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Strategic cooperation agreements are to achieve a competitive advantage by combining particular assets and capabilities. The most crucial aspect of strategic cooperation is that the firms involved preserve their legal and economic independence. In this respect, strategic cooperation differs from company merger and acquisition strategies.
Strategic cooperation frequently allows members to do considerably more than they could alone, from developing new goods and services to collaborating with governments across borders. Some of the numerous reasons for forming strategic cooperation are to achieve growth in existing markets, to reduce difficulties in entering new markets, to maintain the current situation in the sector or market, to strengthen by combining assets and capabilities, to increase the share values of the company, to prevent or protect against the competition, to acquire new capabilities and reduce risks against possible undesirable consequences. This type of cooperation is necessary and beneficial for both parties in today's more competitive environment.
The Turkish Ministry of National Defense (“MoND”) has been published the documents related to the Strategic Cooperation Agreements ("SCA") on the official website. In this context, it is specified that after the Minister of MoND approves the SCA are signed with public and private sector organizations and institutions to create domestic supplier resources for supplying raw materials, materials, spare parts, and systems and for rendering services related to them which are procured from foreign countries and are critical for production, maintenance, repair and modernization activities of military factories.
The Presentation of SCA shared by the MoND (“Presentation”) explains the procedure for the SCA process. The legal basis of SCA has been given as the Cabinet Decree dated 17 July 2017 and numbered 2017/10605 and MSY 310-12 Turkish Ministry of National Defense, Directorate General of Military Factories, and Directorate General of Naval Shipyards (“ASFAT”) Directive on Procurement of Goods and Services to be Made within the Scope of Exceptions (3. B) of the Public Procurement Law No. 4734 (“Presidential Decree”).
To begin with, the Presidential Decree states that it is intended to reduce foreign dependency in the formation of procurement strategies in procurement processes made within the scope of the Presidential Decree, as well as in the operation and maintenance of war weapons, vehicles, equipment, platforms, and systems in the Turkish Armed Forces inventory.
Within this framework, as per the Presentation, it has been specified that SCA activities shall be carried out according to the Flowchart of SCA shared by MoND (“Flowchart”). In addition, it was explained that the information in the "Raw Materials/Materials/Systems/ Rendering Services (Repair) List to be Localized" (“List”), which shall be published on the MoND website and updated if necessary, should be filled in by the Naval Shipyards and sent to the MoND Directorate General of Naval Shipyards to determine the critical raw materials/materials/systems that are planned to be localized within the scope of SCA.
Secondly, errors in the List's preparation are highlighted as surplus material, items within Turkey’s Naval Shipyards' production capacity, and materials currently manufactured by various manufacturers with domestic facilities. In the continuation of the explanations regarding the SCA process, it is stated that the candidate companies shall submit their application requests for the goods/services they are willing to produce to the General Directorate of Naval Shipyards or the relevant Naval Shipyards via the internet address of the administration or by hand/mail, in writing.
In addition, the Presentation indicates that the applications made to the Naval Shipyards shall be notified to the General Directorate of Naval Shipyards, the candidate company/companies shall be directed to the Naval Shipyard that notifies the material to be localized, a "Confidentiality Agreement" shall be signed between the candidate company and the Naval Shipyard, and the candidate company shall be informed about the material in the List.
Afterward, the sufficiency of the company for the goods/services supplied by the candidate company would be certified by examinations to be carried out at the company's facilities by the relevant Naval Shipyard. The relevant Naval Shipyard shall audit whether the candidate company is forbidden by Public Procurement Law No. 4734 before the examination, and if the candidate firm is prohibited, no examination shall be made.
The company would be examined in “Technical Management Responsibility / Naval Shipyard Expertise” on financial and technical competence, localization rate, technology transfer, R&D and product development, and other comparable concerns. The examination results, which are indicated in the “SCA Firm Competency Examination Report”, must be forwarded to the Directorate General of Naval Shipyards for issuance. If the SCA Firm Competence Examination Report is negative, the relevant Naval Shipyard notifies the candidate company in writing. Furthermore, the Directorate General of Naval Shipyards adds the candidate company to the “Company Archive of the Negative Candidacy”.
If the SCA Firm Competence Examination Report is positive and more than one candidate company aspires to the same material, the candidate companies shall be ranked according to the evaluation made by the relevant Naval Shipyard as a result of the SCA Firm Competence Examination Report, and the ranking result shall be submitted to the Directorate General of Naval Shipyards and the candidate company/ companies shall be notified. As a result of the ranking, the candidate firm/firms that are not in the top rank will be informed by the relevant Shipyard on which subjects they have deficiencies/inadequacies as a result of the SCA Firm Competence Examination Report.
Moreover, as a conclusion of the ranking, the candidate company/companies that are not in the top rank would be informed by the relevant Naval Shipyard on which subjects they have deficiencies/inadequacies as a result of the SCA Firm Competence Examination Report. However, as a result of the SCA Firm Competence Examination Report, the list of the goods/services offered by the candidate company, which is in the top place according to the ranking, and the company's SCA Firm Competence Examination Report are presented to the Minister of MoND together with the text of the "Minister of MoND's permission/approval".
If the Minister of MoND does not grant the necessary permission/approval to make the SCA with the candidate company, the result shall be notified to the candidate company in writing by the Directorate General of Naval Shipyards and the candidate company shall be added to the Company Archive of the Negative Candidacy. In addition, if another candidate company from the companies that entered the first examination list for the said goods/services makes an application, the process will be rerun by going back to the company examination stage.
Moreover, if the Minister of MoND grants the required permission/approval to the candidate company, and other candidate company/companies request the same goods/services, the request of the said candidate company/companies would be disregarded, and the situation would be notified to the candidate company/companies in writing. Following that, it shall be passed to the step of signing the SCA, which will be offered as a draft between the relevant Naval Shipyard and the candidate company and the content of which the parties will agree on.
In case the parties cannot agree on the SCA provisions, written information is given to the Directorate General of Naval Shipyards and the candidate company by the relevant Naval Shipyard. In addition, the candidate company is added to the Company Archive of the Negative Candidacy by the Directorate General of Naval Shipyards. If the parties agree on the SCA provisions, the candidate company can start prototype production activities within the framework of the permissions given by the Minister of MoND.
In addition, the test and inspection of the prototype to be delivered by the candidate company within the period specified in the SCA shall be done/to be made by the relevant Naval Shipyard, and a "Test/Inspection Decision Report" would be issued. If the result of this test/inspection is negative, prototype production activities shall continue until the expiry of the time given under the SCA. If the deadline given within the scope of SCA expires, an “Error Analysis Report” would be prepared by the candidate company and submitted to the relevant Naval Shipyard. The relevant Naval Shipyard shall evaluate its analysis results and the Error Analysis Report. If the Naval Shipyard decides to produce prototypes again as a result of the evaluation, the SCA will be extended for the specified period. If the Naval Shipyard decides not to produce prototypes as a result of the evaluation, the SCA with the candidate company shall be canceled and the candidate company would be informed along with the necessary documents. In addition, the candidate company is added to the Company Archive of the Negative Candidacy by the Directorate General of Naval Shipyards.
In case the test/inspection result is positive after the Test/Inspection Decision Report is sent to the Directorate General of Naval Shipyards, the candidate company shall be determined as a "Single Source Supplier" for the period specified in the SCA and added to the "Single Source Supplier Archive" by Directorate General of Naval Shipyards.
Finally, it has been stated in the Presentation, that if any step in the SCA Workflow for the candidate company has resulted in a negative result, the candidate company can be re-evaluated if it undertakes in writing that it has corrected the said deficiencies/non-conformities/inadequacies for the related raw material/material/system/service in the following period.
Şafak Herdem, Esra Temur
