Defense Industry: Turkey’s Presidency of Defense Industry Introduces New Procurement Rules

On January 6, 2021, The Procedures and Principles Regarding the Tenders to be Made Under Subparagraph (b) of Article 3 of the Public Procurement Law №4734 by the Presidency of Defense Industries (“Procedures and Principles”) entered into force in regard to the procurement of goods and services by Turkey’s Presidency of Defense Industries (“SSB”), the military procurement office affiliated to the Turkish Presidency. Accordingly, this Procedures and Principles includes procurement of goods and services, R&D and construction works relating to defense, security, and intelligence and to be carried out by SSB and its affiliates. On other hand, it leaves procurement to be made as a result of bilateral and multilateral agreements and projects with international collaboration out of scope.

The Procedures and Principles highlights that the processes in this scope should consider the principles of protection of national benefits, standardization, modernization, protection of competition and principle of cost. Therefore, project activities will be carried out confidentially in line with the relevant legislation governing privacy and security.

Procurement Methods in Projects

The Procedures and Principles stipulates three different methods for procurement in projects: (i) bidding, (ii) supply from one source and, (iii) competition. Accordingly, the method of bidding refers to the method in which bids are received from those deemed appropriate by SSB and the technical details of the work subject to the tender and the bid prices are discussed. As per the Procedures and Principles, supply from one source means that the needs are provided directly from the bidder. However, this method of supply from one source may only be used in cases of national benefit, ensuring privacy and/or technological gain. Lastly, the method of competition means the method in which the needs within the scope of projects aiming to execute a prototype product/platform for technology demonstration, are obtained by comparing the capabilities of more than one bidder/ contractor in the same tender or contract execution process.

Commencement of Projects

As per the Procedures and Principles, SSB decides upon the commencement of projects and determines the type of the project. Such commencement decision is submitted to the President of SSB for approval. Subsequent to the finalized commencement decision, when appropriate, SSB prepares and publishes a request for bids. The content of request for bids is determined by SSB but it at least includes the issue of providing price advantage in favor of domestic goods and/or domestic bidders. The tender process starts with the receipt of request for bids by the companies, institutions, and organizations and/or the publication of the announcement regarding the tender on SSB’s official website.

Evaluation and Results

Accordingly, results of evaluation in regard to projects are rendered to the Execution Committee of Defense Industries (“SSİK”) and the selection of the contractor is made by the decision of SSİK. Contractual negotiations are carried out and finalized with the bidder in accordance with the selection decision.

On the other hand, results of evaluation in regard to R&D projects, urgent procurement projects, innovative projects, and consulting services are rendered to the President of SSB and any action is taken in line with the decision of the President.

Guarantees

According to the Rules and Procedures, a guarantee is required from the bidders at the rate determined by SSB. However, no guarantees may be required for advances to be given to the general and special budgeted organizations, special provincial administrations, municipalities, state-owned enterprises, in case of procurement of goods and services related to the Strategic Target Plan of the Turkish Armed Forces, and production, renovation, construction, main weapon and material systems and munition from domestic and abroad.

Şafak Herdem, Ezgi Ceren Aydoğmuş

HERDEM is an Istanbul based law firm that provides highest quality, partner led and timely responsive legal services to itsinternational corporate clients.

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