Advises for Foreign Companies Who are Interested in the Turkish Public Procurement Market

In this article, as a follow up to my previous two articles, I want to elaborate on some barriers deterring involvement of foreign companies in the Turkish public procurement market. There are some major barriers that deter involvement of foreign companies in all public procurement markets. This is also the case for the Turkish public procurement market. But, they are not insurmountable. Let’s elaborate on some of them in the context of the Turkish public procurement market.

Language Barrier:

The language barrier is a serious deterrent for foreign companies. Tender notices and tender documents within the scope of the Public Procurement Law (PPL) are nearly always published in Turkish. Even if there are tender notices and tender documents published also in other languages (primarily English and generally in very big size projects such as subway construction), Turkish versions of these documents have superiority in terms of understanding and interpreting clauses written in tender documents. Tender notices and tender documents are published in the Public Procurement Bulletin (PPB) and the Electronic Public Procurement Platform (EKAP) and can be accessed free of charge. Its address is https://ekap.kik.gov.tr/EKAP Neither the PPB nor EKAP have versions other than Turkish. By the way, in negotiated procedure without tender notice, neither a notice nor tender documents are published. So, in such cases it is practically impossible for foreign companies to be aware of such opportunities unless they are invited to tender by the contracting entity.

This barrier affects also throughout the tender cycle. Nearly all contracting entities require preparation and submission of tender letter and other supporting documents in Turkish. If there are any documents such as catalogs originally in a foreign language, they have to be translated to Turkish through authorized translators and those translations have to be included in the tender package.

In order to overcome this barrier foreign companies should either hire personnel who know Turkish and can follow procurement opportunities, or work with a Turkey based public procurement consultant to follow procurement opportunities in Turkey.

Legal Barriers:

As discussed in previous articles, in tenders whose estimated costs are below the thresholds, contracting entities can close the tender to the participation of foreign companies. If estimated cost is above thresholds, then it has to be open to foreign competition but contracting entities can apply price advantage up to 15% in favor of domestic tenderers. These legal provisions written in the PPL are all deterrents to the entry of foreign companies. However, there are ways to overcome these barriers. Foreign companies can establish subsidiaries within Turkey subject to Turkish trade laws. Many medical device and IT companies such as Siemens, General Electric, Johnson&Johnson, Fujitsu and Microsoft attend tenders through their Turkish subsidiaries. They are deemed as domestic tenderers in such cases. Pros and cons of this approach should be evaluated with the extent of public procurement opportunities the foreign company is interested in. If there is a big public procurement market opportunity, establishing a subsidiary is worth the effort.

Another face of legal barriers is the complexity of the Turkish PPL and regulations. In addition to legal pieces, there are so many cases that are brought to the PPA and administrative courts that should be kept in mind both during preparation of tenders and follow up of the tender evaluation phase. This barrier again can be overcome with the help of a Turkey based public procurement consultant expert in public procurement law and regulations.

Procedural Barriers:

What do I mean by procedural barriers? Mainly, procedural barriers are associated with problems that can be countered throughout each tender procedure. Actually, those barriers are problems for domestic tenderers as well. For example, for each tender every tenderer has to submit a number of certificates and documents. They vary from signature circulars to balance sheets, quality standard documents to registry documents of machinery and equipment, business experience certificates to approvals that has to be taken from competent authorities to operate in the sector of the related tender. Collecting all these paperwork is a messy process even for domestic tenderers. For foreign tenderers, this load is multiplied. Because, if a foreign company prepares required documents for a specific tender, it has to acquire them from its original country, has to get them translated by an authorized translator and approved by a notary, most documents have to be approved by Turkish Consulates or carry apostille seals. It is very difficult to comply with all these requirements of form without any error. This fact also increases tender preparation costs for foreign companies which is a disadvantage.

Another issue is how to follow the tender procedure. It is many times imperative to be in contact with the contracting entity and be present on the tender opening date and time. For example, you get informed about whether your competitors submitted all required documents and learn about tender prices on the tender opening date and time. With this information you can challenge the decision of the contracting entitiy if the contract is awarded to a company that lacks a particular certificate. Sometimes, tender evaluation process can take months, making it practically impossible to follow up the tender procedure in interaction with the contracting entity. In addition to this normal tender process, sometimes decisions of contracting entities are unlawful and need to be challenged both administratively and legally. All this kind of procedural barriers deter the entry of foreign companies into Turkish public procurement market. In order to overcome this barrier, it is essential either to establish a subsidiary in Turkey and attend tenders through the subsidiary, or form joint ventures with domestic companies or get support from a domestic public procurement consultant throughout each tender procedure.

Logistic Barriers:

Actually logistic barriers refer to problems that can arise during the contract execution phase. If a foreign company is awarded a goods contract whose subjects are imported machinery and equipment, then customs clearance, delivery of goods on time all need to be considered. Generally, there are big fines for late delivery of contracted goods and services. In order to overcome this barrier, foreign companies need to read carefully what delivery conditions are embedded in the contract and how much the fines would be in delays.

Those barriers written above are primary ones that need to be considered by foreign companies who are interested in the Turkish public procurement market. In order to overcome these barriers, foreign companies should consider setting up subsidiaries in Turkey, forming up joint ventures with Turkish firms or work with public procurement professionals who can provide them sound assistance in each tender procedure. Before getting involved with a specific tender, they should carefully review tender documents and try to understand whether the opportunity is big enough to compensate sometimes big costs of preparation and submission of a tender.

Umit ALSAC

Public Procurement Consultant

E-mail: ualsac@gmail.com