Aerospace &Defense: Rules for Supply of Goods and Services by ASFAT Introduced

On August 24, 2021, the Presidential Decree Determining the Procedures and Principles for the Procurement of Goods and Services to be Made within the Scope (b) of Article 3 of the Public Procurement Law No. 4734 (“Presidential Decree”) by the Turkish Ministry of National Defense, General Directorate of Military Factories and General Directorate of Shipyards (“ASFAT”) was published in the Official Gazette and entered into force after being published.

Provisions in the Presidential Decree, the ASFAT connected by the Turkish Ministry of National Defense, security or intelligence is associated with the fields, or in the privacy of that should be carried on per the legislation or decision by the Turkish Ministry of National Defense special security measures must be taken during the execution of the contract or in cases that require the protection of the essential interests of the security of the state-related, stated that apply to the procurement of goods and services.

To begin with, in the Presidential Decree, the principles to be followed in the procurement procedures to be made within the scope of this Presidential Decree are stated as  and  that the operations to be carried out to keep the warfare, weapons, vehicles, equipment, platforms, and systems in the inventory of the Turkish Armed Forces or to be included in the inventory should not be interrupted due to the procurement processes, and it was aimed to reduce the dependence on foreign countries in the operation and maintenance of the ones in this inventory in the formation of the supply strategy.

The Presidential Decree further said that bids cannot be issued for any work for which the source is not planned, for purchases that do not have allowances, or for purchases that are financed with state/company loans. In addition, it was explained that it is essential to purchasing goods and services included in the list approved by the President per Law No. 3833 on Granting the Authorization to Make Long-Term Commitments to Realize the Strategic Target Plan of the Turkish Armed Forces, considering the continuity of the needs.

According to the Presidential Decree, the procurement of products and services related to some military factory and shipyard operations is related to the domains of defense, security, or intelligence, or should be done in secret. Furthermore, it has been explained that purchasing from bidders who have achieved qualifications in terms of technical competence, quality, delivery performance, and after-sales services is critical, and that bidding can be used as the primary method of procurement among certain bidders, and that potential bidders who request supplier development programs can begin.

Within the scope of the Presidential Decree, regulations regarding bid procedures and direct procurement were made. In this context, explanations regarding the bid procedure, competitive negotiation procedure, bargaining procedure, and open bid procedure were made among certain bidders under the bid procedures to be applied. In addition, detailed regulations regarding the purchases that can be made through direct procurement are also included.

According to the Presidential Decree, the authority has the authority to conduct market research and/or hire consultants to determine specific issues in the procurement of goods and services related to the duties of military factories and shipyards and to use the results in procurement planning. It has been regulated that it can request information from private sector organizations, publish information request documents, and organize meetings and/or conferences.

 the The authority may enter into a strategic cooperation agreement with the relevant public or private sector institutions and organizations with the approval of the Minister for establishment of domestic supply sources of raw materials, materials, spare parts and systems and/or related services, which are critical in the production, maintenance, repair, modernization, and marine vehicles/shipbuilding activities of military factories and shipyards, and procured from abroad, It has been regulated that . In addition to this, it is also explained that the criteria to be applied in the selection of the institutions and organizations with which a strategic cooperation agreement will be made will be specified in the document. It has been stated that if these strategic cooperation activities are successful, the relevant institutions and organizations will be accepted as the sole source for the supply of the said strategic materials and services for a maximum of ten years.

It has been reported that the list of materials identified as strategic raw materials and intermediates will be published by the Turkish Ministry of National Defense and updated if necessary. In addition, it has been regulated that approved supplier lists can be created for the bidder candidates who have been successful in supplier development programs, and the issues regarding the creation and updating of these approved supplier lists and/or the removal of bidders from the said lists shall be specified by the Turkish Ministry of National Defense.

It is also said that the procurement commission, consisting of at least three and odd people, including one of the chairmen, provided that at least one of them is an expert on the subject of procurement, will be appointed by the bid officer, including the substitute members.

Additionally, in the decision of the president, it is stated that bidders who will participate in the purchase may request information and documents related to the determination of their economic and financial competence, as well as their professional and technical competence, provided that they are arranged in the purchase document. However, further information and documents may be requested, for qualification assessment purposes. The authority will determine which of the requested documents can be submitted as a commitment, but if the documents confirming the situation committed by the bidder remaining on the purchase are not provided to the authority before the signing of the contract, those, in this case, will be excluded from the purchase, and if they were received, their temporary collateral will be recorded as income.

In the Presidential Decree, it is also explained what should be done when the bidders who participate in the procurement despite these prohibitions participate in the procurement.

It has been explained that the procurement procedure determined by the bid authorities should be used in the procurements to be made according to this Presidential Decree and that it should be specified in the procurement approval. In the said approval, the purchase commission, project number, allocated/programmed appropriation amount should also be determined.

The Presidential Decree also stipulates that the administrative and technical specifications describing all aspects of the works subject to procurement, as well as the document replacing the technical specification and/or the procurement base samples, must be prepared by the authority, but there is an exception to this situation.

Moreover, it has been explained that whether preliminary announcements and/or announcements will be made in purchases, if there will be an announcement, the duration and where the announcement will be made should be specified in the purchase approval document and that the announcements should be made on the websites of the relevant General Directorate.

However, it has been stated that the procurement document will be given to the authorized representatives of the bidders, on the condition that the receipt showing that the document price has been deposited is delivered, in return for a signature, and that the cost of the procurement document will be determined in the procurement approval document.

According to the Presidential Decree, it has been regulated that it is essential not to make any changes in the procurement document after the announcement/invitation is made and to receive offers in Turkish Lira for purchases. It has been regulated that if the currency to be taken as the basis for purchases is the currency of a foreign country, the difference will not be calculated.

In addition, it has been regulated that the issues regarding whether temporary and performance bonds will be taken in purchases, the validity period of the bids, the receipt and opening of bids, whether the extremely low bid will be questioned or not will be made as specified in the procurement document.

The steps to be taken by the procurement commission during the evaluation of the bids, decision making, approval, and notification of the procurement are also mentioned in the Presidential Decree.

It has been stated that in the purchases to be made within the scope of this Presidential Decree, the contract will be decided by the contracting officer, the contracts to be made as a result of the purchases, and the relevant additional contracts, if any, are not notarized/registered unless otherwise stated in the procurement document, and the activities after the signing of the contract will be carried out within the provisions of the contract.

If a work increase is obligatory due to unforeseen circumstances in the goods and service procurement contracts, the work subject to the increase can be made by the same contractor within the framework of the provisions of the contract and procurement document, up to twenty percent of the contract price, within the scope of the contract price, up to twenty percent of the contract price. If it is understood that the work cannot be completed within the conditions mentioned here, the account is liquidated according to the general provisions without any increase. In the works that are understood to be completed at less than eighty percent of the contract price, the contractor has to complete the work. In this case, eighty percent of the contract price and five percent of the difference in price between the contract prices and the amount of the work performed are paid to the contractor in return for the real expenses and the profit of the contractor, over the prices on the provisional acceptance date.

Further, situations that can be accepted as force majeure are regulated. However, conditions have been introduced for these situations to be accepted as force majeure. It has been stipulated that if the contract is terminated due to force majeure, the account will be liquidated following the general provisions and the performance bond and, if any, additional guarantees will be returned. The failure of the authority to fulfill its obligations regarding the performance of the contract within the stipulated periods or the subsequent delays that are not the responsibility of the contractor due to reasons arising from the authority without the fault of the contractor, if this situation prevents the fulfillment of the commitment and if the contractor is not able to remove this obstacle, it may cause obstacles to the work. and depending on the nature of the work to be done, the time for some or all the work is extended at least until the extended time.

Finally, before the Presidential Decree's effective date, it has been announced that the works for which purchase had been announced or announced in writing would be completed under the terms of the legislation to which they were subject.

Şafak Herdem, Esra Temur