Turkey: Rules On Joint Ventures And Documentation

Last Updated: 13 June 2017
Article by Iris Erbil

This information note has been prepared to provide an outline of the rules of Public Tender Law No. 4734, Construction Tenders Application Regulation published in the Official Gazette dated March 4, 2009 and numbered 27159 (as amended as of the date hereof) and Public Tenders General Communiqué published in the Official Gazette dated August 22, 2009 and numbered 27327(as amended as of the date hereof) on joint ventures and documentation for construction sector public tenders.

A. Joint ventures under Turkish public procurement legislation

Pursuant to Turkish public procurement legislation, joint ventures may be formed as business partnerships or consortiums, the difference being that each partner of a business partnership is liable for the entire project, whereas each partner of a consortium undertakes a specific part of the project. Business partnerships may bid in any kind of tender, as opposed to consortiums which may bid only if the relevant contracting authority so specifies in the tender document.

Turkish public procurement legislation provides that the relevant contracting authority may grant a price advantage of up to 15% for domestic bidders (i.e. Turkish citizens and legal entities established under Turkish laws). The relevant contracting authority may also restrict participation of foreign investors in a tendered project, if the approximate cost of the project as determined by the contracting authority is below a certain threshold (as of the date hereof threshold is TRY33,870,025.00 for construction tenders). As per Turkish public procurement legislation, a joint venture is deemed as domestic bidder only if all of its partners are domestic.

B. Tender documentation for construction sector public tenders

The relevant contracting authority specifies in the tender documents the documents required for each tender. Below we provide an indicative general description of documents which may be required in construction tenders. However, we would like to underline that below list and descriptions are only for information purposes and Turkish public procurement legislation and contracting authorities set forth the descriptions of the required documents including details regarding translation, notarization, certification, apostille etc.   

a. Bid letter

Bidders must submit a bid letter or an application letter in the standard form specified in the tender document, as applicable.

b. Collateral

Bidders must post collateral of the type specified under Turkish public procurement legislation (including tender guarantees) amounting to at least 3% of the bid price. One partner of a joint venture may post all collateral necessary for the joint venture.

c. Documents on conduct of business and authority to bid

Pursuant to Turkish public procurement legislation, bidders must provide (i) a document issued by the relevant chamber of commerce certifying registry of the bidder with such chamber, (ii) signature declaration and documents certifying the signing authority of the authorized signatories of the bidder (power of attorney and signature declaration of the proxy is also required, if the bid is made by proxy),  (iii) documents certifying shareholders and directors/managers of the bidder and (iv) registries, approvals, licenses etc. necessary under the applicable law in for the conduct of tendered activities, as applicable.

d. Joint venture statements

If a bid is made by a joint venture, the bidder is required to submit a standard form business partnership statement or consortium statement, as the case may be. Furthermore, if a joint venture succeeds in a tender, notarized joint venture agreement will also be required to be submitted.

e. Bank reference letter

The relevant contracting authority may require provision of bank reference letters, which letters should show that the sum of the bidder's (i) deposit without any encumbrance at such banks and (ii) unutilized cash or non-cash loan limit with such banks is equal to or exceeds a certain percentage of the price offered by the bidder or the approximate cost of the project as determined by the contracting authority.

If the bidder is a business partnership, one of the partners may provide bank reference letter(s) for the business partnership. On the other hand, if the bidder is a consortium each partner should provide bank reference letter(s) for its part separately.

f. Balance sheet or equivalent documents

Under Turkish public procurement legislation, the relevant contracting authority may stipulate that certain financial ratios are met by the bidders. In such case, bidders will be required to provide their certified balance sheets or parts thereof showing compliance with relevant financial ratios. If a bidder is not required to disclose its balance sheet under the law applicable to itself, such bidder may be allowed to show compliance with such ratios by providing a document issued by the person/entity that is authorized to certify such bidder's balance sheet.

g. Documents showing the trade volume

Under Turkish public procurement legislation, the relevant contracting authority may stipulate that the bidder's total revenue or monetary amount of its construction projects for a certain period must be equal to or exceed a certain percentage of the price offered by the bidder or the approximate cost of the project as determined by the contracting authority. In such case, bidders are required to meet one of the foregoing criteria and accordingly provide for the relevant period their certified income statements or invoices in respect of construction projects. If the bidder is a business partnership, each partner must meet the trade volume criteria of the business partnership on a pro rata basis. On the other hand, if the bidder is a consortium each partner should meet these criteria for its part separately.

h. Documents showing experience

Under Turkish public procurement legislation, bidders are required to provide business experience certificates in order to certify their experience. Total amount of certificates should at least be equal to a certain percentage (which is 50% at minimum and 100% at maximum as of the date hereof) of the offered price or approximate cost, as applicable.

If the bidder is a business partnership, at least 80% of the total required amount must be satisfied by the lead partner and 20% of the total required amount must be satisfied by each other partners. The foregoing requirement does not have to be satisfied, if the bidder is a formerly established business partnership and the business experience certificate of the partnership itself is presented; provided further that partnership structure and partnership ratio of the partners have remained unchanged. If the lead partner satisfies 100% of the total required amount, other partners may alternatively provide business experience certificates for a construction project which is not similar to the one being tendered, however, in such case 40% of the total required amount must be satisfied. As opposed to the partners of a business partnership, each partner of a consortium must satisfy the experience requirement for its part of the project.

A bidder may submit business experience certificates of its majority shareholder. In such case, the bidder must provide additional documents specified under Turkish public procurement legislation in order to certify that such shareholder has been continuously holding the majority of the bidder shares throughout the last year.  

A bidder may also provide diploma of its architect or engineer shareholder. In such case, the bidder must provide additional documents specified under Turkish public procurement legislation in order to certify that such shareholder has been continuously holding at least 51% shares of the bidder throughout the last five years.

Bidders may provide business experience certificates for the projects in respect of which provisional acceptance was made within 15 years before the date of first announcement of or invitation to the tender, as applicable.  Bidders may provide supervision or management business experience certificates for the projects which was supervised or managed at a ratio of 80% of initial contract price.

Bidders may provide business experience certificates in respect of the transferred projects provided that (i) 80% of the initial contract price has been accomplished by the bidder before or after the transfer and (ii) provisional acceptance was made within 15 years before the date of first announcement of or invitation to the tender, as applicable.

Bidders may provide business experience certificates for ongoing projects in respect of which (i) initial contract price has been accomplished and (ii) 80% of the total contract price was accomplished flawlessly within 15 years before the date of first announcement of or invitation to tender, as applicable.  Bidders may provide supervision or management business experience certificates for the projects which was supervised or managed at a ratio of 80% of initial contract price.

In order to certify business experience gained through the projects outside of Turkey (except projects tendered by Turkish authorities), documents issued in accordance with the applicable foreign law must be provided. Such documents must contain the name or title of the contracting authority/party, location of the project, qualification of the project, the name or title of the contractor and persons in charge of supervision or management (as applicable), contract amount, contract date and project completion date.

i. Documents on the organization structure and the personnel of the bidder

Contracting authorities specify the quantity and qualifications of the technical personnel required for the tendered project. The successful bidder will be required to provide documents in order to show compliance with such requirements. One or more partner of a business partnership may provide all technical personnel required for the project. On the other hand, partners of a consortium will have to engage technical personnel separately for their respective part in the project.

j. Documents relating to premises, machinery and equipment

Contracting authorities specify the requirements for the premises, machinery, equipment etc. for each tender. The bidders must provide documents to show compliance with these requirements. One or more partner of a business partnership may provide all premises, machinery, equipment etc. required for the tendered project. On the other hand, partners of a consortium will have to separately provide premises, machinery and equipment required for their part of the project.

k. Documents relating to quality and standard

Relevant contracting authority may require quality management system document and environmental management system document. One or more partner of a business partnership may provide all quality and standard documents required for the project. On the other hand, partners of a consortium will have to separately provide such documents required for their part of the project.

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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