Regarding Signing Progress Payments with Annotation
The General Specifications, which are annexes to the procurement implementation regulations, contain important regulations regarding the execution of tender and contract processes.
The General Specifications for Service Works and the General Specifications for Construction Works regulate the procedure to be followed if contractors and contracting authorities cannot agree on any issue regarding progress payments made under public procurement contracts (issues related to price differences, penalty deductions, etc.).
With its decisions dated 06.06.2023, the 13th Chamber of the Council of State annulled the provisions of the General Specifications for Construction Works[1] and the General Specifications for Service Works[2] regarding the requirement for the contractor to submit a petition to the administration regarding the objections to the progress payment and also the requirement for the progress payment reports to be signed with a reservation.
Which obligations did the General Specifications for Service Works and General Specifications for Construction Works, which were annulled by the Council of State Decision, impose on the contractor?
Paragraph (a) of Article 42 titled "Progress Payments" of the General Specifications for Service Works stipulated that if the contractor objected to the provisional progress payments, the contractor was required to explain objections and justifications with a petition. A copy of this petition should have been attached to the progress payment report and a copy should have been submitted to the administration. However, the progress payment report had to be signed with the objection annotation. Otherwise, it was not possible for the contractor to object to the progress payment made by the administration at a later date.
This regulation was annulled by the decision of the 13th Chamber of the Council of State dated 06.06.2023 and numbered 2023/404 E., 2023/2898 K.
Similarly, the subparagraph (e) of paragraph 4 of Article 39 titled "Provisional Progress Reports" of the General Specifications for Construction Works stipulated that the contractor should explain objections to the provisional progress payments in a petition, stating the grounds thereof. A copy of this petition should be attached to the progress payment report, and a copy should be submitted to the administration. The progress payment report had to be signed with the objection annotation. Otherwise, it was not possible for the contractor to object to the progress payment later on.
This regulation was annulled by the decision of the 13th Chamber of the Council of State dated 06.06.2023 and numbered 2023/403 E., 2023/2899 K.
Conclusion
It is interpreted that with the annulment of the decisions of the 13th Chamber of the Council of State, significant changes have occurred in the obligations under Article 42/a of the General Specifications for Service Works and Article 39/4-e of the General Specifications for Construction Works.
In this case, if the contractor has an objection regarding the provisional acceptance, the obligation to sign the progress payment report with an objection annotation and to submit a petition explaining the reasons for the objection to the contracting authority has been eliminated. However, we would like to note that the annulment decision is not yet finalized and will be subject to an appeal review by the Council of State Administrative Appeals Board.
Atty. Deniz KARADUMAN
Bensu BAHADIR
Seyma YILDIRIM
[1] In subparagraph (a) of Article 42 titled "Progress Payments" of the General Specifications for Service Works, it is stated: "In case the contractor has an objection to the provisional progress payments, he is required to explain what his objections are and the facts on which they are based in his petition to the Administration, a copy of which shall be attached to the Progress Report, and to sign the progress report by writing the sentence "With the reservation written in my ........ dated petition to the Administration" or with an objection annotation to this effect. If the contractor has an objection to the corrections that may be made by the authorities in the progress report until the accrual process is carried out after the signing of the progress report, he must notify the administration with a petition within a maximum of ten days starting from the date the progress payment is paid to him. If the contractor does not notify his objections in this way, he is deemed to have accepted the progress payment as it is." [2] In subparagraph (e) of the fourth paragraph of Article 39 titled "Provisional Progress Payment Reports" of the General Specifications for Construction Works, it is stated as follows: "If the contractor has an objection to the provisional progress payments, he is required to explain his objections and the facts on which they are based in his petition to the administration, a copy of which shall be attached to the progress payment report, and to sign the progress payment report by writing the sentence "with the reservation written in my ........ dated petition to the administration". If the contractor has an objection to the corrections that may be made by the authorities in the progress report until the accrual process is carried out after the signing of the progress report, he must notify the administration with a petition within a maximum of ten days starting from the date the progress payment is paid to him. If the contractor does not notify his objections in this way, he is deemed to have accepted the progress payment as it is."
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