Turkey has recently established a high level “Industrialization Executive Committee” (a.k.a SAIK) with the Presidential Decree No.68 dated 13 October 2020. The SAIK is responsible for  making decisions in line with the policies and targets included in development plans and programs, to ensure the development of domestic production and technological capabilities in different ways, including but not limited to government procurement, to facilitate the investment, production and financing processes of producers and to increase their competitiveness at national level. 

A new definition of "Government Procurement" under SAIK 

The Decree brings a new definition to “government procurement” and gives the clues that government procurement methods may differ from those defined under government procurement and government contracts laws. Accordingly, procurement of any type of goods and services and construction, leasing and financial leasing from all sources that are subject to public law or under the control of the public or used by public institutions and organizations, public-private partnerships that gives private or exclusive rights to private sector organizations, establishment of real rights of property, concession, licensing and authorization agreements are defined as government procurement. 

The SAIK, chaired by the President, consists of the Vice President to be appointed by the President, the Minister of Industry and Technology, the Minister of Treasury and Finance, the Minister of Commerce and the Head of Strategy and Budget of the Presidency and convenes upon invitation by the President.  

The duties and powers are as follows: 

To make decisions regarding the realization of government procurements in accordance with the priorities of industrialization, domestic production, and National Technology Move 

To take the necessary measures to facilitate the investment, production and lending processes of the industrialists and technology producing institutions and organizations. 

To make decisions for government bodies and organizations to make long-term purchasing plans in a way that will allow domestic production. 

To take measures to ensure that the tender specifications and contracts are prepared in a way that does not prevent localization and ensure the indigenization of the technological components that the sectors need. 

To make decisions that will ensure investment in strategic areas where domestic production is limited. 

To decide on the actions to be taken regarding the changes in the structures of companies that are critical for the country with respect to continuity of domestic production and national security. 

To make decisions regarding the creation and implementation of road maps for all relevant public institutions and organizations in consideration of the priority for the produced domestically. 

To make decisions to increase the global competitiveness of the private industry sector, which will ensure coordination between countries in areas such as finance, customs, environment, infrastructure, logistics and energy. 

To make decisions to ensure that the supply policies are integrated with the National Technology Move and critical products in the supply chains are localized. 

To make decisions to guide public practices to strengthen the capital structures of manufacturing industry companies, to encourage company mergers when necessary, to design policies that will increase productivity and to increase product diversity. 

To determine the procedures and principles regarding the implementation of the Committee decisions and the use of the allocation from the general budget for the Committee. 

The secretarial works of the SAIK are performed by the Ministry of Industry and Technology. 

From government contracts perspective with this game-changing development it seems that all government contracts to take a role to support local industry compliant with the policies and decisions of an executive body. 

Admittedly, there would be some certain changes (maybe not in policies but practices) especially in high technology involved industries including but not limited to aerospace, defense, ICT, energy, life sciences and etc. which should be pursued to long negotiations between contractors and government bodies as to intellectual property ownership and technology transfers are likely to be prioritized by government. In addition, offset and industrial cooperation programs (click http://herdem.av.tr/offset-and-industrial-participation-oip-regime-in-turkey to have more information on Turkey’s industrial cooperation programs) for obligors seeking a work share in collaboration with local industry can be much more difficult as the matters on industrialization plans will also be subject to SAIK policies.   

Şafak Herdem