Principles to Services for law no 4734

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Principles Amending the Principles to Apply in Calculation of Price Difference related with the Services to be procured under Public Procurement Law No.4734   (As Amended)

Turkish Official Gazette Date: 07/05/2004
 
Turkish Oficcial Gazette No: 25455 
 

Purpose
Article 1- The purpose of these principles is to establish the principles and procedures to be used in calculation of the price differences for the services procurements contracted pursuant to Public Procurement Contracts Law No 4735 of the Contracting Entities under the scope of Public Procurement Law No 4734.
Scope
Article 2- The transactions related with the price difference calculations to be applied in services that the Contracting Entities are to procure by taking lump sum or unit price bids according to Public Procurement Law No 4734 shall be carried out according to these principles.
Basis
Article 3- These principles have been drawn up based on the article 8 of the Public Procurement Contracts Law No 4735.
Principles to be observed by Contracting Entities
Article 4- The Contracting Entities must include provisions stated herein in the specifications and contracts of the services to be procured under Public Procurement Law# 4734 in order to be able to calculate price difference.
Exceptions
Article 5- Of the services specified in article 4 of Public Procurement Law No.4734, price difference shall not be paid to short term services such as research and development, market surveys and polls, promoting, meeting, organization, exhibition, professional training, photography, film, intellectual and fine arts, and insurance, accounting, communication services and the financial and legal services of the consultancy services stated in article 48 of the said law. Opposing provisions shall not be included in the specifications and contracts.
Definitions
Article 6- For the application of provisions on the services procurements the following definitions shall apply;
a) Contracting Entity: the organizations and institutions within the scope of the Public Procurement Law No 4734,
b) Service: the services stated in article 4 of the Public Procurement Law No 4734,
c) Contract: Written agreement between the Contracting Entity and the contractor for the procurement of services over lump sum or unit prices,
d) Lump Sum Price: The total price offered by the tenderer for the whole of the work, detailed properties and quantity of which are specified by the Contracting Entity,
e) Offer unit price: The price offered by the tenderer for each item of the schedule, which is prepare by the Contracting Entity based on the detailed characteristics of the work,
f) Contract unit price: the price, offered by the contractor and shown in the contract after being approved by the Contracting Entity for each work item to be carried out according to the unit price definition and technical specifications in the unit price contracts,
g) Work item with offered unit price: The units forming the basis for the payments, technical or special characteristics of which are stated, with unit price definitions and the costs of which are shown in the contract or unit price of which is established later, at the works to be carried out according to the unit price contract,
h) Work group: the units forming the basis for the payments, which are comprised of the sum of the work items related with the interim or final payments and showed by progress ratios in lump sum works,
i) Year: Calendar year,
j) Day: Calendar day,
k) Execution month: the month in which the works are performed according to the work program approved by the Contracting Entity,
l) Base Index: the index for the month preceding the month in which the tender date exists,
m) Current index: the index for the month preceding the month in which the progress payment is prepared,
n) (Amended: 07.05.2004- 25455/ art. 1) Base minimal wage: the valid gross minimal wage for those workers, outside agriculture sector and over 16 years of age, as of the tender (final offer) date,
o) (Amended: 07.05.2004- 25455/ art. 1) Current minimal wage: the valid gross minimal wage for those workers, outside agriculture sector and over 16 years of age, as of the date on which the progress payment for the works in the work program are prepared,
p) Base salary coefficient: the servant salary coefficient established according to the article 154 of the state civil servants law no 657 and valid as of the tender date,
r) (Amended: 07.05.2004- 25455/ art. 1) Current salary coefficient: the servant salary coefficient established according to the article 154 of the state civil servants law no 657 and valid as of the date on which the progress payments are prepared,
s) Price difference: The price to be paid or deducted according to these principles for the work items carried out in the execution month according to the work program in the unit price contracts and for the work groups realized as per the progress ratios in the execution month according to the work program in lump sum contracts,
Price difference calculation
Article 7- The price difference shall be calculated according to the following formula: 
F = An x B x ( Pn –1)           
                                        İn              Yn           Gn           Kn           Mn
             Pn =   [a1 + a2  —— + b1  —— + b2  —— + c —— + d  —— ]
                                        İo              Yo           Go           Ko            Mo 
Whereas;
F: Price difference (TL),
An: the amount (TL) calculated by multiplying the work items realized in the execution month by the contract prices in works with offer unit price at progress payment no (n), where n=1 at the first progress payment; and the amount (TL) calculated by multiplying the work group and/or the work item production amount realized in the execution month according to the progress ratio by the contract prices in lump sum works,
B: the coefficient of 0.90,
Pn: the price difference coefficient calculated by applying the basic indexes and current indexes used in price difference calculation and representative coefficients of the weight ratios of the a1, a2, b1, b2, c and d values at the progress payment no (n), where n=1 at the first progress payment,
           a1: the fixed coefficient, represents the rate of labor based on the minimal wage, which will be used in the calculation of the works to carried out under contract and for which an increase difference shall be paid according to article 8 of these principles, and for which no increase is foreseen in the above formula,
           a2: the fixed coefficient, which will be used in the calculation of works under contract and represents the weight ratios of the labor other than a1 coefficient,
            b1: the fixed coefficient representing the weight ratio of the fuel to be used in the performance of the works under contract,
b2: (Amended: 07.05.2004- 25455/ art. 2) the fixed coefficient representing the inputs of other goods or other services to be used in the performance of the works under contract,
c: the fixed coefficient representing the architecture and consultancy ratios of the works under contract,
d: the fixed coefficient representing the weight ratio related with the depreciation of the equipment and machinery to be used in the performance of the works under contract,
It is mandatory that one, several or all of the fixed coefficients a1, a2, b1, b2, c and d be determined by the Contracting Entity in consideration of the ratio in the work tendered such that their sum to be equal to one (1.00) and be published in the tender document. These fixed coefficients shall in no way be changed during the execution of the contract.
The basic indexes (o) and the current indexes (n) in the formula mean the followings;
İo, İn: the basic minimal wage and the current minimal wage related with labor,
Yo, Yn: the basic and current indexes of fuel; the figure in the "Coal, Refined Petroleum Products" line of the Table 2- Wholesale Prices Index Figures Table published by the Prime Ministry State Statistics Institute with 1994=100 base,
Go, Gn: the basic and current indexes of materials other than fuel; the figure in the "General" line of the Table 2- Wholesale Prices Index Figures Table published by the Prime Ministry State Statistics Institute with 1994=100 base,
Ko, Kn: the basic salary coefficient and the current salary coefficient related with engineering and consultancy,
Mo, Mn: the basic and current indexes of machinery and equipment depreciation; the figure in the "Machine and Equipment Production" line of the Table 2- Wholesale Prices Index Figures Table published by the Prime Ministry State Statistics Institute with 1994=100 base,
In case one or several of the indexes stated above are changed by Prime Ministry State Statistics Institute during the implementation of the contract, the price difference shall be calculated by the new index when it is established for the changed one, if not, the figure in the "General" line of the Table 2- Wholesale Prices Index Figures Table published monthly by the Prime Ministry State Statistics Institute with 1994=100 base.  
The difference caused by the changes in the minimal wage and other labor costs (Amended: 07.05.2004- 25455/ art. 3)*
Article 8 – Provided that the number and daily working hours of the staff under Social Insurance Law No 506 to be employed for the realization of the service tendered; the sum of the following paragraphs a, b and c shall be paid or deducted without applying the article 7 of these principles considering the payments to be made by the Treasury on behalf of the employer pursuant to the law no 506;
a) The difference between the old and the new minimal wage in case the minimal wage established for workers older than 16 years of age is changed by the minimal wage establishment commission on tender date,
b) The difference to occur as of the tender date at the sum related with the social insurance premium and unemployment insurance premium to be paid by the employer due to the change in the minimal wage or lower limit change and premium rate changes,
c) the difference to occur at the sum related with the social insurance premium and unemployment insurance premium to be paid by the employer due to the payment additions envisioned in the contract within the framework of the second paragraph of article 77 of the law no 506.
Application Principles
Article 9- The following principles must be observed in price difference calculation:
a) No amendments may be made to the procedures and principles in the contract related with the price difference once the contract is signed.
b) The costs to be paid or deducted in addition to the contract price as a result of the application of these principles are in the form of price difference and do not affect the contract price.
c) These principles shall not apply to works, the costs of which are paid in foreign exchanges or Turkish Lira equivalent of foreign exchanges by calculating exchange differences separately.
d) During the preparation of the progress payments in cases where the index to apply to the progress payment is not revealed, the price difference shall be computed using the previous index. As soon as the new indexes are revealed, the price differences for the following progress payments shall be corrected accordingly.
e) The price differences, such calculated, cover all price increases that might be the subject of price difference payment. Other than this, no price difference shall be paid due to the procedures, the type and amount of the machinery, equipment, material and labor used by the contractor, devaluation of Turkish Lira against foreign exchanges, the increase in the price of the material procured from abroad and other similar reasons.
f) At works, for which an advance payment is made, the amount to be paid to the contractor having deducted the advance from the progress payment is considered as the (An) amount. Where the price difference coefficient (Pn) is smaller than 1, no advance payment shall be deducted from (An) amount.
g) These principles shall apply to work items and/or work groups carried out according to the work program.
h) In case a new unit price is established during the execution of the work for the work item, for which there exists no unit price in the contract and which is requested to be performed by the Contracting Entity, in unit price contracts, this price shall be established according to the market value and conditions of the month in which the price is established. The price computed by dividing the newly established unit price by the execution month price difference coefficient (Pn) is multiplied by the amount of work item and the resulting amount is included in the column "works performed with the contract unit prices" at the progress payment and paid to the contractor as the new work item on the basis of contract. The price difference for this work item is found by calculating over the indexes of the execution month.
i) (Inserted: 07.05.2004- 25455/ art. 4) Provision related with only the application of article 8 of this article may be included in the administrative specifications and contracts.
Work program and allocation segment
Article 10- The contractors, having signed the contract, shall prepare and have approved by the Contracting Entity a detailed work program showing the work items, monthly works, annual allocations and monthly distribution of these.
In case an allocation in any work program of any month is not spent, the index of the month, in which the work program is not realized, shall continue to apply in the following progress payments until the progress payments become equal to the unspent portion of the allocation.
In case time extension is granted to the contractor due to the forces majeure stated in article 10 of the law no 4735 or when the Contracting Entity's fault caused the delay of the execution of the contract, price difference shall be calculated for works carried out according to the revised work program, which is prepared by the contractor and approved by the Contracting Entity, based on the extended time.
In cases where the contractor fails to prepare the work program and have it approved by the Contracting Entity, the work program is prepared and approved by the Contracting Entity one sided. The contractor is obliged to comply with such prepared and given work program.
Increases and decreases in the amount of service
Article 11- On condition that the provisions of the article 10 are considered related with the allocation segments, in cases where increases or decreases in the amount of the services are determined in unit price contracts, the increased or the decreased amount (regardless of the month the service is performed) is valued by the price difference coefficient of the month in which the increase or decrease is finalized so as not to exceed the work completion date.     
Application in the penalty works
Article 12- When the price difference is calculated at works, which failed to receive time extension although the duration expired and which is performed with the permission of the Contracting Entity, the lower of the (Pn) value valid at the end of the expiration date of the duration and the (Pn) value during the period of penalty work shall apply.
Works for which no price difference is envisioned
Article 13- Though the payment of price difference is not envisioned in the administrative specifications and contract of the work tendered, in case the work completion date is postponed by granting time extension due to forces majeure or the failure of the Contracting Entity, price difference may be paid to the work items or work groups, carried out in the postponed period according to the work program, pursuant to these principles on condition that it is stated in the administrative specifications and the contract.
The base index in the price difference calculation means the index of the month in which the work completion date takes place, and the current index means the index of the month in which the progress payment preparation date takes place. The figure in the "General" line of the Table 2- Wholesale Prices Index Figures Table published monthly by the Prime Ministry State Statistics Institute with 1994=100 base shall be considered as the base and current indexes.
Enactment
Article 14- These principles shall enact on 1/1/2003.
Enforcement
Article 15- The Cabinet shall enforce these principles.
* This amendment is valid from 01.01.2004.