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Turkish Government 'Disappointed' With Local Private Firms

Mar. 22, 2014 - 03:45AM   |  
By BURAK EGE BEKDIL   |   Comments
Turkish procurement chief Murad Bayar.
Turkish procurement chief Murad Bayar. (Selahattin Sonmez)
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ANKARA — The head of Turkey’s defense procurement agency said he is “disappointed” with local private companies’ performance, citing “a general lack of quality [in production standards] and a general reluctance to engage in R&D [research and development] activity and long-term investment vision.

“Unfortunately, we don’t have the mental comfort of relying on the private sector,” Murad Bayar, head of the Undersecretariat for Defense Industries (SSM), told a conference in Izmir on March 9.

“The more we work with the private sector, the more amateurish cases we observe,” said Bayar, who has headed the procurement mechanism for the past 10 years. “We are disappointed, and perhaps we must rethink our policies [on awarding contracts to boost private companies].”

He hinted at a potential change in this policy. “We may consider structural reforms. ... We don’t need to invent a new model. There are successful models in the world [which we can adopt],” the procurement chief said.

A defense analyst said Bayar’s speech was “shocking” for many private companies and could mean a governmental reluctance for more business with private firms.

“His words reflect a general frustration over several contracts that have not gone well enough over the past years,” the analyst said. “All that may mean a shift of government contracts from private to state-run companies.”

The top five Turkish defense companies, Aselsan, Tusas Turkish Aerospace Industries, Havelsan, Roketsan and MKE, are government-controlled.

“The case of [armored vehicles manufacturer] BMC is very conspicuous. We [SSM] found ourselves in a difficult situation vis-à-vis the end-user [the military],” Bayar complained.

BMC was seized last May due to financial obligations its parent company, Cukurova Holding, failed to fulfill. The group’s debts amounted to US $455 million. A fund administered by the Turkish government put the company up for sale in February at an estimated price of $434 million.

BMC makes the Kirpi, the country’s first locally designed and developed mine-resistant, ambush-protected vehicle.

Last year, the Turkish Armed Forces terminated a contract with BMC for the acquisition of 468 Kirpis. Under a 2009 contract with the Turkish government, BMC produced and delivered an initial 293 Kirpis but failed to comply with the original delivery schedule.

Three private company executives interviewed by Defense News said their companies were not targeted by Bayar’s criticism, claiming that the procurement chief “must have directed his words at other companies.”

Meanwhile, local industry is expecting the government to do more. A report released this month by Turkey’s largest private sector organization, TOBB, concluded that the defense and aerospace industry needs government-supported financing mechanisms to better compete in export markets.

The report stated that existing loans to finance sales to foreign buyers through the Turkish Eximbank are inadequate. It recommends launching foreign military sales and foreign military financing schemes similar to those operated in the US. ■

Email: bbekdil@defensenews.com.

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