Turkey: Submitting Multiple Bids In Tenders Within The Scope Of Public Procurement Law

Last Updated: 7 November 2016
Article by Pinar Kunt

According to Article no. 5 of the Public Procurement law  ("PPL") no. 4734, Contracting Entities[1]  are responsible for ensuring transparency, competition, equal treatment, reliability, confidentiality, public supervision, fulfilment of needs appropriately, promptly and efficient use of  resources. However, companies participating in a tender can exhibit acts and conducts  contrary to the principle of ensuring competition in pursuant to Article no. 5 of PPL. Within this scope, Article no. 17 of PPL prohibits conducting  or attempting to conduct  procurement fraud; engaging in such actions  that may affect the competition or the tender decision; forging documents; directly or indirectly submitting multiple bids on his own account or on behalf of others,  as the principal person  or as representative of others except for the circumstances described within the Law and participating in a tender even if it is prohibited according to the Law, and those engaged in these acts  and conducts will be interdicted for participating in tenders made under the Article no. 58 of PPL.. Because the purpose of imposing these sanctions is to efficiently use public resources in line with the needs for the ultimate purpose of protecting economic order, these sanctions protect competition especially in public tenders.

In this post, the action of submitting multiple bids is handled out of prohibited acts and conducts  under the Article no. 17 of PPL.

According to the subclause d of Article no. 17 of PPL, directly or indirectly submitting multiple bids on his own account or on behalf of others, as the  principal person or  as representatives of others a except for the circumstances enabling submitting alternative bids[2] is accepted as a prohibited act  and conduct. Except for the circumstances enabling submitting alternative bids, directly or indirectly submitting multiple bids as the principal person or as representative of others by a tenderer is also closely related to the principle of protecting competition which is stipulated within the scope of the Article no. 5 of PPL.  The companies engaging such actss and conducts create an environment of unfair competition and gain unfair advantage in tenders by submitting multiple bids in a tender through creating an organic link with other tenderers or other similar ways.

It is seen in the Council of State decisions that examine such activities stipulated under the Article 17/d of PPL in the context of confirming whether there is an organic link between the tenderers/potential tenderers to resolve the disputes discussed in the examination of the Council of State.

CIRCUMSTANCES CONSIDERED AS SUBMITTING MULTIPLE BIDS

An organic link between companies

There can be a link arising from circumstances such as shareholding, controlling effect, share transfer, companies with same managers or same representatives working under different names between tenderers of a tender. Since there are no "link" definitions in PPL within this context, this "organic link" in question is defined by Council of State case by case. The important point to take into account is to determine whether the tenderers submit multiple bids directly or indirectly, as principal person or representatives of others,  and whether this situation affects the privacy of the tenders. Council of State rules that if there is an organic link between the tenderers, the privacy of bids are compromised or even partially compromised under the Article 17/d of PPL. .

When the decisions of Council of State are examined, we see that circumstances such as a shareholder holding the controlling effect on two tenderers and authorizing shareholders and/or managers of a tenderer to participate in tenders by proxy on behalf of other company are considered to be within the scope of Article no. 17/d of PPL.

Consequently, if there are circumstance such as shareholding, controlling effect, share transfer, companies with same managers or same representatives working under different names between the tenders, which can be considered as an organic link and this situation results in that the tenderers know of each other's bids, the existence of this organic link between the tenderers is considered as a prohibited act  and conduct under the Article no. 17/d of PPL.

Representation link between companies

Just like the organic link between tenderers, Council of State also considers the representation link as a prohibited act and conduct. As in one of its decisions, Council of State included the situation of a tenderer's and its representative's submitting bids in the same tender within the scope of Article no. 17/d of PPL on the grounds that the price competition cannot be ensured and the privacy of the bids are even partially compromised.

Submitting multiple tender letters in the same envelope

Council of State sometimes includes submitting multiple tender letters including the tender price in the same envelope within the scope of Article no. 17/d of PPL. The important point to take into consideration is to distinguish the situation of submitting a filled tender letter and an empty tender letter together in the same envelope. If there is no price information in the submitted documents, then it is not to be considered as submitting multiple bids and therefore not to be included within the scope of Article no. 17/d of PPL. Otherwise, it can be included within the scope of subclause a and b of Article no. 17/d of PPL[3].

CIRCUMSTANCES NOT CONSIDERED AS SUBMITTING MULTIPLE BIDS

Organic Link Between a Potential Tenderer Company and a Tenderer Company

Companies can be vested with the title of potential tenderer by purchasing the tender document and then waive their right to bid in the tender. Then, in a case where there was an organic link between the companies that purchased the tender document but didn't submitted a bid in the tender and the companies that submitted a bid in the tender to be vested with the title of potential tenderer, Council of State deduced that it was not a case of submitting multiple bids.

Companies with an Organic Link Submitting Multiple Bids for Different Parts In Tenders Enabling Partial Bids

According to the subclause h of Article no. 27 of PPL, if it is allowed to submit a bid for a part of a tender, then it should be clearly expressed in the tender document. If it is possible to submit a partial bid in a tender, companies can submit a partial bid for one or multiple parts of the tender. In tenders enabling partial bids, companies can submit individual bids for each part of the tender and the qualification review to be able to participate in a tender of the companies should be conducted for each part separately.

Within this context, in a case where the subject of the examination is to determine whether submitting bids for different parts of a tender when there was an organic link and/or representation link between the tenderers was a prohibited act or conduct, or not, Council of State ruled that the tenderers do not capitalize on knowing the bids since the scope of the work of the different parts of the tenders is different and therefore it cannot be considered as an alternative bid and will not violate the principles of equal treatment, confidentiality and  reliability, even if the tenderers are in a position to know each other's bids.

As a result, if the tenderers submit bids for different parts of a tender, then the organic link between the tenderers will not be interpreted as a prohibited act and conduct in tenders enabling submitting partial bids, since the bids of each part will be processed separately and the scope of the work will be different. A remarkable point here is that the companies that have an organic link in between should not submit a partial bid for the same item so that it will not constitute a prohibited act or conduct. Even though it is possible to submit a partial bid, the companies that have an organic link in between will be considered to exhibit a prohibited act  and conduct by submitting bids for the same item.

CONCLUSION

According to the subclause d of Article no. 17 of PPL, multiple bids submitted by a tenderer in a tender is considered as a prohibited act and conduct but the PPL has no clear definition regarding the cases which includes submitting multiple bids. Considering the case based decisions of Council of State within this framework, the tenderers may be considered to commit the prohibited acts and conducts if there is an organic link or representation link between the tenderers, according to the Article no. 58 of the PPL, but in tenders enabling submitting partial bids, submitting bids for different items of the bid will not be interpreted as a prohibited act and conduct even when there is an organic link between the tenderers. However, it should be taken into consideration that each case is different and the Council of State will decide, case by case, whether there is an organic link/representation link between the tenderers and whether this link can be interpreted as submitting multiple bids under the subclause d of Article no. 17 of PPL .


[1] Contracting Entities means procuring entities and institutions covered by Public Procurement Law No.4734.

[2] According to the subclause a of the Article no. 3 ("Definitions") of the Governing Regulations Regarding the Product Purchase Tenders, Alternative Bids are defined as "offering products as an alternate with different specifications offering minimum properties and requirements described in the product's technical specification of the product in tender by the same party or the tenderer on the condition that there is a related provision in the tender document".

[3] Article no. 17 of PTA – The following acts and conducts are prohibited in tender proceedings:

a) to conduct or attempt to conduct procurement fraud by means of fraudulent and corrupt acts, promises, threats, unlawful influence, undue interest, agreement, malversation, bribery or other actions.

b) to cause confusion among tenderers, to prevent participation, to offer agreement to tenderers or to encourage tenderers to accept such offers, to conduct actions which may influence competition or tender decision.

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