With the Law No. 7491 published in the Official Gazette dated 28 December 2023, an additional article 12 was added to the Public Procurement Law (the “Law”). Accordingly, a new exemption has been introduced for procurements of vehicles, vehicle renting, fuel, medicines, medical supplies and medical devices which are to be made by the General Directorate of State Supply Office (“DMO”) on behalf of the administrations.
Current Exemptions
There were already some exemptions in the Law in terms of procurements made by the DMO for needs of administrations. Within this framework, in accordance with Article 3(e) of the Law, the procurements to be made by the public institutions from the DMO are exempt from the Law. Pursuant to Article 3(g) of the Law, the procurements to be made by the DMO for supply of the needs directly for production of goods and services or its main activities are also currently exempt from the Law provided that their approximate cost and value of agreements to be made for such procurements do not exceed 66,22,498 Turkish liras for now (subject to an increase every year) except for those financed by the Treasury guarantee or direct transfers from the budget’s transfer funds. The value about the restriction for 2024 has not yet been determined but with the Public Procurement Communique expected to be published later in January, the monetary value for the restriction will be increased by the annual rate of change in the Domestic Producer Price Index of December 2023 (which is 44.22%) and thus, the procurements of goods or services that do not exceed 95,508,971 Turkish liras are expected to be exempt from the Law.
The New Exemption Under Additional Article 12
The additional article 12 added to the Law allows the DMO to make procurements of vehicles, fuel, medicines, medical supplies and medical devices as well as vehicle rentals by the procurement methods determined by the DMO without considering monetary limit specified in Article 3(g) of the Law. Pursuant to the relevant article, it is regulated that the DMO can make these procurements without being subject to any monetary limit, on condition that the Law’s principles for transparency, competition, equal treatment, reliability, confidentiality, public scrutiny, meeting the needs on time and under favourable conditions and efficient use of resources are ensured. The DMO may apply purchasing methods such as open or closed bidding procedure in which all bidders can bid, tender procedure among certain bidders by sending invitations to bidders and requesting open or closed bids or bargaining procedure in which price negotiations are made with the invited bidder. The DMO is also authorized to conclude framework agreements for such procurements.
The most crucial consequence of the exemption is that the Law will not apply to the procurements of the DMO within the scope of additional article 12 (except for the provisions about sanctions, banning from tenders and notification of the tender results). Therefore, these procurements can be made within the context of the procurement methods that is to be determined by the DMO without opening any public tenders pursuant to the Law and subject to procedures regulated under the Law.
Conclusion
The exemption provided under the additional article 12 is not new. Previously, it was regulated that the monetary limit would not be applied in the said procurements of the DMO within the scope of the provisional article 4 of the Law. However, in line with the decision of the Constitutional Court dated 18.05.2023 and numbered E. 2022/11, K. 2023/98 (the “Decision”), the relevant section of the provisional article 4 was annulled previously. Accordingly, the monetary restriction has become applicable to procurements of vehicles, fuel, medicines, medical supplies and medical devices as well as vehicle rentals made by the DMO as of the publication of the relevant decision in the Official Gazette on 12 September 2023. Consequently, it can be stated that the new regulation has brought us back to the situation before the Decision.
Pursuant to the additional article 12, DMO is expected to introduce secondary legislation with consultation of the Public Procurement Agency in order to determine the principles and procedures related to business and transactions regarding tender process and framework agreements, including rules for applicable procurement methods, time periods and rules applicable to announcement and invitation procedures, preparation of tender documentation (including tender specifications), bidding procedures, evaluation of offers and finalization of the procurement process. Since the DMO’s existing legislation also meets and regulates these conditions, it is envisaged that the DMO will continue its procurements pursuant to its existing regulations and without the monetary limit for procurements in the scope of the additional article 12. Indeed, in the announcement dated 2 January 2024 made on the DMO’s official website, only the new exemption was mentioned and the DMO stated that the procurements of vehicles, fuel, medicines, medical supplies and medical devices as well as vehicle rentals will be made by DMO irrespective of their values (whether they are below or above monetary limits specified in the Article 3(g) of the Law).
Although it is anticipated that the DMO will not introduce a new regulation, the DMO can still make amendments to the existing regulation and principles and procedures. Moreover, a new annulment action may also be filed before the Constitutional Court against the wide-ranging exemption brought in terms of the DMO’s procurements. The legality of the DMO’s procurements is critical for the companies supplying the relevant goods to the DMO and it is crucial to closely monitor the developments regarding these procurements.