COVID-19: Measures in relation to Public Procurement Contacts, Extension of Time or Termination of Contract
The Circular on the Effect of the COVID-19 Pandemic on Public Procurement Contracts No. 2020/5 (“Circular”), has entered into force upon its publication in the Official Gazette No. 31087 dated 2 April 2020, as measures to curb the adverse effects of the pandemic continue.
The Circular covers contracts concluded following a tender opened under the Public Procurement Law No. 4734 and the exemptions stated therein, (e.g. contracts on construction works such as construction of highways, shipyards, docks, power plants, or for purchase of goods and services such as protection and security, software services, etc.) and provides that where the performance of the works stated in the contract have become temporarily or permanently, partially or completely impossible due to the pandemic, the contractors shall be entitled to file an application with the relevant contracting administration, providing documentary evidence of the alleged impossibility.
The administrations will assess the applications within the scope of article 10 of the Public Procurement Contracts Law No. 4735, which deems pandemics as force majeure events (and any other legal provisions) and either grant an extension of time or terminate the contracts if all the following conditions exist together:
- the event shall not be caused by the contractor’s fault;
- the event should be of such nature that it hinders the performance of the contractual obligations of the contractor and
- the contractor should be unable to remove the hindrance.
The Circular also provides that the administrations will seek the assessment of the Ministry of Treasury and Finance prior to making any decisions.
If any of our readers intend to file an application pursuant to the Circular, they should do so within twenty days following the occurrence of the force majeure event as required by article 10 of the Public Procurement Contracts Law No. 4735.
We remain at the disposal of our clients should they need our assistance or any further information or clarification.