What will be the Impact of State of Emergency on the Turkish Public Procurement Market?

Turkey has been exposed to a fatal and terrible coup attempt on 15th of July, 2016. The Turkish people have opposed to this attempt fiercely and prevented the seizure of government by a junta within the Turkish Army. Just after this attempt, on July 20th,the Turkish Government declared a state of emergency (SoE) for 3 months in order to fight the FETO/PDY terrorist organization and root out those civil servants from the state who are allegedly linked to this structure. The SoE has been extended twice for 3 months, last one in January 2017.

The SoE now Turkey is in is characterized mainly by decree laws that included lists of thousands of people (nearly 95.000) who have been sacked from civil service due to allegations of links with terrorist organizations. In this process many innocent people also lost their civil service jobs with these allegations. Recently, the Turkish Government established a special commission charged with review of complaints from those who said they had been unjustly included in those purge lists.

The SoE decree laws of this period also included some clauses affecting the public procurement market in Turkey. The most notable of these clauses are amendments to the Article 11 of Public Procurement Law No. 4734 (PPL) by the Decree Laws No. 678, 680 and 684. This article is about those who are barred from public tenders. The final version of additions to this article is as follows:

- Those real and legal persons who have connections or contacts with terrorist organizations are barred from public tenders.

- The domestic persons who have such connections and contacts will be determined by the Directorate General of Security.

- The foreign persons who have such connections and contacts will be determined by the Undersecretariat of National Intelligence.

- The notifications of persons who are barred from public tenders will be made, by either the Directorate General of Security or the Undersecreteriat of National Intelligence, according to a decree of the Council of Ministers.

- Such persons will be excluded from the tender they have attended, but their bid bonds will not be liquefied.

- Those civil servants who are involved with determination and notification of such persons will be immune from administrative, legal, criminal and financial responsibilities. But, they will be prosecuted if they use such information illegally.

- The bar clause will not be applied to those legal entities whose management functions are transferred to the Savings Deposit Insurance Fund (a state agency) due to alleged links of their owners/managers with terrorist organizations.

The solid impact of these new clauses added to the PPL will be decrease in the number of real/legal persons who are entitled to submit bids to tenders within the scope of the PPL. How many tenderers will be affected by this clause is still uncertain. The Council of Ministers still did not publish a decree regulating the determination and notification of those tenderers who are allegedly linked to, have contacts or connections with terrorist organizations. In order to apply such a punitive clause in a justifiable way, the regulations should include solid, legal and unarbitrary criteria as to how a real or legal person is linked, connected to or have a contact with a terrorist organization. Otherwise, like many civil servants who suffered from arbitrary sacking from public service based on unjustifiable reasons, many businesses will be losing income and business opportunities within public tenders.


The second impact will be how competing tenderers within a tender will behave against each other. It is highly likely that if a tenderer understands that he can grab the tenderer from the economically most advantageous tenderer by alleging that it has links to or connections to a terrorist organization, he may submit petitions to contracting entities to have its competitor excluded from tender. Some case law is accumulating in this regard. For example, the decision of the Public Procurement Authority dated 18.01.2017 and no. 2017/UY.1-259 includes such a case. The second tenderer claimed that the most successful tenderer should be excluded from the tender due to this clause. The contracting entity asked about the validity of such claims to District Security Directorates and the economically most advantageous tenderer was excluded from the tender because he had bank accounts within a bank formally owned by the FETO/PDY group and worked with a regional affiliate of this group more than 6 years ago. The obvious fiscal impact in this case is a higher contract price. In order to avoid any abuses of this clause by competitor tenderers, those who allege that its competitor has such connections or contacts and should be excluded from the tender, should be kept responsible. If the competitor doesn’t have such connections or contacts, then the alleging party should pay price for stigmatizing the competitor and extending the time for settling the tender procedure and signing of the contract.

The third impact will be increased contract prices due to decrease in the number of real/legal persons who are entitled to submit tenders and decreased level of competition thereof. To what extent this clause will affect public fiscal management will be seen later. In cases such as written in the previous paragraph, the difference between the contract prices of the second one and the first one who is excluded will be the price of this clauses application.

The fourth impact will likely be additional list of real/legal persons who are barred from submitting tenders very similar to the blacklist that has been in use since the PPL entered into force in 2003. How such a list will emerge will be understood after the Council of Ministers publishes a decree regulating the determination and notification of those tenderers who are allegedly linked to, have contacts or connections with terrorist organizations.

The fifth impact will definitely be increase in disputes and court cases as real/legal persons who are barred from public tenders due to this clause will challenge decisions of the Directorate General of Security in the case of domestic tenderers and National Intelligence Agency in the case of foreign tenderers. If this clause applies to real/legal persons without legally justifiable reasons, then they will be likely overturned by courts. This may require reversal of decisions of contracting entities about who is awarded the specific contract, may be many years later.

I personally hope that this clause applies legally and justifiably in public procurement procedures in Turkey. Otherwise, the number of those who suffer from injustice will increase.

Umit ALSAC

Former Public Procurement Expert at the Public Procurement Authority of Turkey

Public Procurement, EKAP and E-Procurement Advisor
E-mail: ualsac@gmail.com