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Legal Alerts
09/06/2022

Principles on calculating additional price difference and assignment of contracts in public procurement were published

Legal Alerts
Energy, Mining & Infrastructure

Recent development

Implementation Principles related to the Provisional Article 5 of Public Procurement Contracts Law No. 4735 (“Provisional Article 5“) regarding calculating additional price difference and assignment of contracts, which entered into force on 22 January 2022, were published in the Official Gazette No. 31760 dated 24 February 2022 and became effective on the same date (“Implementation Principles“). You may access the Implementation Principles in Turkish, here.

What do the Implementation Principles bring?

Provisional Article 5 already provided the opportunity to calculate an additional price difference and assign contracts that have been signed based on Turkish lira prices as a result of public tenders conducted under the Public Procurement Law No. 4734 (“Public Procurement Law“) before 1 December 2021, and continuing as of 22 January 2022, or under which acceptance or preliminary acceptance was made without terminating or dissolving contracts before that date. The procedures for using this opportunity and formulas for calculating price difference are specified in the Implementation Principles. In this regard, the most important provisions can be summarized as follows:

a) Calculating and implementing the additional price difference

  • The additional price difference can be calculated for parts fulfilled between 1 July 2021 and 31 December 2021, including these dates, regardless of whether the procurement documents include provisions on calculating price difference.
  • The contractor must apply to the contracting authority in writing within 30 days following 24 February 2022 to be able to benefit from the additional price difference calculation.
  • The additional amounts to be calculated will constitute the additional price difference and do not change the contract value. In mixed contracts, separate calculations will be made for a lump sum turnkey price and unit price.
  • The Implementation Principles explicitly provide that there will be no deduction from progress payments if the calculated additional price difference is negative. Additionally, the Implementation Principles do not prevent the application of the existing price difference provisions in the procurement documents. Those provisions will continue to apply as they are provided under the procurement documents.
  • It is not required to comply with the work or delivery schedule for calculating the additional price difference for the works completed between 1 July 2021 and 31 December 2021, including these dates. However, the additional price difference cannot be calculated for contracts whose work or delivery terms expired before 1 July 2021 but who continued after this date with delay penalty implementation. On the other hand, additional price differences can be calculated for contracts made for the procurement of goods, services and works that were delayed due to force majeure events.
  • Additional price differences will not be calculated pursuant to the Implementation Principles for the procurement of services that are outside the scope of the general rules on price difference and that are temporary in nature, such as research and development, market research and surveys, promotions, meetings, organizations, presentations, professional education, photography, movies and fine arts, as well as insurance and accounting services and financial and legal consulting services provided under Article 48 of Public Procurement Law.
  • Additional price differences will not be calculated in procurements of goods where (i) the final bid date and delivery dates are 60 or less calendar days apart (also applicable for parts delivered within this time frame for procurement of goods where partial delivery is made); or (ii) the price difference calculation is regulated under procurement documents concerning electricity, medicine, petroleum products and liquefied petroleum gas procurements.

b) Assigning the contract

  • To be able to assign the contract, the contractor must submit a written application to the contracting authority within 60 days of 24 February 2022 and the contracting authority must approve the assignment of the contract. The contracting authority will decide on approval within 30 days of the application.
  • The contractor must complete the procedure necessary for assigning the contract within 30 days of the contracting authority’s approval. Otherwise, the application for assigning the contract will be deemed null.
  • The assignee must fulfill the necessary qualifications required at the first tender date at the date of assignment for assigning the contract to be possible.
  • Concerning the assignment of the contract, restrictions and sanctions related to assignment will not apply, stamp duty will not be required and the tender security of the assignor will be returned upon the assignment.
  • Upon assigning the contract, the contractor cannot claim any financial rights other than the additional price difference and its rights for the works completed until the assignment date. It is possible to apply for an assignment of contract where the additional price calculation application is also made.

Conclusion

The Implementation Principles provide details as to the calculation of additional price difference and assignment of contract opportunities provided under Provisional Article 5. Relevant contractors can benefit from these opportunities by submitting applications in accordance with the procedures and time limits foreseen under the Implementation Principles.