No 4734, for example, the procurement of:
Agriculture or livestock products by authorities included within the scope of Law No 4734 and the procurement of services from development co-operatives of forest villages and villagers pursuant to Law No 6831, Forest Law.
Goods, services and works by the relevant ministry that are related to matters of defence, security or intelligence.
Goods, services or works that involve foreign financing pursuant to international agreements where the financing agreement states that different tender procedures and principles apply.
Consultancy and loan graduating services that involve borrowing from international capital markets.
Goods and services by the Turkish Central Bank relating to the production and printing of banknotes and valuable documents.
Consultancy services in privatisation implementations (Law No 4046 of 24 November 1994).
Goods and services related to commercial activities by enterprises, undertakings and companies operating in the field of air transport.
Goods, services or works by branches of contracting authorities in foreign countries.
Goods and services by prisons, rest homes and orphanages, schools and breeding stations.
Goods and services that have the principal status of State Supply Office from the General Directorate of State Supply Office.
Freight, passenger and port services from the General Directorate of State Railways.
Fuel and transportation from the General Directorate of Liquidation Works Revolving Fund Administrations.
Goods, services, and consultancy services from the Scientific and Technological Research Council of Turkey within the scope of research and development activities.
Meat and meat products from the General Directorate of Meat and Fish Products Agency.
Monoblock wheels and wheel sets used in vehicles that tow or are towed on rail from the General Directorate of the Machinery and Chemical Industry Agency.
Goods and services necessary for research and development projects.
The procurement rules cover the following contracts (Article 5, Law No 4735):
Standard contracts for the purchase and production of goods and services. To ensure uniformity of implementation, the contracts must be published in the Official Gazette.
Contracts prepared by the Directorates are based on the standard contract provisions.
Contracts relating to construction works and the purchase of goods or services on a lump sum price basis (Article 6, Law No 4735).
Atypical construction contracts (depending on the construction work) based on lump sum and unit price.
The threshold values are (Article 8, Law No 4734):
TRY300 billion for procurement of goods and services by the contracting authorities operating under the general or the annexed budget (TRY811,890 for the period 1 February 2011 to 31 January 2012 as published in the Official Gazette).
TRY500 billion for procurement of goods and services by other contracting authorities within the scope of Law No 4734 (TRY1,353,164).
TRY11 billion for the works contracts by any of the contacting authorities covered by Law No 4734 (TRY29,769,751).
These thresholds are important as they trigger the application of:
Article 13 of Law No 4734, which regulates time for preparing an offer for tenderers.
Article 63 of Law No 4734, which regulates price advantages in favour of domestic applicants and the joining of domestic applicants in the tender.
Concession contracts are not defined in any code or regulation in Turkey. However, the accepted definition as reflected in legal precedent is that concession contracts are made by and between the administration and private persons on the basis of mutual trust with the aim of supplying a certain service for a certain period where the cost and revenue belongs to the private person.
Concession contracts are not referred to in Law No 4735. Some special laws, such as Law No 5393, Municipal Law refer to and regulate concession contracts in service procurements.
Privatisations and PPPs
Privatisations and PPPs are not subject to the procurement regime in Turkey.
The principal legislation governing privatisations is Law No 4046, Law On Implementation of Privatisations dated 24 November 1994 and most recently amended by Law No 5398.
There is as yet no principal legislation relating to PPPs in Turkey. However, there are some special laws regulating PPPs between authorities and the private sector for certain projects:
Law No 5396, Law on the Addition of a New Provision to the Basic Act on Health Services.
Law No 6228, Law on the Amendment of Value Added Tax Law.
Law on the Conduct of Certain Investments and Services within the Framework of the Build-Operate-Transfer Model and the Public Procurement Law.
Shared services and “in-house” arrangements
Share service arrangements and in-house arrangements can be subject to public procurement. There is no legal restriction for this. However, shared service and in-house arrangements are not commonly subject to public procurement in Turkey. There are no exemptions regarding shared service arrangements and in-house arrangements.
In the procurement of goods, services and works by contracting authorities, one of the following procedures must be applied (Article 18, Law No 4734):
The open procedure is a procedure where tenderers submit their tenders in accordance with Article 19 of Law No 4734. It is the most common procedure.
The restricted procedure is a procedure in which tenderers, who are invited following pre-qualification by the contracting authority, can submit their tenders (Article 20, Law No 4734). Procurement of goods, services or works can be conducted where the open procedure is not applicable due to the:
Nature of the subject necessitating speciality and/or high technology.
Works having estimated costs exceeding half the threshold value.
Pre-qualification evaluation must be carried out in accordance with the qualification criteria (established and specified in the pre-qualification documents and notices). Those who fail to meet the minimum requirements are not accepted as qualified. Provided it is stated in the pre-qualification notice and document, all or a certain number of the tenderers who are considered qualified can be invited to submit their tenders.
The negotiated procedure applies in the following circumstances:
No tender has been submitted under the open or restricted procedures.
The tender procedure must be conducted immediately due to:
unexpected and unforeseen events such as natural disasters, epidemics, risk of losing lives or properties or events that could not be predicted by the contracting authority;
specific events relating to defence and security.
The procurement involves a research and development process.
Technical and financial aspects cannot be clearly defined due to specific and complex characteristics of the works, goods or services to be procured.
The procurement has estimated costs of up to TRY50 billion.
There is also the method of direct procurement in Turkish public procurement law that can be applied in the following cases without advertising or receiving any securities:
When the work or service can be met from only one natural or legal person.
In cases where one single natural or legal person has exclusive rights with regard to the work or service in question.
Procurement of goods and services that must be supplied from the initial supplier to ensure compatibility. The contract is based on the principal contract and cannot be awarded for more than a total period of three years.
Purchases with regard to accommodation, trips and subsistence within the scope of representation expenses and procurements not exceeding:
TRY15 billion for the needs of contracting authorities within the boundaries of metropolitan municipalities;
TRY5 billion for the needs of other contracting authorities.
Purchase or lease of immovable property according to the works or services required by the contracting authority.
Procurement of medicines, vaccinations, serums, antiserum, blood and blood products, which cannot be economically stored due to their nature.
Procurement of services from advocates of Turkish or foreign nationality or from advocacy partnerships:
to represent contracting authorities with regard to disputes proposed to be settled by international arbitration;
in accordance with Articles 22 and 36, Law No 4353, 8 January 1943;
to register intellectual and industrial property by national and international institutions.
Procurement of services by the Turkish Labour Authority regarding its stated duties.
Cases relating to elections and referendums.
In procurements pursuant to this Article, the needs must be met based on market price research by an assigned person without the need to establish a tender commission or meet the qualification provisions stated in Article 10.
Freedom of choice
The procedure of choice is based on the nature of the business and volume of the work or service and decided with respect to the requirements of each procedure.
Procurement notices that do not comply with the provisions relating to notice periods and pre-qualification requirements are invalid (Article 26, Law No 4734). In cases of non-compliance, the procurement or pre-qualification proceedings cannot be carried out unless the procurement notices are renewed in a way to ensure conformity with the Articles.
However, in the case of non-compliance due to errors (except errors such as not advertising tender notices or not conforming to the related time limits), the tender or pre-qualification proceedings may be conducted provided a correction notice is advertised within:
15 days in procurements with 25 or 45-day time limits.
Ten days in other cases.
The tender documents must include administrative specifications that incorporate the:
Instructions to tenderers.
Technical specifications of the work.
Other required documents and information.
Pre-qualification documents must include the:
Required qualifications of candidates.
Other necessary information and documents.
The tender and pre-qualification documents must be available for viewing at the location of the contracting authority, free of charge. However, economic operators intending to participate in the pre-qualification or tender proceedings must purchase the document.
Turkish legislation has a general procedure for pre-qualification and advertising of a tender whether following the open, restricted or negotiated procedure in Question 11.
The pre-qualification notice must not include matters that are not specified in the tender documents. The following information must be included in the notice:
Name, address, telephone and fax number of the contracting authority.
Name, characteristics, type and quantity of the procurement.
Place of delivery or performance of the goods or services.
Commencement and completion dates.
Procurement procedure to be applied.
Rules of participation and the required documents and certificates.
Criteria to be used in the qualification and evaluation.
Whether the tender is limited only to domestic tenderers and whether they have a price advantage.
Place where the tender documents can be viewed.
Price of a copy of the tender documents.
Place, date and hour of the opening of the tenders.
Address where the tenders are to be submitted.
Type of tender and contract.
Statement specifying that a tender security should be given in an amount determined by the tenderer, not being less than 3% of the tender price.
Validity period of the tenders.
Statement confirming the consortium is allowed to submit the tender.
Submission of tender
All documents required under the rules of participation in the procurement including the tender letter and the tender security must be placed in a sealed envelope signed and stamped by the tenderer. The tender letter must be submitted in writing and signed with confirmation that:
The tender documents are fully read and accepted.
The offered price is written clearly, both in writing and in figures as consistent with each other.
There are no scrapings, erasures, or corrections.
The tender must be signed by the authorised persons stating name, surname or commercial title. In the procurement of goods, if a provision on the submission of alternative tenders exists in the procurement document, then the alternative tender must be prepared and submitted.
The tenders must be submitted to the contracting authority no later than the date and hour specified in the tender documents, in return for a receipt indicating the queue number.
Tenders submitted after the hour specified as the deadline cannot be accepted and must be returned unopened. Tenders can also be sent via registered mail. The submitted tenders cannot be withdrawn or changed for any reason except in the case of an addendum arrangement.
There are time limits regarding the announcement of tenderers who join the tender. Time limits differ between tenders that are above and tenders that are below the thresholds (Article 13, Law No 4734).
Advertisement of procurement notice
Advertisements must not include matters that are not specified in the pre-qualification documents. The same information required in the pre-qualification notice must be included in the advertisement.
Goods and services and construction works subject to tender must be prepared by the government. There are several points to consider such as:
Tenders must not lead to the creation of an anti-competitive situation.
Technical specifications can include only technical elements, not details of the brand, patent or origin of the product.
For the procurement of medical devices, an EC Certificate is enough and there is no need to provide other documents such as a:
Paul Ehrlich document (a standardisation document issued by the Paul Ehrlich Institute);
Turkish Standard Institution (TSI) certificate;
International Organization for Standardization (ISO) certificate;
US Food and Drug Administration (FDA) certificate;
Underwriters Labourites Inc (UL) certificate.
All technical requirements are declared in the tender document.
In principle, no amendments can be made to the tender documents after the advertisement of the procurement notice. If an amendment is considered necessary the:
Reason must be certified.
Previous notices are deemed invalid.
Procurement notice must be advertised again.
However, after the advertisement of tender notices, if there are material or technical errors or deficiencies that may affect the preparation of tenders or the realisation of the work, the tender documents can be amended.
The addendum relating to the amendments, and constituting a binding part of the tender documents must be provided to all tenderers at least ten days before the deadline for submission of tenders. In case an extension of the time period is needed to prepare the tenders as a result of the amendments, the date of tendering can be postponed for a maximum of 20 days but only once. In the case of an addendum, tenderers who have already submitted tenders are allowed to withdraw and submit new tenders.
Contract award criteria
Tenders must be submitted to the contracting authority by the time stated for submission of tenders in the tender documents (Article 36, Law No 4734). The number of tenders submitted by the deadline must be recorded in the minutes by the tender commissioner and announced to those who are present. The tender proceedings must then immediately commence:
The tender commissioner must examine the tender envelopes in the order of submission. Envelopes that do not comply with the law must be recorded in the minutes and must not be included in the evaluation stage. The envelopes must be opened in the presence of tenderers and those who are present, in the order of submission.
Tenders are checked for completeness and conformity with the relevant procedures. Incomplete documents or improper tender letters and tender securities must be recorded in the minutes.
The names of the tenderers, their tender prices and the amount of estimated cost must be announced. The minutes relating to these proceedings must be signed by the tender commissioner. The session is closed for immediate evaluation of the tenders by the tender commissioner.
The tender commissioner must evaluate the tenders in accordance with Article 37 of the Law No 4734 and determine those that are abnormally low compared to the other tenders or the estimated cost determined by the contracting authority. Before rejecting these tenders, the commissioner must request details in writing within a specified period from the related tenderers.
The tender commissioner must evaluate the abnormally low tenders taking into consideration the written explanations on the following aspects:
economic nature of the manufacturing process, the services provided and the method of work;
selected technical solutions and advantageous conditions to be used by the tenderer in the supply of the goods and services or fulfilment of the works;
originality of the goods, services or works proposed.
The tender commissioner must use the criteria set by the authority to determine and evaluate the abnormally low tenders. Tenders with insufficient or no written explanations must be rejected. The authority can limit values or average values to identify and evaluate abnormally low tenders and determine the economically most advantageous tender.
The contracting authority is free to reject all tenders and cancel the tender proceedings (Article 30, Law No 4734). In this case, all the tenderers must be informed promptly about this cancellation. The contracting authority incurs no liability for rejecting all the tenders. However, if requested by the tenderers, the contracting authority must provide reasons for the cancellation.
Generally after the evaluation, the contract is awarded to the tenderer who submits the economically most advantageous tender. The economically most advantageous tender is determined solely on the basis of price taking into account non-monetary factors such as:
operation and maintenance costs;
quality and technical merit.
Non-monetary factors must be expressed in monetary values or relative weights in the tender documents.
The contracting officer must approve or cancel the tender decision, indicating clearly the grounds for cancellation, officer within a maximum of five days following the date of the decision. The tender commissioner's decision is deemed valid if the decision is approved, and void if the decision is cancelled.
Before approval of the tender decision by the contracting officer, the contracting authority must check whether the successful tenderer and the owner of the second most economically advantageous tender are prohibited from participating in tenders. If both tenderers are prohibited, the procurement is cancelled.
Changes to an existing contract
In Turkish public procurement law, contracts must not be contrary to the conditions set out in the tender documents. Any change requires a new procurement procedure (see Question 14).
Right to bring a claim
Candidates, tenderers or potential tenderers who claim to have suffered or are likely to suffer a loss of right or damage due to unlawful procedures or actions during the tender process can file:
A complaint application to the contracting authority (Article 54, Law No 4734).
An appeal to the Public Procurement Authority (Article 56, Law No 473).
The time limits are as follows:
Five days regarding the procurement work or service involving unexpected and unforeseen events such as natural disasters, epidemics, risk of losing lives or property or events that could not be predicted by the contracting authority and specific events relating to defence and security.
Ten days for other cases from the date the proceeding or action, which is the subject matter of the complaint, was realised or should have been realised.
The contract for procurement of the work or services cannot be signed unless:
Ten days have passed either from the:
final notification date of the decision on the application where an application to the contracting authority exists;
expiration date for taking a decision where no decision is taken.
Enquiry has been made that there has been no appeal application.
The Public Procurement Authority has given a final decision where there has been an appeal application.
The complaint and appeal procedures above must be exhausted before a claimant can file a lawsuit.
The documents evidencing the authority to make the application and the original signature circular or the copies approved by the competent authorities must be attached to the complaint application. These documents are not required if the candidate or tenderer has already submitted them with the application documents or the tender.
The complaint must be made to the contracting authority within the application period, which is:
Five days regarding the procurement of unexpected and unforeseen events such as natural disasters, epidemics, the risk of losing lives or property or events that could not be predicted by the contracting authority and specific events relating to defence and security.
Ten days for other cases from the date the proceeding or action, which is the subject matter of the complaint, was realised or should be realised, and before the signing of the contract.
The period for complaint applications concerning the issues covered in the procurement notice starts from the date on which the notice is first published. The period for applications regarding the other provisions of pre-qualification or tender documents that are not reflected in the procurement notice starts from the purchasing date of the relevant document.
Complaints regarding the procurement notice, pre-qualification or tender documents must be submitted at the latest, three working days before the tender or application deadline. The contracting authorities must conclude the complaint application before the procurement date or deadline for the application.
The contracting authority makes the necessary review of the complaint application and takes a reasoned decision within ten days of the application. The decision must be notified to the complainant and the other candidates, tenderers or potential tenderers within three days of the date of the decision. Potential tenderers are not notified about decisions other than those against the tender notice, tender or pre-qualification documents.
If the decision is not deemed appropriate, the candidates, tenderers or potential tenderers including the complainant can submit an appeal application to the Public Procurement Authority within ten days of being notified of the decision by the contracting authority. The petition must include the:
Name, surname or title and address of the applicants, and of the agents or representatives, if any.
Name of the contracting authority and subject matter of the contract or the procurement registration number.
Date when the circumstances giving rise to the application were realised or notified.
Subject matter of the application, the reasons and supporting evidence.
For appeal applications, the date of notification of the complaint raised to the contracting authority and the date of notification of the contracting authority's decision, if any.
Among the proceedings and decisions related to the cancellation of a tender only those taken on complaints and appeals can be the subject matter of an appeal and this appeal application is submitted directly to the Authority within five days. The Authority must make a final decision on the appeal application within 20 days. All decisions taken by the board hearing the appeal must be notified to the parties within five working days and published on the Authority's website within five days of notification.
Statutes of limitation
See above, Appeal applications.
Turkish public procurement law is one of the most rapidly changing areas of law in Turkey. Changes to the law relating to the Ministries of Transport, Maritime and Communications are due before the local elections in 2014 and general election in 2015. They are mostly intended to provide the legal structure for compliance to the public procurement law in industries such as mining and transportation.
Public Procurement Authority
Description. The official website of the Public Procurement Authority. It provides, among other things, an unofficial English language translation of the Public Procurement Law.
Description. The official website of the Privatisation Administration. Information is available in English.
Grand National Assembly of Turkey
Description. The official website of the Grand National Assembly of Turkey. Information is available in English.
Şafak Herdem, Managing Partner
Herdem Attorneys At Law
Professional qualifications. Turkey
Areas of practice. Investment and funding; project finance; administrative; renewable; aviation.
Recent transactions. Involved in projects valued at US$1.2 billion in Turkey.
Professional associations/memberships. Istanbul Bar Association, AICAC.
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