Internal or external evaluators are then asked to decide which bidder is the best equipped -- and the cheapest -- to competently fulfill the contract. We are talking about billions, not millions. Add cross-border tendering and we understand the economic relevance and political dimension of this process. Further add domestic, international and pre-European Union accession grants or loans and a very lucrative segment of Turkey's economy emerges. So lucrative as a matter of fact, that it has become prone to misuse -- but this is unfortunately a universal problem inherent to nearly all undertakings where large amounts of money change hands.As was reported in this newspaper earlier, there will be a new Turkish public procurement law, probably named the public purchases law, before the end of 2010. Today I wish to comment upon a number of issues which highlight the complexity of the system and why a final overhaul of legal frameworks and the awards-criteria process as such are a timely decision.
Although Turkish decision makers had been busy preparing for harmonization with the EU's laws in this regard since 2001, the year 2006 saw increased activity. I was invited to a meeting of the Turkish Union of Chambers and Commodity Exchanges' (TOBB) internal EU negotiations group about this subject and the utilities sector in particular. The meeting had brought together representatives of Turkey's leading industry sectors and government officials including Turkey's Public Procurement Authority (KİK) and Turkey's State Planning Authority (DPT). We spoke about the relevance of undertaking regulatory impact analysis before embarking on contracting out large-scale public events. A flawless system? Not as yet.
So what can go wrong?
First, let us take a look at the process and how it is supposed to be implemented. Assume town hall A or ministry B wants to invest one million in any local currency and advertises its intention as is legally required. Those companies or individuals who bid on the contract and who promise the best price-quality ratio according to strict points-based criteria will then be short-listed and invited to submit a full dossier; ultimately one of those applicants will be awarded the contract. The names and addresses of the winning individual, company or consortium will be published, and then it is back to business as usual for the next tender.
Second, let us think about things that can go awry; my list is not exhaustive. Imagine that the future contract awarding body does not advertise as required. Picture a scenario where decision makers favor local companies instead of allowing for nationwide competition. Consider the possibility that an applicant knows the people who will manage the future contract personally and obtains illicit information about this competitor's bids. Do not forget that the contract awarding authority is drafting the tender dossier itself and can easily add references that ultimately exclude certain future bidders. Very often only large holdings can successfully participate in tenders as financial thresholds with regards to previously undertaken work are kept exceedingly high and local small- and medium-sized enterprises (SMEs) -- although capable of carrying out the job -- fall through the net.
Transparency, morals and ethics -- or perhaps the lack of them -- are buzzwords often used when describing the tender process, and not only in this country. While Turkey had her own tender procedures in place, due to EU membership negotiations additional and quite enormous pre-accession financing became available together with further non-domestic public budget lines. It seems that there was a certain grey area that was conveniently overlooked by both Ankara and Brussels: evaluators -- both staff within institutions and externally hired if required -- must be impartial, and regulations must disallow the favoring of “personal acquaintances.” Besides, not every foreign or local consulting firm is really interested in the country's welfare, but is instead interested in making money, and fast.
Environmental considerations -- a must
In the same year of 2006, Sigma -- a joint initiative of the OECD (Organization for Economic Cooperation and Development) and the EU for the support of improvement in governance and management -- invited Turkish local and national authorities and experts from other countries to discuss the environmental considerations of public procurements at a meeting in İstanbul.
On Oct. 1 of this year, I conducted an online interview with Sven-Eric Hargeskog, who had attended the İstanbul meeting in which I participated, too, and I thought it made sense to ask him about developments since. He is now a senior public procurement adviser with the Swedish Governmental Agency for Innovation Systems (VINNOVA). His answers are his personal reflections. He began by stating that environmental considerations are well integrated in the EU's public procurement regime, which is important for successful climate and environmental targets. I wanted to learn how he, as a leading public procurement expert, evaluates Turkey's current public procurement law; he stated that Turkey is in a good position. Mr. Hargeskog believes that what is important is of course to listen, understand and act in accordance with the requirements in the negotiation process with the EU. He made an important comment: It is very easy to misunderstand the real meaning of the public procurement directives due to the terminology involved.
I then asked him what should come first: overhauling the system, making it more transparent or beginning with implementing environmental criteria in the awards procedure?
His answer was as follows: Even if environmental considerations are supposed to be on an equal footing in the public procurement directives and if prioritization is necessary, the treaty rules of transparency, equal treatment, non-discrimination, proportionality and mutual recognition will prevail.
Learning from Sweden
Asking whether Turkish SMEs would benefit or lose out due to cross-border tenders and the environmental criteria, Mr. Hargeskog replied that it all depends on how the procurement is set up and prepared. Market knowledge is the key to taking the correct measures to improve the possibilities for SMEs to at least participate in public procurement and the better the preparatory actions taken, the better their chances to win the tender.
He commented on Sweden before joining the EU and whether Turkey could learn from Stockholm's experiences in this regard. Sweden had a system and regulations for central government procurement many decades before implementing the EU directives in 1994. However, local authority public procurement was not regulated by law. So, the EU directives were a bigger “shock” for local authorities than for the central government, having had very similar rules before. Mostly the fact that no negotiations were allowed was hard for the local authorities to accept.
It became mandatory to allow bids to come in from non-local companies, which was a key obstacle to convincing local authorities of the benefits of a new law. The public procurement law had to be changed once a year on average for the first 10 years, due to -- as mentioned above -- not quite understanding the underlying meaning and culture of the directives. There was also too much legal influence and too little involvement of practitioners in the process.
My final point of concern was his on views about “buying green” and who would need to be convinced first: Turkish consumers or Turkish business? His closing remarks were that there will also always be a conflict between the buyer's ambition and the market actors in the sense that the market is not prepared to invest in more expensive but environmentally friendly solutions.
Looking ahead -- electronic tenders
The EU has developed a model for electronic public procurement which is called Tenders Electronic Daily, or TED. Every working day, all EU countries list their tenders according to more than 300 industry and business sub-categories, each with a unique eight digit identification number. It takes minutes instead of days to find out about relevant tenders for your company, across borders that is. France is leading the way as Europe's top public spender. While the process has been internationalized, very often one last obstacle remains: language! Civil servants in local town halls in most countries prefer to work in their mother tongue -- which is only fair -- hence most regional tender documents must be completed in the language of that country. SMEs may face difficulties as they need to hire a professional translator, but regional chambers and trade associations could help to provide these services at reduced rates.
Transparent public procurement -- one of Turkey's business cards
Designing a transparent and efficient tender announcement system ideally based on electronic bid submission, guaranteeing fair access and equal chances to and for each applicant -- a task that requires both legal and economic expertise, taking environmental and social impacts into account and finally, training enough independent internal and external evaluators -- is what is required now. A transparent and ethical public procurement system ultimately based on environmentally friendly standards -- a benchmark for Turkey's reform process and a business card for its democratic institutions! Learning from EU countries' best practices could be a helpful approach.
Benzer Haberler 
