The procedures and principles applicable to tenders conducted by public institutions and organisations are set out in the Public Procurement Act No. 4734. Although compliance with the rules laid down in the Act is mandatory, various unlawful features may nevertheless arise in the acts and actions carried out during the tender process. For those who claim to have suffered a loss of rights or damage, or to be likely to suffer damage, as a result of such unlawfulness, the Act establishes a tiered system of recourse. The first step in that system is a complaint submitted to the contracting authority that conducted the tender. A person who considers the decision taken by that authority on the complaint to be unlawful may then apply to the Public Procurement Authority (KİK) by way of an appeal by complaint. If the decision of that body is likewise considered unlawful, an action for the annulment of the administrative act may be brought before the administrative courts.
Observing the periods prescribed in the Act is of the utmost importance if an application is to be examined at all. Where those periods are missed, the allegation that the tender was unlawful can no longer be raised, and losses of rights that are difficult to remedy may follow.
The Concept of a Public Tender
A public tender means a tender opened by the institutions and organisations listed in Article 2 of the Public Procurement Act No. 4734 in order to meet their needs for the procurement of goods or services and for construction works.
Although public tenders may be conducted in different forms, it is legally mandatory that all of them be carried out in accordance with the procedures and principles prescribed in the Act No. 4734. Not only is there a public interest in tenders being conducted in conformity with the law and with due procedure, but the principle of the rule of law also requires such conformity.
Where tenders published by the Public Procurement Authority are not organised within the framework of the procedures and principles laid down in the Act, annulment of the tender may arise. Likewise, unlawful acts or actions occurring during the process — such as conduct by tender participants that is contrary to the legislation — may also result in annulment. For example, in a tender conducted under the restricted procedure governed by Article 20 of the Act, the tender is annulled if the number of candidates who may be invited falls below five, or if the number of tenderers submitting bids falls below three.
Public Tender Procedures
The Act No. 4734 provides for three tender procedures: the open procedure, the restricted procedure and the negotiated procedure.
Under the first of these, the open procedure, all tenderers may submit bids. Under the restricted procedure, by contrast, the opportunity to submit a bid is reserved to those tenderers invited by the administration following a pre-qualification assessment. Works to which the open procedure cannot be applied because they require specialist expertise and/or advanced technology, as well as construction works whose estimated cost exceeds half the threshold value, may be tendered under this procedure. The scope of application of the negotiated procedure is set out in detail in Article 21 of the Act No. 4734; recourse is had to this procedure where no bid emerges from a tender conducted under the open or restricted procedure, and in certain urgent situations specified in the Act.
In order to establish whether a tender contains a ground for annulment, determining the procedure under which it was conducted is of great importance.
General Framework of the Avenues of Recourse
Article 54 of the Public Procurement Act No. 4734, entitled “Applications concerning tenders”, reads as follows:
Public Procurement Act No. 4734, Art. 54
“Candidates or tenderers, and those who may become tenderers, who claim to have suffered a loss of rights or damage, or to be likely to suffer damage, as a result of unlawful acts or actions in the tender process may lodge a complaint and an appeal by complaint, provided that they comply with the rules as to form and procedure laid down in this Act.”
Accordingly, a person who claims that a loss of rights or damage has arisen, or that damage is likely to arise, as a result of unlawful acts or actions in the tender process may have recourse to legal remedies. It is open to the person concerned to pursue the avenues of complaint and appeal by complaint within the framework of the rules as to form and procedure laid down in the Act.
Under the further provisions of that article, complaint and appeal by complaint are administrative avenues of recourse that must be exhausted before an action is brought in relation to public tenders. In other words, an action seeking the annulment of the tender, which is an administrative act, cannot be brought directly on the allegation that the tender is unlawful. It is only where the complaint and, subsequently, the appeal by complaint are unsuccessful that the administrative courts may be approached with a request for the annulment of the tender.
If an action is brought before the administrative courts without those mandatory administrative applications having been exhausted, the pleadings are ordered to be referred to the competent administrative authority on the ground of encroachment upon the administrative authority. Encroachment upon the administrative authority constitutes a ground of preliminary examination for the purposes of the Administrative Procedure Act No. 2577.
The Complaint Procedure
The period for lodging a complaint begins to run from the day following the date on which the acts and actions in the tender process were learned of, or should be deemed to have been learned of. The application is addressed to the contracting authority that conducted the tender within five days in tenders conducted under subparagraphs (b) and (c) of Article 21 of the Act, and within ten days in other cases, and in any event before the contract is signed.
Identifying the correct addressee of the application is of critical importance. As will be explained below, in an appeal by complaint the application is made to the Public Procurement Authority, whereas in a complaint the addressee is the institution that conducted the tender. The legislature provided for the institution of complaint as an intermediate stage, with the aim of enabling unlawfulness to be remedied within a shorter period.
Upon receiving a complaint, the administration carries out the necessary examination and adopts a reasoned decision within ten days. The decision taken is notified to the complainant and to the other interested parties within three days following the date of the decision.
Where no decision is taken within the prescribed period, or where the decision taken is not in conformity with the law, candidates, tenderers and those who may become tenderers, including the applicant, must lodge an appeal by complaint with the Public Procurement Authority. That application must be made within ten days from the expiry of the period for taking a decision or from the notification to the person concerned of the decision alleged to be unlawful.
No contract may be concluded before the Public Procurement Authority has examined whether an appeal by complaint has been lodged, or before it has given its final decision on such an application.
The Appeal by Complaint Procedure
A person who has lodged a complaint, or who does not consider the decision taken by the administration to be well founded, may have recourse to an appeal by complaint in the cases and within the periods prescribed for a complaint, and before the contract is signed. As indicated above, such applications are made by way of pleadings addressed to the Public Procurement Authority.
The Authority examines appeals by complaint from three points of view: the allegations raised by the applicant, the matters identified in the decision taken by the administration on the complaint, and whether the principle of equal treatment has been infringed in the acts complained of. Appeals by complaint relating to a tender annulled by the administration following a complaint or an appeal by complaint are, however, dealt with strictly within the limits of the administration’s grounds for annulment.
The fact that a contract has been signed without compliance with the periods and the procedure prescribed in the Act, or that the application has been waived, does not preclude the examination of an appeal by complaint.
The power to assess appeals by complaint belongs to the Public Procurement Board within the KİK. The Board may, where it considers it necessary, decide to hear the parties and the interested persons.
The KİK must give its final decision on an appeal by complaint within twenty days following the date on which the information and documents relating to the tender under examination, together with the tender procedure file, are registered. That period is ten working days for appeals by complaint lodged against tenders conducted under subparagraphs (b) and (c) of Article 21 of the Act and against tenders annulled following a complaint or an appeal by complaint.
All decisions of the Board are served on the parties within five working days following the date of the decision and are published on the Authority’s website within five days following the date of service.
The Judicial Avenue
Since the final decisions reached at the end of the avenues of recourse described above have the character of administrative acts, an action for annulment may be brought against them before the administrative courts. Under the statutory arrangement, such actions are heard “as a matter of priority”.
Article 20/A of the Administrative Procedure Act No. 2577 provides that disputes arising from tender procedures other than decisions to bar from tenders are subject to the expedited trial procedure. Under that procedure the time limit for bringing an action is thirty days. Subject-matter jurisdiction in actions for annulment lies with the administrative courts, and the court with territorial jurisdiction is the court of the place where the authority that adopted the administrative act is located.
On the other hand, the administration, which must operate in a wide variety of fields such as electricity, building and construction, procures services in matters requiring specialist expertise. The provision of those services takes place by means of administrative contracts concluded reciprocally and by free will. Nevertheless, in certain cases the annulment of those contracts may also arise on grounds of unlawfulness, and the unlawfulness in question may even result in the payment of damages.
Frequently Asked Questions
Is representation by a lawyer mandatory before the administrative courts?
Turkish law allows parties to defend and represent themselves in person before the courts; save for limited exceptions, there is no obligation to be represented by counsel. No such obligation is prescribed in respect of the administrative courts either.
However, the complex structure of administrative law legislation, together with the short and strict periods contained in the Administrative Procedure Act, may lead to errors of form and substance that are difficult to remedy where the process is conducted by persons who are not lawyers. It is therefore advisable to obtain support from a lawyer practising in the field of administrative law before any step is taken.
What order should be followed if unlawfulness is identified in a tender?
Those concerned should first lodge a complaint with the institution that conducted the tender and, if the outcome is negative, pursue an appeal by complaint before the Public Procurement Authority. If the appeal by complaint is also unsuccessful, an action for the annulment of the administrative act may be brought before the administrative courts.
Can an irregularity in a tender also constitute a criminal offence?
Where irregularities or acts of corruption arising in public tenders constitute a type of offence defined in the legislation, a criminal complaint may be filed. For example, the commission of the offences of rigging a tender or of forgery of official documents may both require the annulment of the tender and give rise to the criminal liability of those who committed those acts.
When does the complaint period begin and how long is it?
The period runs, on the allegation that the acts or actions in the tender process are unlawful, from the day following the date on which they were learned of or should be deemed to have been learned of. The period for applying is five days in tenders that must be conducted as a matter of urgency, and ten days in other cases.
What happens if the administration is approached after the period has expired?
An application made after the period for administrative application has expired is rejected by the administration on the ground that the period has been exceeded. Where an action is brought against that rejection decision, the action is dismissed on the ground that the administrative avenue of recourse has not been exhausted.
Independent Legal Assessment
In disputes concerning public tenders, the strength of the objections on the merits is often of secondary importance; what is decisive is that the tiered system of recourse be operated correctly and in good time. The five-day and ten-day complaint periods are extremely short, and the starting point of the period is tied not to the date of service but to the date on which the unlawfulness was learned of or should be deemed to have been learned of. That criterion is one of the most contested points in practice and requires all notifications relating to the tender process to be archived in dated form.
Omitting the mandatory administrative avenues of recourse, for its part, leads to a finding of encroachment upon the administrative authority without the merits of the action being examined at all. By contrast, the fact that tender procedures are subject to the expedited trial procedure makes it necessary to act swiftly at the litigation stage as well. In a given file, the following matters in particular should be prioritised:
- Determining at the outset the procedure under which the tender was conducted and the corresponding period for applying
- Recording the date on which the unlawfulness was learned of in a manner capable of being established by documentary evidence
- Addressing the complaint pleading to the correct addressee, namely the administration that conducted the tender
- Scheduling the administration’s ten-day decision period together with the possibility that it will remain silent
- Raising all allegations in full in the appeal by complaint pleading, since the scope of the examination is limited to those allegations
- Making the application before the contract is signed and observing the thirty-day time limit for bringing an action under the expedited trial procedure
Independent Legal provides legal support throughout the entire process in disputes arising from public procurement legislation, from the preparation of complaints and appeals by complaint to the conduct of actions for annulment brought against decisions of the Board.