Turkey: AKP gov't mulls over further controversial changes to public procurement law

After changing Public Procurement Law 32 times since 2002, the ruling Justice and Development Party (AK Party) government has prepared 10 draft bills for amendments to be made to the Public Procurement General Communique and related regulations, the Cumhuriyet daily reported on Monday.
 
According to the daily, the draft bills were sent to civil institutions for review. In its written response to the Public Procurement Authority (KİK), the Turkish Union of Engineers and Architects’ Chambers (TMMOB) said, “No matter what we say, the opinions we send will be declined by your institution on the grounds that they are against the law.”
 
TMMOB also pointed out that with the proposed change in the regulations governing construction projects, engineers and architects would be left outside of public tenders on construction.
 
The Public Procurement Law, which has been changed several times since the AK Party first came to power in 2002, was last changed with an omnibus bill in January. With the bill, the cost of challenging the results of a public tender more than doubled, now ranging from TL 3,000 to TL 12,000.
 
Meanwhile, complaints over the results of public tenders fell by almost half between March 24 and April 24 compared to the same period in the previous year after the amendments came into effect in March.
 
The total number of complaints filed between March 24 and April 24 was 269, while it was 453 for the same period last year. The increased fees for filing complaints over the results of public tenders had been criticized by companies as it made it more difficult for firms to claim their rights. Representatives of the business sector expressed their dissatisfaction with the new regulation on the KİK website.

KİK President Mahmut Gürses had explained that the reason for the increase in application costs for filing complaints was to prevent unnecessary objections that delay procurement and extend the time period for public tenders.
 
The amendment  passed in January also states that the purchase of goods and services by Turkey’s state-run Anadolu news agency and State Economic Enterprises (KİT) as well as the construction of buildings by energy institutions will be exempted from supervision by KİK.

As of March 22, new fees for filing an objection were set at TL 3,000 for tenders up to TL 500,000, TL 6,000 for tenders between TL 500,000 and TL 2 million, TL 9,000 for tenders between TL 2 million and TL 15 million and TL 12,000 for tenders worth more than TL 15 million. Prior to the amendment, the fees for filing an objection to public tenders ranged between TL 1,336 and TL 4,000.
 
Lawyer İlyas Kılıç, an expert on public procurement, said the new regulation with higher objection fees penalizes firms that lose tenders and want to file a complaint. Kılıç emphasized that the state calculates firms’ profits at 5 percent in public tenders, and that in small-scale public tenders, the cost of filing a complaint exceeds the companies’ profit margin due to the high fees.
 
KİK received over 5,000 complaints in 2013 concerning public tenders. According to a report on complaints released earlier in February, KİK rejected about 3,000 of these complaints. It ruled in favor of the complainant in over 1,500 complaints. Furthermore, 308 tenders were canceled. Of the tenders that went ahead, 40 percent involved the purchase of goods, 36 percent involved the procurement of services and 22 percent involved construction and maintenance.
 
The public procurement report also indicated that 12,960 public agencies and institutions held a total of 157,000 purchase tenders in 2013 and that the total amount spent on these tenders was TL 105.5 billion. This figure was TL 94.4 billion in 2012.
 
Atilla İnan, an academic at Başkent University’s Faculty of Law, stressed that firms cannot apply to administrative courts before filing a complaint with KİK and the higher fees are against the Constitution in terms of claiming one’s rights.
 
With a number of legal overhauls, public procurement has become the most problematic area in Turkey’s public sector as far as transparency is concerned. According to a 2013 report “Overview of Corruption in Turkey” prepared by the Turkey chapter of Transparency International (TI-Turkey or Şeffaflık Derneği), the accountability of the government continues to be low and problems with public procurement have increased in the last decade.
 
The same report said the number of “exceptional procurements” (closed tenders) made by public offices has increased by 24 percent since 2001, which is much higher than the international average.
 
Likewise, an earlier report from Berlin-based Transparency International said that on a scale of one to 100, where one represents “highly corrupt,” Turkey’s overall score in 2013 was 50.

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