Analysis of supply procedures applied in public expenditure process in terms of fraud risk – a case of a public institution

The principle that is protected by the Public Procurement Law, which manages public procurements, and also by secondary regulations is intended to enable public actions to take place for the best interest of the public. The only procurement method that forms the organic bond between public institutions and the free market is the direct procurement method. The article number 22, covering the direct procurement method, of the Public Procurement Law No. 4734 does not contain basic principles of the Turkish public procurement system that prevents fraud. It is believed that an attempt to eradicate fraud risk in public procurements will result in too many legislation changes, increasingly slower bureaucratic procedures and also more paper work. Nevertheless, practicalities of the direct procurement method bring along fraud risks against the common wellfare. The scope of this research covers the goods, services and construction works bought by an internal security unit in the rural, of the Ministry of the Internal, according to the Public Procurement Law No. 4734, in the years 2014-2018. 1.574 public procurement files have been examined against legislations. It has been observed that 1.532 out of 1.574 procurement files included the direct procurement method in the article number 22 of the Public Procurement Law No. 4734. That is why, this research has focused particularly on procurements via this method. It is stated in the Public Procurement Law No. 4734 that public administrations can negotiate with willing parties on technical conditions and price in order to meet the needs of such public institutions in the most economical way possible. This law aims to enable public institutions to bargain face to face and make purchases in best terms and prices. It has been found out in the research that the direct procurement method serves the above stated purposes in the public institution examined. Yet, the research has also revealed that the fact that the spending officer and the institution administrator have almost unlimited decision-making power and also their positions in the purchase processes make direct procurement method and other public procurement methods vulnerable to fraud risks in certain conditions. The research has concluded that purchases by the public institution investigated were carried out in accordance with accounting and reporting rules stated by the Law No. 5018 on Public Financial Management and Control and these purchases offered correct and reliable information in all important aspects, except for 3 different findings.