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Dursun Ali DEM I RBO G A dursunalidemirboga@kik.gov.tr Head of International Relations Department

Strategic Approach to Centralized Purchasing in Turkish Public Procurement System (TPPS). Dursun Ali DEM I RBO G A dursunalidemirboga@kik.gov.tr Head of International Relations Department. Agenda. Introduction.

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Dursun Ali DEM I RBO G A dursunalidemirboga@kik.gov.tr Head of International Relations Department

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  1. Strategic ApproachtoCentralizedPurchasing in TurkishPublicProcurementSystem (TPPS) Dursun Ali DEMIRBOGAdursunalidemirboga@kik.gov.trHead of International RelationsDepartment

  2. Agenda

  3. Introduction • Value formoney (VFM) is definedbybusinessdictionary;‘A utilityderivedfromeverypurchaseoreverysum of moneyspent.’ • On theotherhand, valueformoney is based not only on the minimum purchaseprice (economy) but also on themaximumefficiencyandeffectiveness of thepurchase. • Sothat VFM determinescentralpurchasingefficiencylevel.

  4. TurkishPublicProcurementSystem (TPPS) • TurkishPublicProcurementSytem has fourhistorical background dates: • 1)Auction, Contestand Tender Lawno 661 dated 22 April 1925 • 2)Auctionand Tender Actno 2490 dated10 December1934 • 3) State Tender Lawno 2886 dated 08 September 1983 • 4)PublicProcurementLaw (PPL) no4734 dated 04 January 2002 PPL has created an advanced model of internationalprocurementregulations.

  5. TurkishPublicProcurementSystem (TPPS) • Currently, Publicprocurement is regulatedbyPublicProcurementLawNo. 4734whichentered into force on January 1, 2003. • One of theobjectives of preparing a newlaw on publicprocurementwasadaptationtointernationalinstruments on publicprocurement(EU ProcurementDirectives, UNCITRAL Model Law on Procurement, World Bank ProcurementGuidelines, etc.). PublicProcurementLaw no. 4734

  6. TurkishPublicProcurementSystem (TPPS) • Main Principles of PPL are; Transparency Reliability FullfillmentofNeeds EfficientUse of Resources Competititon Confidentiality EqualTraetment PublicSupervision Taxpayers’ Expectations

  7. PublicProcurementAuthority(PPA) • Public Procurement Authority which is administratively and financially autonomous was established in 2002. • The main duties of the PPA are; Regulation DisputeResolution Training E-Procurement Gathering Information andStatististics International Relations

  8. CentralisedPurchasing • Centralisation is one of thekeyprocurementstrategies. The optimal level of centralization is a challengingissue

  9. KeyPlayers of CentralizedPurchasingSystem in Turkey • TurkishPublicProcurementSystem (TPPS) is a mixture of centralisedanddecentralised model. • Majority of public procurement is conducted by the individual contractingauthorities (currentlymorethan 25.000). • PublicProcurementAuthority

  10. StateSupply Office • The State Supply Office (DMO), whichwasestablished in 1926,is the nationalcentralpurchasing body in Turkey. • TheStateSupply Office is located in Ankara, and it has offices in differentregions. • The State Supply Office purchasessomegoods andserviceslisted in its articles of associationfor otherpublicinstitutions. www.dmo.gov.tr

  11. StateSupply Office

  12. PublicHospitalsInstitution • PublicHospitalsInstitutionwasestablishedbyLegislativeDecreeno 663 dated 11 November 2011. • PublicHospitalsUnionsestablished in 52 citiesunderthePublicHospitalsInstitutionconductpublicprocurement in healthsectorforallthepublichospitals in therelevantcity. • PublicHospitalsUnionshavetoobey PPL fortheircentralizedprocurement. Inadditionframeworkagreementsprovide an instrumenttoPublicHospitalsInstitutionfortheircentralizedpurchasing. www.tkhk.gov.tr

  13. PublicHospitalsInstitution • The main duty of PublicHospitalsInstitution is opening, running, monitoring, assessingandsupervisingpublichospitalsandhealthinstitutionsandtoensurethatthepublichospitalsprovidehealthservicesproperly. • PublicfundsallocatedtoPublicHospitalsInstitutionfrom general budgetforhealthservices is over 8 billion TL (4,5 billion $) in 2013. Total HealthExpenditure Medicine Treatment

  14. MinistriesandContractingAuthorities • Needs of variouscontractingauthoritiessubordinateto a Ministrymay be procuredbythecentralorganisation of thatMinistry. • Inaddition, contractingauthorities in a citymaycometogethertoprocuretheircommonneedsthroughframeworkagreements.

  15. Integration of E-Procurement Tools with Centralized Purchasing System • Electronic PublicProcurement Platform (EPPP) becameoperational on 1 September 2010. • Operations that can be performed in EPPP, includepublication of contractnotices, preparation of contractdocumentbythecontractingauthorities, downloading of the contract document by economicoperators, verification of tax liability, balance sheet and income statement information, socialsecuritypremiumdebtinformation of theeconomicoperators.

  16. Integration of E-Procurement Tools with Centralized Purchasing System • StateSupply Office andothercontractingauthoritiesareregistered in EPPP tousethetools of EPPP. • Framework agreements can be concludedbyusing EPPP. • In2011, 465 frameworkagreementswereconcludedbyusing EPPP, and1.887 contracts based on these framework agreement wereawarded. • In 2012, 198 frameworkagreementswereconcludedbyusing EPPP, and 1.597 contracts based on theseframework agreement wereawarded. • One of themostimportantbenefit of e-procurement is reducingthecosts.

  17. Integration of E-Procurement Tools with Centralized Purchasing System • E-Procurementtools’ functions as follows; EffectiveCentralizedProcurementSystem Sustainability Therefore, E-Procurementtools has a crucial role in centralizedprocurement

  18. Benefits and Critical Views • Therearesomebenefitsandalsocentralizedpurchasingsystem has criticalviews;

  19. Strategic Perspective of Centralized Procurement • Procurement is increasinglybeingrecognised as a strategicfunctionratherthan an operativefunction. • A long-termstrategicapproachshould be adoptedtoachieveefficiency. • Thelevel of centralisationandthescope of goodsandservicesto be procuredcentrallyareimportantcomponents of procurementstrategy. Optimum approachshould be decidedbysupportfromanalytics.

  20. Strategic Perspective of Centralized Procurement • Strategic perspective has threepillars in TPPS;

  21. Strategic Perspective of Centralized Procurement • Strategic goals of centralisedpurchasing: SustainableCentralizedProcurementSystem

  22. ConclusionandRecommendations (Experiences) • How can thestrategicgoals be achieved: • Balancedinterestbetween market andcontractingentities, • Effectiveregulatoryauthority, • Effectivedisputeresolutionsystem, • Morelocalcentralisedpurchasing, • Sensitivitylevel of sustainability.

  23. THANK YOU…

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