Turkey: Turkey's First Civil Offset Legislation Is Now In English

REGULATION ON PROCEDURES AND PRINCIPLES OF INDUSTRIAL COOPERATION
PROGRAMS FOR PROCUREMENT OF GOODS AND SERVICES WITHIN THE SCOPE
OF ARTICLE 3 (U) OF THE LAW NO 4734

SECTION ONE

Objective, Scope, Legal Basis and Definitions

Objective and Scope

Article 1- (1) The objective of this Regulation is to set forth the principles and procedures related to procurement of goods and services within the scope of article 3 (U) of the Public Procurement Law dated 4/1/2002 and numbered 4734.

(2) This Regulation covers application of Industrial Cooperation Program for procurement of goods and services which costs at least USD 10 million to ensure innovation, local content and technology transfer.

Legal Basis

Article 2- This Regulation is issued as per the article 3 (u) and the provisional article 4 of the Law No 4734.

Definitions

Article 3- For the purposes of enforcement of this Regulation, the following terms shall bear the following meanings:

a) Candidate: Any real or legal person or joint ventures which established by those applying for pre-qualification in the tender for procurement of goods or services which puts under Industrial Cooperation Program obligations

b) Sub- contractor: Real or legal person or joint ventures which established by those who performs contract work on behalf of the contractor.

c) Main Procurement Contract: The Contract setting out the issues needed for the procurement of goods or services, including Industrial Cooperation Program obligations

ç) R & D: Research and development Activities as defined under article 2 paragraph (a) of the Law on the Promotion of Research and Development activities dated 02.28.2008, numbered 5746.

d) Department: A department of the authorities whom decided to purchase in scope of this Regulation or unit of local authorities, companies owned by municipalities and its affiliates which assigned in accordance with the relevant legislation to procure in scope of this Regulation.

e) General Directorate/ Head of Department: General Directorate or the head of department in administration unit in charge of the general directorate or the head of department assigned to procure in scope of this Regulation

f) Service: Services such of maintenance and repair, modernization, research and development, communication, consultancy, insurance, training, services for information systms, software systems, leasing of movable and immovable property and rights and other similar services to ensure innovation, local content and / or technology transfer.

g) Authority: Authorities specified in Article 2 of the Law No 4734 and decided to procure under this Regulation.

ğ) Tender: The tender to be made in scope of this Regulation for procurement of goods and services and subject to Industrial Cooperation Program.

h) Tender documents: The documents and attachments containing technical, administrative, financial and legal principles related to the procurement of goods and services to be made in scope of the project.

ı) Contracting Authority: Requiring Authority or the unit making the tender on behalf of the Requiring Authority of the relevant Authority.

i) The Contracting Officer: The senior manager or duly delegated officials of the Contracting Authority authorized and responsible for making tender and spending,

j) Requiring Authority: The unit of the relevant authority that require procurement of goods or services,

k) Tenderers: Any real or legal person bidding in the tender of procurement of goods or services which puts under Industrial Cooperation Program obligations,

l) SME: Small and medium-sized enterprises as defined in article 4 of the paragraph (b) of the Regulation on Description, Qualification and Classification of the Small and Medium Sized Enterprises which promulgated by the Cabinet Degree dated 19/10/2005, numbered 2005/9617,

m) Crediting: The reduction of the achieved activities in scope of Industrial Cooperation Program Contract from the total obligations contained in that Contract,

n) Criteria Tree: The schedule which includes criterion, multipliers and evaluation methods to be considered for the tender evaluation,

o) Cluster Initiative: legal person actually and legally representing the cluster collaboration which is formed by firms, institutions and private law legal entities having presence in a certain location and operating in sectors or issues related to each other,

ö) Goods: All kind of necessaries subject to procurement to ensure innovation, local content and / or technology transfer and immovable and movable properties and rights,

p) Joint venture: Business partnership or consortiums which is formed by an agreement between real or legal persons aiming to participate in the tender,

r) Pre- approval: Written approval to be obtained by the Contractor before starting transaction in order those transactions under proposed Industrial Cooperation Program is accepted and credited,

s) Program Period: The period which is taken into consideration for crediting the obligations of the industrial cooperation program and scheduled by the Department within program year starting from the date of signing the Industrial Cooperation Program Contract.

ş) Program Year: Each 12 (twelve) month period, taken into consideration for crediting the obligations, starting as of the date of signing the Industrial Cooperation Program Contract and within Industrial Cooperation Program performance period,

t) Project: Course of transactions to be carried out by the Contracting Authority and the Department in scope of Main Procurement and the Industrial Cooperation Program to be imitated following the approval of the written request of the Contracting Authority by the Industrial Development Commission,

u) Industrial Cooperation Program ("ICP"): Transactions and the activities to be carried out within the scope of the Project to ensure innovation, local content and technology transfer and under ICP categories of this Regulation,

ü) ICP Plan: The detailed plan prepared by the Contractor as an addendum to ICP Contract which describes the obligations of the Contractor which are related to ICP categories under the ICP Contract on the basis of program year and periods

v) ICP Contract: The Contract signed with the Contractor in relation to Main Procurement Contract that defines the terms and conditions for fulfillment of ICP obligations by the Contractor.

y) Technology Transfer: Transfer of technology, information, design, methodology, production methods and systems between the parties in order to generate or develop new products, services, processes or applications,

z) Tender Security: The values accepted as tender security as per the article 34 of the Law No: 4734

aa) Investment project: Goods and services procurement project prepared by the relevant authority in accordance with the Public Financial Management and Control Law dated 10/12/2003 numbered 5018, Investment Program Preparation Guide and as per the provisions of relevant legislation to be included in the annual Investment Program,

bb) Innovation: processes and the process outcomes generated through a new product or good or services, application, method, business model idea to be put in existing markets successfully to satisfy the social and economic need or to create new markets

cc) Local producer or service provider: Turkish citizen producers/ service providers and producers/service providers of legal entities established under the laws of the Republic of Turkey or legal person producers/service providers owned by Turkish citizens by holding the majority in capital.

çç) Local content: The provision of the local content rate that is committed under the project.

dd) Domestic added value (DAV): In the invoice of a product and/or a service, the aggregate of the costs of all raw material, supplies, product, service, manpower, etc. obtained from local market, overhead costs excluding administrative expenses (travel, accommodation, food, postal services, etc.) and the profits made by local producers/service providers and relevant taxes that may occur during the production of the mentioned product and/or service,

ee) Contractor: Real or legal person or the joint venture established by those, who is responsible for Main Procurement and ICP obligations and signed contracts to perform the subject of the tender with the Contracting Authority and the Department in charge of the General Directorate/Head of Department.

SECTION TWO

General and Basic Principles

General Principles

Article 4- (1) Regarding the projects under this Regulation, the Contractors should enter the Main Procurement Contract with the Contracting Authority and referring to the this Contract to sign ICP Contract with the General Directorate/Head of Department that the Department is attached

(2) The authorities that make decisions to procure goods and services under this Regulation shall set up their own organizational structure, make regulations, prepare tender and evaluation documents to ensure the implementation of ICP in accordance with the provisions of this Regulation.

(3) The minimum ICP commitment ratio is determined by the Department and specified in tender document. In the determination ICP commitment ratio, industrial technology level of the good or service to be procured shall be taken into consideration.

(4) In case of the Main Procurement Contract value is increased or decreased limited to maximum 20% for reasons defined in the Contract, the value of the total ICP obligation of the Contractor shall also increase or decrease proportionally.

(5) ICP activities that are accomplished within the scope of a tender by the Contractor shall not be counted towards ICP obligations defined in other tenders under this Regulation.

(6) The Contractor shall not impose any financial burden on relevant authority, while performing its ICP obligation.

Basic Principles

Article 5- (1) all projects under this Regulation shall be based on the principals of efficiency and economically most advantageousness. Economically most advantageousness in project procurement is not provided solely on the basis of lowest price; it is determined by taking into account other non-price factors such as operation and maintenance costs, efficiency, quality, technical merit, life cycle and ICP obligation

(2) In tenders to be conducted in accordance with this Regulation, it is essential to ensure transparency, competition, equal treatment, reliability, confidentiality, public supervision, fulfillment of needs appropriately and in a timely manner, and efficient use of resources.

(3) Unless there is an acceptable natural connection between them procurement of goods and services shall not be consolidated in the same procurement.

(4) Procurement of goods or services shall not be divided into lots with the intention of avoiding threshold values defined in article 1 paragraph two.

(5) The procurement proceedings shall not be initiated unless there is a budget allocation.

(6) In order to conduct a procurement that covers a period exceeding one year, programming is compulsory to ensure that there is an appropriation budget on a yearly basis according to the time period of the work. The appropriation contemplated for the first year shall not be less than 10 % of the project cost, and the appropriation portions which are initially put in the program for the coming years shall not be decreased in the years to follow.

(7) In the calculation of the cost of procurement goods or services, the buying rate of exchange set by the Central Bank of the Republic of Turkey on the date of calculation of the costs shall be considered.

SECTION THREE

Notification of Requirements and Commencement of Project

Establishment of Industrial Development Commission and Rules of Procedures

Article 6- (1) The Industrial Development Commission may be established in local authorities, affiliates and the companies owned by municipality accordance with the relevant legislation. Authorities who decided to make purchase under this Regulation shall establish Industrial Development Commission in their organizations providing the approval of the relevant Ministry

(2) The Industrial Development Commission is chaired by the head of the relevant authority and comprised of at least five members and in odd numbers, including the senior competent administrative, technical, financial and legal executives together with substitute. The Commission's duty term is two years. New members or retiring members shall be reassigned for the members whom duty term is expired. In case of expiration of duty term of a member, new members or the members expired their term shall be assigned/re-assigned. In case of replacement in two years period, new member shall complete the term of the members they replace.

(3) The Industrial Development Commission shall convene with no absentees and the decisions shall be taken by majority voting.

Activities of Department

Article 7- (1) The Departments of the relevant authorities to procure under this Regulation may be assigned to execute the activities mentioned in this article.

(2) Local authorities, companies owned by municipalities and affiliated institutions are entitled to assign a unit to conduct ICP activities in accordance with the relevant legislation.

(3) Activities to be conducted by the Department are as follows;

a) To conduct secretarial works of the Industrial Development Commission.

b) To conduct ICP activities within the scope of projects for purchase of goods and services

c) To make the lists of requirements envisaged for purchases of goods or services under ICP

ç) To evaluate the requirement of goods or services of the separate Requiring Authority of the relevant authority and to make lists of requirements if procurement under ICP is deemed necessary

d) To keep the inventory list and to make the technology analysis of these goods or services.

e) To submit the ICP Contract to be made with the appropriate Contractor for purchase of goods or services under ICP to the General Directorate/Head of Department related to the Contract for approval

f) To monitor and to make the audit of ICP obligations, to examine the reports submitted by the Contractor.

g) To monitor the adequacy of goods or services to be procured the technology transferred and the local producers/service providers designated by the Contractor, to credit and to apply escalation if required,

ğ) To investigate and to develop the capabilities of local producers/service providers

h) Preparation of industrial database of relevant authorities.

ı) Pursuance, coordination and guidance of activities of relevant authorities such as innovation, local content, technology transfer, technology management having the aim of investment and cooperation

i) To express opinions on incentives and supports to be provided by public establishments and institutions as per the requirements of the respective sectors.

j) To cooperate with relevant institutions/organizations and industry regarding ICP implementations, to exchange of information

k) To ensure the use of technological developments in ICP implementations, to contribute to export growth.

l) To investigate local and foreign investment opportunities aiming the goods or services deemed appropriate to be brought in country by ICP implementations.

m) To appoint member from Project Group to Tender Evaluation Commission providing the approval of affiliated General Directorate/Head of Department.

n) To prepare and to update activity reports, program, plan, strategy documents on ICP policies aiming to develop the industrial sectors related to the fields in responsibility

o) To establish task and scientific committees and to conduct secretarial works for issues falling into the responsibility

ö) To organize, to pursue and to ensure participation to national and international meetings, events and training activities,

Notification of Requirements and Fund Allocation

Article 8- (1) Requirement Authorities shall send the list of requirements of goods and services to be procured following year that costs at least USD 10 million to the General Directorate/ Head of Department which the Department is attached until the end of January each year.

(2) The list of requirements of goods and services that deemed appropriate to be procured under ICP providing those include innovation, local content and / or technology transfer and the documents mentioned in the third paragraph of this article shall be submitted for approval to the Industrial Development Commission by the Department through the General Directorate/ Head of Department which the Department is attached until end of February.

(3) The information such as the justifications to purchase goods and services on the list, existence and non existence status of the local production and technology, quantities for those imported, strategic situation of the goods and services technologies, critic technologies to be attained should be specified in Appendices to the list of requirements that shall be prepared by Requiring Authority and the Department.

(4) As a result of the evaluation of the list by the end of March by the Industrial Development Commission for the requirements deemed appropriate to make purchases under this Regulation, the investment project proposal containing the preliminary information about ICP and the detailed feasibility report annexed to the investment project proposal shall be prepared by Requiring Authority and Department.

(5) The investment project tender shall be submitted to the Ministry of Development by the Requiring Authority in accordance with the budget calendar through the Directorate of Strategy Development of the relevant authority. Projects to be included to Investment Program shall be enumerated under separate project numbers in Investment Programs.

(6) The contract price of the goods or services by the authorities shall be met from the budget allocated for the project following to the acceptance to include the project to annual Investment Program and the publication in the Official Gazette.

(7) For projects to be funded by relevant authority's circulating capital, the contract price of the goods and services shall be met from the budget allocated to the project following to the assessment of requirements list by the Industrial Development Commission and upon to approval for execution of the projects under this Regulation.

Commencement of Project

Article 9- (1) Budget allocated projects shall commence by approval of the written request of the Contracting Authority by the Industrial Development Commission.

Establishment of Main Procurement and Project Groups

Article 10- (1) Following to the commencement of the project, Main Procurement Group shall be established in the Contracting Authority to execute Main Procurement process of the project.

(2) The Main Procurement Group, by approval of the Contracting Authority; is comprised of at least five members including one acting as chairman and together with substitutes. At least three of them should be experts on the subject matter of that, one of them is responsible for accounting and financial affairs; one of them is responsible for purchasing unit. The resolutions and minutes of the Main Procurement Group shall be signed by the chairman and the members stating name, surname and titles.

(3) Following to the commencement of the project, Project Group shall be established in the Department in order to carry out ICP related activities of the project.

(4) The Project Group, by approval of the General Directorate/Head of Department which the Department is attached; is comprised of at least five members including a member acting as chairman and together with substitutes. At least three of them should be senior and experienced on the ICP management, expert in technical issues; one each of them is responsible for financial and legal affairs. The resolutions and minutes of the Project Group shall be signed by the chairman and the members stating name, surname and titles.

(5) The duty term of the Main Procurement Group expires by fulfillment of the all Main Procurement obligations by the Contractor; the duty term of the Project Group expires by fulfillment of all ICP obligations.

(6) In case of absence of personnel in adequate number or qualification in the Contracting Authority, experts may be invited to the Main Procurement Group from other units of the relevant authority or from other authorities.

(7) In case of absence of personnel in adequate number or qualification in the Department, experts may be invited to the Project Group from other units of the relevant authority or from other authorities.

SECTION FOUR

Procurement Procedure and Procedures of Main Procurement Process

Procurement Procedure

Article 11- (1) Restricted procedure as set forth in procedures and the principles shall be applied for tenders under this Regulation as the nature of the subject necessitates specialty and/or high technology.

(2) The number of candidates and tenderers shall not be less than three in principle. However, in case of the absence of at least three candidates and tenderers in application to prequalification and tender phases, tenders to purchase goods or services having strategic importance as determined by the relevant authority, which provide high added value and competitiveness and new and contain a unique technology shall proceed with the approval of the Industry Development Commission providing the reasons to be specified.

Selective Limited Tendering Procedure

Article 12- (1) In selective limited tendering procedure set forth in procedures and principles of this Regulation, the pre-qualified tenderers from those who have been invited by the relevant authority are entitled to tender.

(2) Pre-qualification evaluation shall be carried out in accordance with the qualification criteria considering the technical, economical and ICP competence, which are set forth by relevant authority and specified in the pre-qualification documents and in the pre-qualification notices. Pre-qualification evaluation shall be finalized as soon as possible. Those who fail to meet the minimum requirements shall not be accepted as qualified.

(3) Provided that it is stated in prequalification notice and document, all of the tenderers who have been considered as qualified shall be included to a short list. The candidates who have not been invited to submit tenders shall be informed in writing about the reasons.

(4) The procurement shall be concluded after the evaluation of the tenders in accordance with the evaluation criterion that are designed in accordance with Article 25 in a way to avoid any impediment to competition depending on the nature of the work and that are specified in the tender documents and in the letter of invitation.

Procedures of Main Procurement Process

Article 13- (1) In process of the Main Procurement the issues concerning to the determination of the estimated cost , the administrative and technical specifications, drawing up the draft of the Main Procurement Contract, submission of tender and prequalification documents, change or explanation of these documents , determination of qualification to tender and the documentation relating to be qualified, tender validity, execution of the Main Procurement Contract, reflection of price differences, amendments in contracts, transfer and termination of the contracts shall be stated in administrative regulations of the relevant authorities and/or tender documents.

(2) The tender documents shall include the administrative and technical specifications, the draft Main Procurement Contract, ICP specifications and the draft of ICP Contract, prequalification criterion in scope of Main Procurement and ICP required for qualifications of candidates and other necessary information and documents. Prequalification documents shall include required qualifications of candidates, prequalification criterion and other necessary information and documents.

(3) The priced bill of quantities relating to the estimated cost, pre-qualification and tender documents and the Main Procurement Contract together with its Appendices shall be prepared by the Main Procurement Group and the ICP specifications, the draft of ICP Contract together with its Appendices shall be prepared by the Project Group.

(4) The documents prepared by the Main Procurement Group and the Project Group shall be assessed collectively to coordinate and the tender documents are finalized accordingly.

SECTION FIVE

Principles of Industrial Cooperation Program

ICP Categories

Article 14- (1) In addition to the obligations related to the procurement of goods or services required by the Requiring Authority, obligations in order to ensure innovation in the industry, local content and / or the technology transfer, improvement of the added value and competitiveness of the local industry and increasing the export opportunities must be fulfilled by the Contractor within the scope of activities committed under ICP categories.

(2) Tenderers participating in the tender undertake to fulfill their obligations complying with the projected target with the ICP implementation which worth minimum ICP commitment ratio are as defined in the Main Procurement Contract and within the scope of the ICP categories listed below.

a) Category A- Local Industry Participation: The production of a high tech good or its component by the Contractor within the context of goods and services subject to procurement to be achieved through the activities in guidance of Appendix 1 by using the existing facilities and the local industry abilities in Turkey.

b) Category B- Investment: The production of a high tech good or its component by the Contractor within the context of goods and services subject to procurement to be achieved through the activities in guidance of Appendix 2 by establishing a new production facility and the local industry abilities in Turkey.

c) Category C- Technological Cooperation: Technological capabilities to be brought by the Contractor in the local industry to be achieved through the activities in guidance of Appendix 3.

ç) Category D- Export: Execution of the export activities by the Contractor to be achieved through the activities in guidance of Appendix 4.

(3) Commitments within the context of Category C or Category D shall only be given together with Category A and/or Category B commitments.

(4) Different commitment procedures within the scope of ICP categories might be determined by the relevant authorities complying with the aim of ensuring innovation, local content and/or technology transfer.

ICP Specification

Article 15- (1) The ICP Specification which is on the basis of standard ICP Specification in which the minimum requirements are defined in Appendix-5 and issued by the Project Group in the course of preparation of the tender document and published by the relevant Authority shall be attached to the tender document.

(2) During the evaluation of tender, the ICP Multipliers Table in Appendix- 6 to be used in calculation of weight of ICP categories to ensure the minimum ICP multiplier shall be prepared according to the characteristics and priority of each project and attached to the ICP Specification. Provisions which allow tenderers to fill in the ICP Multipliers Table might exist in the specification.

(3) ICP Multipliers Table which is determined by the Project Group in framework of ICP categories and to be used for crediting of obligations to be fulfilled by the Contractor shall be prepared according to the feature and priority of each project in consideration of article 33 and attached to the ICP Specification.

ICP Contract

Article 16- (1) In preparation of the drafts of ICP Contract to be included in tender documents, the minimum requirements of standard ICP Contracts as stipulated in Appendix- 7 and published by relevant authorities shall be taken into consideration by the Project Group.

(2) In cases where there are no provisions in standard contracts; arrangements can be made unless contrary to the relevant legislation.

(3) The draft ICP Plan to be filled by the Contractor and which covers the program year and program periods of ICP activities within the context of ICP categories shall be attached to draft ICP Contract.

Rules on Qualification for ICP and Securities

Article 17- (1) Project Group requires information and documents of technical qualifications, economic and financial capabilities of companies, work experience certificates in scope of ICP obligations, works to be outsourced and information related to subcontractors, technical persons to be employed by companies in determination of ICP qualification to be included in ICP Specification.

(2) In addition to the tender security not being less than 3 % of the tender price and performance security not being less than 6 % of the Main Procurement Contract, a performance security not being less than 4% of the amount which realized the ICP commitment ratio shall be given by tenderers.

(3) Performance securities within the context of ICP Contract shall not be released at least one year round following to the fulfillment of all ICP obligations.

(4) Letters of guarantees which do not comply with the standard forms prepared by the relevant authorities shall not be accepted.

SECTION SIX

Approval of the Tender, Invitation to Tender and Procurement Proceedings Dossier

Approval of the Tender

Article 18- (1) The priced bill of quantities relating to the estimated cost, administrative and technical specifications and draft Main Procurement Contract to be prepared by Main Procurement Group and ICP Specification, draft ICP Contract to be prepared by Project Group together with other documents as attached to tender approval certificate shall be submitted for approval of the contracting officer. Official and substitute members of Tender Evaluation Commission shall be mentioned in the tender approval certificate.

(2) A registration number from Public Procurement Authority shall be taken by the Contracting Authority before pre-qualification notice to make transactions such as notification, inquiry of prohibition and to send information form.

Pre-qualification Announcement, Determination of Tenderers and Invitation to Tender

Article 19- (1) Pre-qualification announcements to be conducted by Contracting Authority shall be published not less than twenty days in advance of the deadline for the application following to the preparation of tender documents and for the purpose of giving sufficient time for all candidates to prepare their tenders,

(2) The announcements shall be published at least once in the other announcements of procurement section of the Public Procurement Bulletin and in one of the newspapers delivered nationwide.

(3) Apart from the above-mentioned compulsory announcement, the procurement announcements might be conducted by means of other newspapers or publications having national and international circulation, broadcast media, data processing networks or internet, depending on the significance and characteristics of the procurement. However, where international announcement of notices is required the above minimum time limits shall be increased by ten days

(4) The pre-qualification announcements to be conducted in accordance with the provisions of this Regulation shall include information relating to the prequalification criterion to be used in the evaluation of the general competency, technical skills, economical and financial capacity of the candidates and the ICP qualification requirements as stipulated in the first paragraph of Article 17.

(5) Following to the pre-qualification announcement and upon the evaluation of application of candidates by Tender Evaluation Commission as set forth in pre-qualification document and the pre-qualification criterion, the candidates who will be invited according the paragraph three of Article 12 shall be given a time period which is not less than forty days in order those candidates to prepare their tenders.

(6) The pre-qualification and tender documents can be seen at the place of relevant authority, free of charge. However, candidates or tenderers who wish to participate in the pre-qualification or the tender are required to purchase this document.

Procurement Proceedings Dossier

Article 20- (1) Contracting Authority shall keep a record of procurement proceedings dossier for all projects to be procured. This dossier shall include the certificate of approval and its attached priced bill of quantities relating to the estimated cost, the tender and pre-qualification documents, the announcements, the tenders or the applications submitted by candidates or tenderers, the notification and the receipt documents relating to the notifications made to candidates and tenderers, complaints and their conclusions, contract copies and all documents relating to the procurement process such as tender evaluation minutes and decisions.

SECTION SIX

Submission and Evaluation of Tenders

The Establishment and Working Conditions of Tender Evaluation Commission

Article 21- (1) Following to the approval of the tender, Tender Evaluation Commission consisting of official and substitute members shall be established within the Contracting Authority.

(2) Tender Evaluation Commission, providing the approval of the contracting officer, is composed of at least five members and in odd numbers, including one chairperson, at least two personnel having expertise on financial and legal matters, one Main Procurement Group member, and two Project Group members having technical expertise.

(3) In case of absence of personnel in adequate number or qualification in the Contracting Authority, experts may be invited to the Commission from other units of relevant authority or from other authorities.

(4) In order to allow for required examination, members of the Tender Evaluation Commission shall be provided with a copy of procurement proceedings dossier by the Contracting Authority, within three days following the approval of the tender.

(5) The Tender Evaluation Commission shall convene with no absentees. The commission decisions shall be taken by majority. Abstention is not allowed in decisions. The chairman and members of the commission are responsible for their votes and decisions, dissenting members have to write down their justifications in the records of commission minute and sign it.

(6) The Tender Evaluation Commission may ask from relevant authorities to confirm the accuracy of required documents in the tender or in application attachments. Such requests of the commission must be executed immediately by relevant authorities.

Preparation of Tender Evaluation Plan

Article 22- (1) Tender Evaluation Plan which includes matters such as tender evaluation criterion in context of Main Procurement and ICP, evaluation calendar and work flow, opening and scoring of tenders shall be prepared by the Tender Evaluation Commission following to the submission of all tenders but before opening of those and submitted to the approval of the contracting officer.

(2) Once the Tender Evaluation Plan is approved and before opening of the tenders, Criteria Tree shall be prepared by the Tender Evaluation Commission in consideration of Reference Tender Evaluation Criteria Tree in Appendix-8 or other criteria scoring methods prepared by relevant authorities shall apply.

(3) Criteria Tree shall be prepared in consideration of matters such as technical performance, business plan, work experience together with administrative and economical matters relating to the goods and services to be procured and the criterion relating to the ICP categories in the context of Reference ICP Activities Tables for Preparation of Criteria Tree as set forth in Appendix-1, Appendix-2, Appendix-3 and Appendix-4. No matter shall be included in Criteria Tree unless specified in tender documents.

Preparation and Submission of Tenders

Article 23- (1) The letter of tender containing the price tendered for goods and services to be procured as subject to Main Procurement and tender security shall constitute the economical tender of the tenderers. Letter of tenders for procurement of goods consisting of more than one item of property shall be prepared on the basis of unit price letter of tender.

(2) All other documents required for the technical evaluation of goods and services to be procured as subject to Main Procurement shall constitute the technical tender of the tenderers. This tender shall be placed in a separate envelope marked as technical tender.

(3) Both envelopes relating to the economical and technical tender for goods and services to be procured as subject to Main Procurement shall be put in a separate dossier and submitted indicating the name, surname or commercial title and notification address of the tenderers and the tender which is the subject of the tender and address of Contracting Authority making the tender.

(4) Tenderers to ensure the minimum ICP commitment ratio which is defined in tender documents shall submit ICP dossier which includes ICP Contract and ICP Plan as its Appendix and the sealed ICP letter of tender to the Contracting Authority together with the Main Procurement tender dossier as mentioned in paragraph 3. All documents requested as the condition of ICP qualification shall be put in ICP dossier.

(5) The blanks in contracts and their Appendixes shall be filled in by tenderers or his representative as each page is signed and stamped.

(6) The tenders shall be submitted to the relevant authority until the time stated for submission of tenders in the tender documents. Tenders submitted after this time shall not be accepted and shall be returned as unopened.

Opening of Tenders

Article 24 (1) The number of tenders submitted at the hour of the tender shall be recorded in the minutes by Tender Evaluation Commission and announced to those who are present

(2) Tender envelopes relating to the technical tenders shall be opened in the presence of tenderers and those who are present, in the receiving order of submission and checked if the documents of the tenderers are complete or incomplete and recorded in a minute. The envelopes containing the economical and SIP tenders shall be recorded in the minutes without being opened, packed all together, sealed, and signed by the tender evaluation commission to be held in protection. No decision can be made at this stage as regards the rejection or acceptance of any tender. The documents in the tenders cannot be changed; no corrections or completion can be made. The session shall be closed by the tender evaluation commission to evaluate the tenders.

Evaluation of Tenders

Article 25 (1) Tender evaluation proceedings shall be determined by taking into account the protection of competition, objectivity and cost effectiveness

(2) In the evaluation of the tenders, an examination to ensure that all documents of the tenderers pertaining to the technical evaluation comply with the conditions required in the tender documents shall be made at first. Tenders, which have missing documents, or which do not comply with the required conditions shall be disqualified. However, in case of missing information in the documents provided that absence of those do not alter the substance of the tender; the relevant authority shall request the tenderers in writing to furnish these missing information in a given time period not less than two business days. The tenderers who do not furnish this missing information in a given time shall be excluded from the evaluation and their tender securities shall be registered as revenue.

(3) Tender Evaluation Commission shall determine the tenderers' technical scores based on the evaluation of technical evaluation criterion and scores specified in invitation letter and tender document. Tenders, which have got score below the minimum technical score specified in the tender documents, shall be excluded from the evaluation.

(4) At the date and hour notified by the Tender Evaluation Commission; firstly the results of technical evaluation and the technical scores calculated in accordance with the provisions of Article 26 shall be announced to those who are present. Following to this proceeding, the package containing financial and ICP tenders of those who exceed minimum technical score or get higher in tender document shall be opened and tendered price and estimated cost are announced and recorded in a minute.

(5) Tenderers who fail to submit the tender letter and tender security in their financial tenders or whose tenders are not in conformity with the procedures shall be disqualified from the evaluation and this decision be recorded in the minutes. The financial and ICP scores of the tenderers with eligible financial tenders and tender securities shall be calculated in accordance with the provisions of Article 26.

(6) The tenders in whom the price in writing and in figures in those is inconsistent with each other and the tenders with arithmetic errors in unit price charts attached to tender letter which indicates the tendered price shall be excluded from evaluation.

(7) In cases of the determination of that the evaluation proceedings will not be completed within tender validity period, tenderers are requested by the Contracting Authority before expiration of this period to extent their tender security period and validity period which is not less than forty days.

(8) Tenderers might be asked to clarify their tenders in writing on the unclear aspects of the tender in evaluation proceedings. However, this clarification shall not be required and made with the intention of making change in the tender price, or converting any ineligible tender according the conditions in the tender documents to an eligible one.

(9) The procurement during the evaluation stage shall be excluded from the scope of this Regulation and cancelled upon the proposal of Tender Evaluation Commission and the approval of contracting officer in case it is deemed inexpedient to ensure innovation, local content and technology transfer and disapproved to be conducted under SIP scope for reasons like not being cost effective.

Tender Scoring

Article 26 (1) Tenders are calculated in accordance with the Tender Evaluation Plan and Criteria Tree

(2) Overall tender score is calculated using the Cost Effective Rate Formula (K) which is basis for cost effectiveness and specified in Tender Evaluation Guideline in Appendix-9. The overall score shall be calculated taking into account the weighted coefficients determined for the technical (T), economical (E) and ICP (S) scores according to the characteristics and priorities of each project. The technical and economic scores shall be evaluated in a scoring system which has same percentage weight and in the same number range with ICP score.

(3) ICP score shall be calculated using the ICP Score formula in Appendix-9. In calculation of the ICP Score to ensure the minimum ICP commitment ratio, the percentage weight of ICP categories and the weighted scores of the ICP activities which are undertaken to fulfill shall be determined by the Project Group on basis of the characteristics and priority of each project.

(4) Different calculation formulas for overall tender score and ICP Score which are the basis for cost-effectiveness score might be found and used by relevant authorities.

(5) Before the end of evaluation proceedings and providing the scope is determined by the Tender Evaluation Commission; the Contracting Authority may ask tenderers in writing to submit their best and final tenders. Upon receipt of the best and final tenders, overall tender scores shall be re-calculated within the scope of second paragraph.

(6) Following to the conclusion of evaluations the Tender Evaluation Report which is prepared by The Tender Evaluation Commission shall be submitted for the approval of the contracting officer. The Tender Evaluation Report shall include the names or commercial titles of the tenderers, the tender opening date and justifications of top three tenderers giving the most advantageous offer according to the overall tender score as the result of scoring the tenders, and in case the contract was not awarded, the related reasons thereof.

(7) Tender Evaluation Report shall be submitted to Industry Development Commission following to the approval of the contracting officer.

Negotiations

Article 27 (1) During the evaluation of Tender Evaluation Report, the Industry Development Commission may take decision to negotiate with top three tenderers whom specified in the Report and submitted the most advantageous offer. In this case, those tenderers shall be invited to the negotiations by the Contracting Authority within ten working days following to the decision of the Industry Development Commission.

(2) In negotiations between the Tender Evaluation Commission and the tenderers, technical and economical tenders related to the Main Procurement and the ICP tenders of the tenderers shall be discussed.

(3) In cases where any of the tenderers wishes to renew its tender to be more advantageous than his previous tender, other tenderers shall be granted the right of renewal to be exercised within ten business days. Negotiations shall conclude within ten business days taking the final tenders into account and the Tender Evaluation Report is finalized and submitted to the approval of contracting officer.

Rejection of All Tenders and Cancellation of Tender Proceedings

Article 28 (1) Upon proposal of the Tender Evaluation Commission and approval of the contracting officer, all tenders might be rejected and the tender proceedings might be cancelled. In this case, all the tenderers shall be informed promptly about this situation and tender securities shall be returned. The relevant authority shall incur no liability for rejecting all the tenders. However, upon request of the tenderers, the relevant authority shall inform the requesting tenderers about the reasons for the cancellation of the tender proceedings.

SECTION EIGHT

Selection of Contractor and Matters Relating to Contracts

Selection of Contractor

Article 29 (1) In cases where the Industry Development Commission takes decision to negotiate the tenders and following the conclusion of negotiation phase, the most advantageous offer which is determined by the Tender Evaluation Commission is submitted to the approval of the contracting officer within ten business days. Within maximum five business days following the date of submission, the contracting officer shall approve or cancel the tender decision, indicating the justification for cancellation.

(2) In case of no decision taken by the Industry Development Commission to negotiate the tenders, the most advantageous offer determined by the Tender Evaluation Commission is submitted to the approval of the contracting officer within ten business days. Within maximum five business days following the date of submission, the contracting officer shall approve or cancel the tender decision, indicating the justification for cancellation.

(3) The tenderer whom specified in Tender Evaluation Report having technical and economical and ICP capability relating to the Main Procurement and submitted the most advantageous offer among three tenderers shall be awarded.

(4) The tender result shall be notified to all tenderers who have submitted a tender, including the tenderers to whom the contract is awarded, within maximum three business days following the day of approval of the tender result and announced on the web site of the relevant authority. The tendered shall be notified to sign the contract by issuing a performance security within twenty business days following the date of notification.

(5) In case of the presence of the second and third most advantageous tenderers, tender securities of those shall be retained by the Tender Evaluation Commission until the signing of the contracts.

(6) Tender Evaluation Report shall be held in protection within five years following to the notification of completion of the contract work to the Contractor.

(7) The securities of other tenderers other than those three tenderers who submitted the most advantageous tenders shall be returned within twenty business days following to the contractor selection decision.

Signing of the Main Procurement and ICP Contracts

Article 30 – (1) Following the tender result, the tendered who submitted the performance security within twenty business days shall enter a Main Procurement Contract with the Contracting Authority and ICP Contract with the Department in charge of the General Directorate/Head of Department after expiry of this period. In case the Tendered is a joint venture, the contract shall be signed by all the partners of the joint venture. In case the tendered rejects signing the contract or fails to submit performance security, the tender security shall be registered as revenue

(2) Contracts shall not be signed unless twenty working days have passed after the tender result has been notified to all tenderers

(3) In case the tendered rejects signing contracts or fails to submit performance security, with the approval of the contracting officer, the second most advantageous tenderer shall be notified and invited to sign contract. The invited second most advantageous tenderer shall submit the performance security within ten business days following the expiration of the term as set forth in paragraph two and sign the contracts otherwise the tender security of this tenderer shall also be registered as revenue.

(4) In case the second most advantageous tenderer rejects signing contracts or fails to submit performance security, with the approval of the contracting officer, the third most advantageous tenderer shall be notified and invited to sign contract. The invited third most advantageous tenderer shall submit the performance security within ten business days following the expiration of the term as set forth in paragraph three and sign the contracts otherwise the tender security of this tenderer shall also be registered as revenue and the tender proceedings shall be cancelled.

(5) Contracts within the scope of this Regulation together with Appendices and all other documents, excluding those accepted by the relevant authority, shall be written in Turkish language. Turkish text shall prevail in the interpretation of the documents prepared in Turkish and foreign languages and the resolution of disputes.

(6) The ICP Plan in which the ICP activities are listed on program year and program period basis in scope of ICP categories shall be attached to the ICP Contract.

(7) Following the contracts is signed, the tender security of the successful tenderer shall be promptly returned.

(8) The relevant provisions of the Public Procurement Contracts Law No 4735, dated 5/1/2002 shall apply with respect to the execution of Main Procurement Contract.

SECTION NINE

Provisions on the Implementation of Industrial Cooperation Program Contract

Pre-Approval

Article 31 – (1) Prior to commencement of any proceedings for the execution of ICP activities which specified in ICP Contract and in its attachment ICP Plan or in case of changes related to activities, a written pre-approval application shall be made by the Contractor to General Directorate/Head of Department which the Department is attached for each ICP activity by using the standard form prepared by the relevant authority.

(2) Pre-Approval applications shall be evaluated by Project Group within thirty business days and submitted to the General Directorate/Head of Department where deemed appropriate by the Department. In case the pre-approval application is rejected, the decision of rejection shall be notified to the Contractor in writing together with justifications within the same period of time and the Contractor is requested to renew its application. In case the pre-approval evaluation results are not notified to Contractor in writing within ninety days, the application shall be deemed to have been rejected.

(3) Pre-approval applications might be limited in respect to matters such as duration, value, and product and service where deemed necessary.

(4) The activities executed without receiving a written pre-approval or those that renewed pre-approval application is not deemed appropriate shall not be accepted and credited as ICP activity even it complies with the other principles stated in this Regulation or ICP Contract.

ICP Performance Period and Activity Report

Article 32 – (1) ICP obligations shall be fulfilled in accordance with the program year and program periods defined in ICP Plan which is approved by the Department that is in charge of General Directorate/Head of Department. Upon the proposal of Project Group and Contractor, program year and program periods might be revised by General Directorate/Head of Department not being less than the performance period specified in ICP Contract. In this case, providing the Contractor's overall ICP obligations remain constant, ICP performance period shall be re-evaluated depending on the works and subject of contract undertaken by the Contractor's

(2) The Contractor shall submit ICP Activity Report which indicates the fulfillment status of ICP obligations to be committed by himself, proving information and documents and other information or documents requested by Department depending on the nature of the obligations within fifteen business days following to the end of each program period to be determined by Department to the General Directorate/Head of Department in a written form.

(3) ICP Activity Report which is submitted at the end of each program period shall be evaluated by Project Group and submitted to the approval of submitted to General Directorate/Head of Department where deemed appropriate by the Department. In case the ICP Activity Report is approved by General Directorate/Head of Department, crediting procedures may apply.

(4) In case of non-delivery of ICP Activity Report at the end of each program period, it is considered as non-performance of ICP activities within relevant year. The provisions of Article 35 shall apply to the ICP Activity Report in case it does not contain the required information or it is not delivered on time.

(5) In case of any ICP activity specified in ICP Plan has not been performed by the Contractor in partly or wholly by event of force majeure as stipulated in the contract and in consideration of Law No 4735 or without negligence; Contractor shall submit proving and supporting information and documents which relate to the failure of performance to the General Directorate/Head of Department. Following the evaluation of evidences submitted to General Directorate/Head of Department; in case the reasoning of the Contractor is accepted, then the failed ICP activity shall be removed from ICP Plan.

(6) Providing the overall ICP obligations remain constant, the Contractor shall define a new ICP activity instead of the non-performed activity and submit it to the approval of General Directorate/Head of Department. The new ICP activity shall be include to ICP Plan by the Contractor upon approval of General Directorate/Head of Department.

Crediting ICP Activities

Article 33 – (1) Following to the approval of ICP Activity Report by the Department which is in charge of General Directorate/Head of Department, Contract shall apply to be credited for pre-approved and performed ICP activities.

(2) Information and documents required to be attached to crediting applications shall be determined by Project Group depending on the nature of the obligations.

(3) ICP activities shall be credited in accordance with the below principles:

a) Crediting shall be granted in accordance with the conditions stated in the pre-approval by using the corresponding multipliers given in Appendix-10 Table of ICP Crediting Multipliers which is attached to ICP Specification or in accordance with the conditions set forth by relevant authorities.

b) The administrative expenses which are made during the fulfillment of any ICP obligations and irrelevant to subject of obligation such as travel, accommodation, meal, postal services expenses of Contractor shall not be credited as ICP activity.

(4) The works to be assigned to local industry and the export in the context of ICP Contract shall be granted by taking domestic added value into account. Verification of DAV amounts in performed ICP activities shall be done by Project Group.

(5) For the purpose of verification of DAV, all information and documents requested by Project Group shall be submitted to General Directorate/Head of Department by Contractor. General Directorate/Head of Department where deemed necessary may request independent auditing firms, universities and relevant public institutions and organizations to conduct an investigation of the documents, which are provided by the Contractor to the purpose of verification of DAV at Contractor's expense.

Pursuance and Supervision Authority

Article 34 – (1) Project Group is entitled to pursue ICP obligations, request all kind of required information and documents regarding the fulfillment of obligations, to conduct on-site inspection or to get the on-site inspection conducted.

(2) As the result of the pursuance and supervision conducted by Project Group, in case of determination of incompliancy related to the ICP obligations this shall be reported and submitted to General Directorate/Head of Department and the provisions of Article 35 shall apply to Contractor.

Penal Clause

Article 35 – (1) In case the ICP activities expected to be achieved have not been fulfilled within the related program year and program period and/or in line with the duration and conditions stated in the ICP Contract; Contractor shall be requested by General Directorate/Head of Department in writing to fulfill requested obligations within a period not less than sixty days.

(2) In case the fulfillment is not achieved within this period penal clause stated in the ICP Contract shall apply. The application of penalty sanctions, shall not remove the responsibility of Contractor to fulfill the ICP obligation.

(3) The Contractor who is responsible for the penalty clause as per the second paragraph shall pay the amount to the account notified him by relevant authority within 15 business days upon the written request of General Directorate/Head of Department. In case the subject penalty is not paid in due time; penalty amount shall be deducted from the payments to be made to the Contractor under Main Procurement Contract and/or other contracts if available and/or compensated from the Contractor's security provided in context of ICP Contract.

(4) The security provided in context of ICP Contract shall be registered as revenue in case of termination of ICP Contract due to the negligence of the Contractor.

ICP Escalation

Article 36 – (1) Contractor's ICP obligations which are not fulfilled at the end of relevant program year shall be escalated in ratios and conditions defined in relevant legislation and in the ICP Contract and added to the ICP obligations of the following program year.

(2) In case the Main Procurement Contract is subject to escalation, then escalation shall also be applied to ICP obligations in ratios and conditions defined in Main Procurement Contract.

Temporary Crediting

Article 37 – (1) Temporary credit to be converted into permanent credit later might be granted in terms of crediting principles set forth by the relevant authority for a planned ICP activity which is intended to achieve by the Contractor in a program period

Pre-Crediting

Article 38 – (1) Pre-crediting might be granted to a company having no existing ICP obligation in terms of crediting principles set forth by the relevant authority in order to be counted towards the possible future ICP obligations.

Transfers of Excess ICP Credits

Article 39 – (1) Upon Contractor's written request and providing the approval of the General Directorate/Head of Department which the Department is attached, at the end of each program period, the excess ICP credit which accomplished by the Contractor above the obligations of an ICP category may be transferred to following period obligations within the same ICP Contract and ICP category,

(2) Principles regarding the transfer of excess credits shall be determined by the relevant authority.

SECTION TEN

Miscellaneous and Final Provisions

SME Work Share and Sub-contractors under ICP obligations

Article 40 – (1) Work share to be contributed by SMEs under ICP obligations shall be specified in ICP Speciation with respect to the nature of the project.

(2) Work share to be contributed by SMEs might be credited with a higher multiplier than the multipliers in ICP multipliers table

(3) Provisions relating to sub-contractors under ICP obligations shall be executed in line with the principles set forth by relevant authority.

(4) Responsibilities of sub-contractors with respect to their work shall not remove the responsibility of Contractor.

Transfer of Investments, Intellectual Property Rights

Article 41 – (1) Following the end of ICP obligation period, issues related to the transfer of investments by the Contractor under ICP categories shall be regulated by relevant authorities.

(2) All issues relating to right of disposal or transfer of intellectual property rights as a result of activities fulfilled under ICP obligations shall be determined in accordance with the legislation relating to intellectual property rights.

(3) In case of failure of the provisions in this article, provisions set forth in paragraph of article 35 shall apply to Contractor.

Issuance of Work Experience Certificate

Article 42 – (1) Work experience certificate for the works that have been fulfilled under Main Procurement shall be issued by Contracting Authority with respect to Law No 4734 and Law No 4735.

(2) Following the fulfillment of ICP obligations within the scope of this Regulation, ICP work experience certificate shall be issued by the General Directorate/Head of Department which the Department is attached. ICP work experience certificates might be used for tenders within the scope of this Regulation.

Industrial Database

Article 43 – (1) In determination of the production and technological capabilities of local producers and service provider and the work share to be assigned to those under ICP categories; the sector, company and product oriented database which is created by the Department in collaboration with Science, Industry and Technology Ministry, Ministry of Finance, Turkey Scientific and Technological Research Council of Small and Medium Enterprises Development and Support Administration, Public Procurement Authority, Turkey Statistical Institute, R & D Centers, Technology Transfer Office, Technology Development Zones, Clustering enterprises, universities, non -governmental organizations, industry and other relevant institutions and organizations might be utilized and the data might be disclosed to the public via internet providing the respective companies deem appropriate.

Long Term Projection of Requirements

Article 44 – (1) Long term projections of requirements might be made and disclosed to public by relevant authorities to the purpose of predetermination of requirements and establishment of production infrastructure by the industry in fields of requirements.

Consultancy Services

Article 45 – (1) Providing the approval of contracting officer, consultancy services for preparation of documents, preparation to tender and pursuance of ICP obligations within the scope of this Regulation might be purchased in accordance with the provisions of Law No 4734.

Guidance and Process Monitoring

Article 46 – (1) The relevant authorities, when deemed necessary, might consult opinions of expert public institutions and organizations in enforcement of this Regulation.

(2) Upon request of Industry Development Commission and providing the approval of Undersecretariat for Defense Industries, processes specified in this Regulation might be monitored on behalf of authorities.

(3) Related documents issued by the relevant authorities might guide preparation of draft ICP Plan, Tender Evaluation Plan, Criteria Tree, standard form, table, report which are required for ICP implementation processes and to be prepared by authorities under this Regulation.

Subsidies and State Incentives for Investments

Article 47 – (1) The Decree No: 2012/3305 dated 15 June 2012 on State Incentives for Investments might apply in contracts made within the scope of this Regulation.

(2) Contractor can benefit the supports according to the principles and procedures determined by public institutions and organizations granting support

Notifications

Article 48 – (1) Any kind of announcement or notification to the candidates or tenderers by relevant authorities shall be made by hand in return of signature or pursuant to the article 7/a of Law No 7201 Code of Notification dated 11/2/1959. In case the notification is not made through determined methods due to justifiable and compelling reasons, other methods prescribed in sub-paragraph (a) of article 65 of the Law No 4734 may apply.

Complaints

Article 49 – (1) The complaint with the claim of unlawful procedures or actions within the process of the tender shall be made to the relevant authority within ten days from the date which the proceeding or action, which is subject matter of the complaint, have been realized or should be realized, and before contract signing. Upon the application for complaint, the decision of the relevant authority shall be reached and notified to the compliant within ten business days. Contracts shall not be signed unless twenty working days have passed after the last notification date of the decision.

(2) The appeal application to the Public Procurement Authority shall not apply to the works within scope of this Regulation.

Criminal Liability and Prohibition

Article 50 – (1) In enforcement of this Regulation, the relevant provisions of Law No 4734 and Law No 4735 shall apply for issues relating to criminal liability and prohibition from participation in tenders.

Legal Clauses

Article 51 – (1) In case there is no relevant provision in this Regulation, Law No 4734, Law No 4735 and the provisions of current relevant legislation made by Public Procurement Authority shall apply in a comparative manner.

(2) Law No 4734, Law No 4735 and the provisions of current relevant legislation made by Public Procurement Authority shall apply with respect to the regulations made by relevant authorities and for issues not specified in tender documents in a comparative manner.

Effectiveness

Article 52 – (1) This Regulation becomes effective on the date of its publication.

Enforcement

Article 53 – (1) This Regulation is enforced by the Minister of Science, Industry and Technology

To read this Regulation in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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