Turkey - Selling to the Government Turkey - Selling to the Government
Procurement regulations and practices are explained below. For major infrastructure projects, such as bridges, airports, ports, hospitals, highways, transportation and other public service-type infrastructure, the government has increasingly held tenders on a build-operate-transfer (BOT) or public-private-partnership (PPP) basis. For these types of projects, the government guarantees a certain number of passengers or clients and meets the price difference until the target number is met. Some projects have local production conditions attached to them.
While Turkey has been a member of the World Trade Organization (WTO) since March 1995 and a member of General Agreement on Tariffs and Trade (GATT) since October 1951, the country has yet to sign the WTO Government Procurement Agreement (GPA). Rather, Turkey is an observer of the WTO GPA.
In January and March 2017, the Turkish Parliament passed amendments to the existing Public Procurement Law No 4734 and Public Procurement Contract Law No 4735, bringing some practical improvements to the regulations. For example, at the tendering stage, the Chamber of Commerce or Chamber of Industry registration or Proficiency Chamber registration is no longer requested. However, the tendering committee asks the winner to provide these documents prior to signing the contract. This registration must be made before the tender closing date. Additionally, at the tendering stage, companies provide their official revenue balance sheets and do not need to provide bank reference letters, which would increase costs to all bidders. Instead, winners submit bank reference letters before signing the contract.
Companies established in Turkey, including the subsidiaries of foreign companies, are able to register their company and attach any required documents at the “Electronic Public Procurement Platform” (EKAP for short in Turkish) included in the EKAP website. However, these documents may need to be updated depending on their validity period. Documents entered in EKAP under a company name need to be official and need to be scanned. Some documents (e.g., previous work experience and completion certificates, social security documents, chamber documents, trade registry, etc.) need to be confirmed at official websites. Public Procurement Board decision no. 2018/DK.D-357, dated November 13, 2018 defines the procedures and principles of registering foreign real and legal persons on EKAP.
With these changes, bidders will not be disqualified based on how bid documents are submitted or how notarized copies of documents are accepted. For bids submitted by consortia, work completion certificates from each company are accepted by tender committees. Work completion certificates obtained from previously completed work are valid for 5 years from the date of completion. Foreign documents with apostille or documents approved by Turkish consulates are accepted.
Since e-tendering started in early 2019, 90,000 tenders have been conducted through that system. It is anticipated that the system will be extended to cover medical equipment. There is often a 15% price advantage for local contractors/producers, placing foreign bidders at a disadvantage.
In addition to a pricing disadvantage, foreign firms including U.S. firms have drawn attention to several issues in Turkey’s government procurement practices, including lengthy and onerous terms and conditions to participate and win procurements, such as localization demands; substantial delays and an opaque tender selection process as well as burdensome documentation requirements that are not common to international procurement practices.
U.S. firms should work closely with a local partner/ representative or legal consultant to analyze public procurement tender specifications not only in terms of technical compliance, but also for required documentation compliance and additional costs involved. The main laws and regulations that regulate government procurement are found at the Public Procurement Authority (KIK) website.
For defense tenders and contracts, the Presidency for Defense Industries (SSB) and the Ministry of National Defense have their own procurement regulations. SSB procurement is financed off-budget, through special taxes, and is not subject to public procurement laws.
KIK approves public tender conditions and evaluates complaints of wrongdoing in public procurement tenders for a certain fee specified by the relevant regulations. Bidders can file objections to tender specifications or tender conditions after procuring the tender documents but before the tender closing date. KIK evaluates the objections and makes decisions in accordance with the regulations. Its decision is final unless a bidder appeals in court. Bidders can also file cases at KIK if they believe there is wrongdoing after the evaluation is finalized but before a bid bond is collected.
Companies must submit their bids in original form before the deadline. Each page typically must be signed with a fresh signature and stamped with a company seal and bids must be submitted in signed, sealed envelopes. Another important document is the letter of authorization, which is signed by the board of directors, notarized and apostilled and should be given to the signatory of the bid. (Note: an "apostille" is a form of authentication applied to documents for use in countries participating in the 1961 Hague Convention, to which Turkey is a signatory.)
In evaluating public procurement tenders, the Turkish Government, first and foremost, considers price, then quality and then, in some cases, financial credit terms. Some companies have reported politics playing a role in Turkish procurement decisions, especially in sectors the government views as strategically important, such as aviation, defense, energy, infrastructure, pharmaceuticals and IT. Other factors that affect sourcing decisions are similar work experience and compliance with EU regulations and standards.
For Turkish Government tenders, the validity of the proposal must generally be 3 to 6 months from the bidding date. Along with the proposal, a bid bond (bank guarantee letter) in the amount of 3% of the bid amount must be submitted. The bid bond must be issued by a Turkish bank, counter-guaranteed by the bidder’s bank and valid at least for the period of bid validity, usually 3 months. A bid bond is not required for consultancy tenders. A bid bond is issued by the bidder’s bank to the project owner to guarantee that the winning bidder will undertake the contract under the terms at which they bid. This action is only triggered should the principal who is awarded the contract fail to enter into the contract, as agreed with the project owner.
Once a company is awarded a contract, the bidder then becomes the contractor and must provide a performance bond, which is usually 6% of the contract amount and is valid throughout the delivery or per final acceptance beginning from the contract date. All bonds must be issued by a Turkish bank and counter-guaranteed (confirmed) by the bidder’s bank.
U.S. exporters with sufficient U.S. content that wish to receive commercial advocacy from the U.S. Government for a government tender in Turkey, may fill out the questionnaire and apply at the U.S. Department of Commerce’s Advocacy Center. All applications are subject to approval by the Advocacy Center. Private sector bidding and negotiations cannot be covered by the Advocacy Center.
Some projects in Turkey are financed through borrowing from Multilateral Development Banks such as the World Bank and the European Bank for Reconstruction and Development (EBRD). Please refer to the “Project Financing” section in “Trade and Project Financing” for more information. In such cases, the relevant bank’s regulations apply.