Overview of Turkey's 2017 Semiannual Public Procurement Statistics

The semiannual public procurement statistics were published by the Turkish PPA recently. The gross public procurement expenditures increased from 88,3 billion TL in the first half of 2016 to 112,8 billion TL in the first half of 2017. An enormous increase by more than 25%. This increase can be attributed partly to the election-like constitutional referandum campaign and enormous increase in foreign exchange rates. Considering the big share of imports in public procurement from petroleum products to medical devices and construction materials, the impact of exchange rates can not be ignored. In fact, the USD value of public procurement did not change much in the same period: just from 30.2 billion USD to 31 billion USD. Review the graph below for details.

In the graph below, you can see the allocation of public procurement in the first half of 2017 according to rules applied. It shows that 90% of the total value of public procurement was spent according to the Public Procurement Law (PPL) No. 4734. The share of procurement by exemptions was just 7%. It can be stated that contracting entities are not so much inclined to use procedures other than the PPL.

In the graph below, you can see the allocation of public procurement under the Public Procurement Law No.4734 according to procurement types in the first half of 2017. Public works contracts' share was the biggest with 53% followed by services with 30%.  Again, we can think that central and local governments in Turkey supported  economic growth in this period with infrastructure and construction spending. However, how this phenomenon affected public finances abd debt should also be considered.

In the graph below, you can see the allocation of public procurement in Turkey in the first half of 2017 according to the procedures. Notice how the share of negotiated procedures increased from around 8% to 17%.  The share of open procedures decreased steeply from 88% to 74%. This means extra burden for public finances. Because, the contract value/estimated cost percentage is 82% in open procedures, but 86% in negotiated procedures. 

In the graph below, you can see the allocation of public procurement by contracting entity groups in the first half of 2017. The central government leads with 13,7 billion USD and 46% share. Local governments follow with 11,6 billion USD and 38% share. Both the central government and local governments increased their shares by 2%, whereas the share of other contracting entities (mainly state and municipal economic enterprises) decreased by 4% in this period compared to 2016 year-end statistics. This may again be a reflection of election-like constitutional referandum of April 2017 where central government and municipalities played active roles.

In the graph below, you can see the contract value/estimated cost ratio of tenders conducted according to the Public Procurement Law No. 4734 in Turkey. Probably it is the first time that the ratio is highest for restricted procedures with 88%, slightly higher than negotiated procedures which has 86%. The decreasing trend of this ratio continues for negotiated procedures (91% for 2015, 88% for 2016 and 86% for the first half of 2017). This means either better competition in negotiated procedures or better negotiation with contractors. On the other hand the increasing trend continues for open procedures  (79% for 2015, 80% for 2016 and 82% for the first half of 2017)

In the graph below you can see the contract value/estimated cost ratio of tenders conducted under the PPL No.4734 in Turkey in the first half of 2017 according to types. The ratio is the highest for  services tenders with 90% and lowest for consultancy services tenders with 76%. This ratio increased by 3% for goods contracts and 2% for construction tenders compared to 2016 year end. Worrisome for public finances considering these two constitute nearly 70% of all procurement expenditures.

Umit ALSAC

Public Procurement, Public Procurement Contracts and E-Procurement Consultant

Former Public Procurement Expert at the Turkish Public Procurement Authority

For your inquiries about consultancy and training on the Turkish Public Procurement Market contact me at:

ualsac@gmail.com