Legal Arrangements Made Within the Context of Public Tenders and the Corona Virus (Covid-19) OutbreakApril 2020, Erdemir&Özmen Attorney Partnership
Legal Arrangements Made Within the Context of Public Tenders and the Corona Virus (Covid-19) Outbreak
In our Country and all over the world, many economic and social activities are suspended or substantially reduced due to the corona virus (Covid-19) which causes a major pandemic.
Many contractual obligations are also affected by the current situation. Consequently, for the commitments made under the contracts concluded prior to the pandemic, the risk of failure to fulfill these commitments arises.
Due to the existence of the obligations that become impossible in whole or in part as a result of the pandemic, a new legal arrangement was made in respect of the commitments made under public tenders. Within this framework, it becomes necessary to carry out evaluations on how to proceed for public tenders in this period.
A. PUBLIC TENDERS
Public tender means the proceedings which indicate that the government agencies’ good or service procurements and construction works are awarded to the one selected from among the bidders in accordance with the procedures and conditions laid down in the Public Procurement Law numbered 4734 and which are completed by singing of the contract following the approval of the contracting officer. The construction works and the goods and services, needed by public institutions, are provided to those public institutions through tenders.
The suppliers, service providers or construction contractors that will submit their bids for tenders regarding good or service procurements and construction works should be requested to submit various documents, certificates, information and samples, etc. which indicate that they have the capacity and competency to accomplish the work constituting the subject of the tender and thus, on the part of the public institution, there must be a strong conviction that the contractors will be able to accomplish the work. All the tender-related documents and certificates are submitted to the public institution that will organize the tender. After completion of the phases for admission of the tender applications and submission of the bids, the tendering official public institution selects the contractor to whom the tender will be awarded. The persons to whom the contract is awarded take over this work and thus, they perform the commitments they have made in accordance with the contract concluded between the parties within the scope of the tender.
However, as is known, the contractors that are in a position not allowing them to perform their contractual activities in whole or in part, temporarily or permanently due to current extraordinary situation fail to fulfill their commitments or encounter the possibility of failure to fulfil their commitments. Therefore, a legal arrangement was made and thus, it is prescribed that such contractors may apply to the relevant public institution due to the pandemic situation and that, thereupon, the contractual obligations may be postponed or the contracts may be terminated.
B. LEGAL ARRANGEMENTS MADE DUE TO THE CORONA VIRUS OUTBREAK
Pursuant to the Presidential Circular numbered 2020/5 regarding the “Effect of the COVID-19 Outbreak on Public Procurement Contracts” as published in the Official Gazette dated 02.04.2020 and numbered 31087 , it is prescribed that the contracts may be extended or terminated due to an impossibility of performance in respect of the public tenders awarded within the framework of the Public Procurement Law numbered 4734.
The Circular referred to above covers the contracts signed in result of the tenders that took place under the provisions specified in the Public Procurement Law numbered 4374 and exempted from the same Law, including the exceptions.
Pursuant to the Circular, the contractors may file their applications regarding the impossibility of performance of the contractual work in whole or in part, temporarily or permanently due to the COVID-19 outbreak. The contractor shall file this application with the administration namely the other party to the contract, by documenting the case of impossibility.
The administrations shall review these applications within the framework of the provisions contained in the related legislation. Before taking the relevant decision, the administrations shall also receive the opinion of the Ministry of Treasury and Finance in this regard.
In order for the administrations to decide to terminate the contract in result of their evaluation, it is necessary to determine that the following conditions have taken place all together, namely that the existing situation has not taken place due to the contractor’s fault and that the existing situation constitutes an obstacle against the contractor to fulfill its contractual obligations and that the contractor does not have the capability to eliminate this obstacle.
In the light of all-above mentioned, it is prescribed that the contractors may apply to the administration namely the other party to the contract, together with the evidence indicating the case of impossibility due to the corona virus outbreak and that the administration may thus decide to extend the term of or terminate the contracts concluded within the context of public tenders. This legal arrangement was made in order that the contractors affected by the pandemic situation and the administrations demanding goods, services or construction works under the contracts are not aggrieved in this period and therefore, it is of quite importance for those contractors and administrations.