ANKARA — In 2008, a privately owned Turkish armored vehicles producer, Otokar, signed a $500 million contract with Turkey’s procurement office, the Undersecretariat for Defence Industries (SSM) for the development of four prototypes that would become the country’s first indigenous, new-generation main battle tank. Both procurement officials and the industry viewed Otokar as the "natural contractor" for the serial production order that would follow the development deal. But things have taken a different turn since then.

Under the various clauses of the development contract, Otokar, without competition, was to make an offer for the serial production contract. If Otokar’s offer was to be found satisfactory there would be no competition. If, however, the procurement bureaucracy was not content with the offer, then it had all the legal rights to launch competition for serial production of the Altay, the planned Turkish tank.

At the beginning of this year, Otokar said it completed the production of Altay prototypes and that the prototypes were now going through system qualification and acceptance tests.

In January, Otokar officially submitted its bid for serial production of 250 Altay tanks and integrated logistical support for the program. A few months later it revised its bid and submitted its best and final offer (BAFO) to SSM. Now the ball is at SSM’s court.

SSM’s decision on whether to go with Otokar or open competition will shape the Altay and its future sales, both to the Turkish army and potentially to foreign armies.

The decision comes at a time when SSM is reshuffling its own organization and defense procurement is not the top priority for a government that faced a coup attempt on July 15. More than 10 SSM personnel have been suspended after the failed coup on charges of links with the Islamist group suspected of masterminding the attempt. On Sept. 26, several department heads were also suspended.

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"At some point in [the] not-so-distant future, things will move ahead," a senior SSM official said. "All major programs will gain pace."

Another SSM official familiar with the tank program said: "We were hoping to decide on the modality of the serial production program before the end of the year. Now there may be delays."

He did not comment on whether there will be sole-source acquisition or competition but said that the per unit price in Otokar's original bid was "surprisingly high." He did not elaborate on the company's BAFO.

Speaking on condition of anonymity, several industry sources agreed that the Turkish government will go for the competition option. They also agreed that rival manufacturer BMC's entry into the arena has changed the whole picture.

BMC's local partner, businessman Ethem Sancak, is known to be a close friend of Turkey's authoritarian president, Recep Tayyip Erdogan. A Qatari investment fund owns 50 percent of BMC. Qatar is Erdogan's best political ally in the Middle East.

In August, BMC, Germany's Rheinmetall AG and the Malaysia-based Etika Strategi announced a Turkey-based joint venture for cooperation in armored solutions. The companies said that the joint venture would focus on wheeled and tracked armored vehicles.

"Apparently the joint venture aims not just the Altay contract but also to sell the tank to Gulf, Malaysian and other Asian markets," according to an industry source.

The Altay program involves the production of 1,000 tanks, with an initial batch of 250. Last year a privately owned Turkish engine maker, TUMOSAN, signed a €190 million (US $206.35 million) contract with the government to design an engine for the Altay.

The Turkish Army has 720 German-made Leopard 1 and 2 tanks, 930 American M-60s, and 1,370 M-48s, most of which are Cold War-era tanks and need to be replaced.

Turkey's Aselsan is the subcontractor for the fire control system and command, control and communications information system. Also, state-owned MKEK was selected as the subcontractor for the 120mm primary weapon, while Roketsan will provide the armor.