Our Information Note on the effects of the COVID-19 pandemic on public procurement agreements has been published.

1. INTRODUCTION

Presidential Circular No. 2020/5 on the Effects of the COVID-19 Pandemic on Public Procurement Agreements (the “Circular”) has been published in the Official Gazette dated 2 April 2020 and numbered 31087.

2. PROVISIONS OF THE CIRCULAR

According to the Circular, contractors of agreements executed on the basis of tenders carried out pursuant to the Public Procurement Law No. 4734[1] (the “Public Procurement Law”) will be entitled to apply to the relevant contracting administration and present documentation to prove that the performance of their respective works (in whole or in part) has become impossible (temporarily or definitely) due to the outbreak of the COVID-19 pandemic. Such application right of contractors will also be applicable with respect to agreements for procurement transactions such as procurements of goods and services which are set out in article 3 of the Public Procurement Law and are kept outside its scope.

Applications will be evaluated by the relevant administration on the basis of article 10 of Law No. 4735 on Public Procurement Agreements[2] regulating events of force majeure and other relevant provisions. Before rendering a final decision in respect of such applications, administrations will obtain the opinion of the Ministry of Treasury and Finance.

If, as a result of such evaluation, the relevant administration determines that the situation (i) is due to a reason not attributable to the contractor; (ii) prevents the contractor from performing its obligations; and (iii) cannot be remedied by the contractor (such conditions being cumulative), the relevant administration may provide a time extension or terminate the relevant agreement.

3. CONCLUSION

The objective of the Circular is to mitigate against the negative effects of the COVID-19 pandemic on public procurement agreements. However, uncertainty as to the documentation to be presented by affected contractors and the evaluation criteria to be used by the Ministry of Treasury and Finance when opining on the relevant applications remain a question mark. Another ambiguity is likely to arise in circumstances where the public procurement agreement contains a force majeure clause, thereby possibly creating a discrepancy between the provisions of the agreement and the Circular.