Can Foreign Companies Enter the Turkish Public Procurement Market? (1)

Turkey has a large public procurement market. According to the 2015 public procurement statistics of the Public Procurement Authority (PPA) the total size of public procurement market in Turkey was more than 140 billion TL (approximately 45 billion USD). The main regulatory piece for public procurement is the Public Procurement Law No. 4734 that entered into force on 1 January 2003. PPA is the regulatory and supervisory agency in charge of public procurement market. Even though some centralized agencies do exist, such as the State Supply Office which procures nearly 1 billion USD worth of commonly used goods such as stationary, furniture and computers, public procurement is decentralized among 12.200 procuring units. This covers central government, local government, state economic enterprises and public foundations.


Is Turkey’s public procurement market open to competition of foreign companies? We can say partially yes and partially no. First let me begin by the definition of what domestic means in terms of the PPL. The PPL states that all real persons who are citizens of Turkey and all legal persons (mainly companies) who were established according to the Turkish laws are domestic. So, all tenderers that cannot be defined as such are accepted as foreign for the purposes of the PPL.

The 63rd article of the PPL regulates the entry of foreign companies to the Turkish public procurement market. Below these regulations are summarized:

- If the estimated cost of a tender is below the thresholds mentioned in the 8th article of the PPL, the contracting entity may close the tender to foreign companies. The thresholds are; 1.073.525 TL-aprx. 300.000 USD for goods and services procurement of central government units, 1.789.213 TL-aprx. 500.000 USD for goods and services procurement of other government units and 39.362.920 TL -aprx. 11 million USD for works procurement of government units)

- In services and works tenders open to competition of foreign companies, price advantages up to 15% can be applied in favor of domestic companies.

- In goods procurement price advantages are not applied according to the nationality of tenderer. It is used according to the origin of the good proposed by the tenderer. Price advantage up to 15% may be applied in favor of tenderers (both domestic and foreign) who propose domestic goods. In certain categories of goods determined by the Ministry of Science, Industry and Technology price advantage clause has to be applied.

- If companies establish a joint venture to submit a tender, in order to be accepted as domestic, all partners has to be domestic. In other words, if a foreign company is part of a joint venture, regardless of the amount of its share, that joint venture shall be deemed as foreign.

Let me summarize what do these regulations mean for foreign companies?

- If the estimated cost of a tender is equal to or above thresholds, then the contracting entity has to open this tender to foreign companies. In such a case, the contracting entity has the discretion to apply price advantages up to 15% in favor of domestic tenderers.

- If the estimated cost of a tender is below the thresholds, then the contracting entity has the discretion to close the tender to foreign companies.

- These decisions as to whether accept foreign companies to the tender or not, are announced both in tender notices and tender documents.

In the next article I will delve a little more to statistical details to show the extent of Turkish public procurement markets openness to foreign competition.

Umit ALSAC
Public Procurement and E-procurement Consultant
E-mail: ualsac@gmail.com