ECOSAI - 2019
Berkay CANTEK󾜀 N
SAI Turkey
Government Procurement Legislation and
Audit Practıce in Turkey
This st u d y i n t r o d u c e s g o v e rn m e nt
procurement system and government
procurement audit practice of Turkey. As a
developing country, there is an upward chart
in the public expenditures of Turkey.
Connected to the development, diversity and
amount of public expenditures has
considerably increased in recent years in
Additionaly, candidacy and harmonisation
progress of Turkey with Europen Union has
brought new changes in all sections of public
sector. In purpose of fulfilling increasing
needs of government efficient, promptly and
appropriately, new editings have been done
and new entities were established in 2002.
These were Public Procurement Law and
Public Procurement Authority.
Public procurement legistlation in Turkey is
divided into two main parts. Public
Procurement Law regulates the preparation
stag e of p rocu reme nts, and P ubli c
Procurement Contracts Law and the
s e c o n d a r y l e g i s l a t i o n r e g u l a t e s
implemention rules of procurements.
Before Public Procurement Law, State
Procurement Law (Law No: 2886) was in
force since 1983. But as a requirement of
getting adapted to necessities of today, and
harmonisation schedule of Turkey's
membership process to the European Union,
Public Procurement Law and Public
Procurement Contract Law were issued in
The main dierence between the State
Procurement Law and Public Procurement
Law is that; State Procurement Law regulates
both revenue-providing transactions such as
rent and sell of government properties and
expenditure-providing transactions
(procurements) at the same law.
With issue of Public Procurement Law,
government procurements have began
carrying on through a dedicated and
specialized law that is based on transperency
and equality, and all public entities get
involved into implemention area of the Law
as well.
Main Regulations on Government
Procurement in Turkey
1. Public Procurement Law
Law No:4734-Public Procurement Law is the
main and fundamental legislation about
government procurements in Turkey. It
consists of 7 chapters and 70 articles. Briefly,
the law regulates scope and exceptions,
procurement principles, procurement
procedures, tender notices, specifications,
prohobited actions, penalty provisions, and
Pu b li c P ro cu re me nt Au th or t i y - t he
authorized regulative agency about
government procurements in Turkey.
2. Public Procurement Contracts Law
Law No: 4735- Public Procurement Contracts
Law briefly regulates types and specifications
of contracts and contract types, force
majeures, control, inspection and acceptance
procuredures, liabilites of suppliers and
public serveants. It consists of 5 chapters and
51 articles.
3. Secondary Legislation
Secondary legistlation consist of regulations
and notifications. Elements of seconday
legistlation may be dened as detailed
routers for implemention of Law. For
example, Regulations for Implemention of
Works, Regulations for Control, Inspection
and Acceptance of Services, etc…
Monetary values and threshold values those
mentioned in the Law are annualy updated by
notications. Articles of laws are also
explained in detailed in General Notification
of Public Procurements.
S c op e of P u bl i c P r o cu r e m en t
Government procurement legistlation has a
wide area of implemention. Every public
institution those governed by public law or
under public control or using public funds are
obligated to provide their needs under
regulations and supervision of public
procurement legislation.
Public authorities who shall apply Public
Procurement Law are listed below:
ü General budget and special budget
ü Special provincial administrations and
ü State economic enterprises
ü Social security establishments
ü Any institutions, organizations,
a s s o c i a t i o n s , e n t e r p r i s e s a n d
corporations which more than half of
their capitals, directly or indirectly,
together or separately are owned by
those stated above
When scope of the law is examined, there is
no public entity out of the implemention area
of law. Besides, scope of the Public
Procurement Law is in a great harmony with
the audit area of Turkish Court Of Accounts.
M e t h o d s o f G o v e r n m e n t
Procurement In Turkey
There are two principal procurement
p r o c u r e d u r e s m e n t i o n e d i n P u b l i c
Procurement Law:
1. Open Procedure: Procedure which all
tenderers may submit their tenders.
2. Restricted Procedure: Procedure which
only qualified tenderers who succeed
the pre-qualification evalution carried
out by contractor authority are invited
for tendership. Restricted procedure
may be applied in two cases:
a) Subject of procurement requires
high technology or speciality that
open procedure is not suitable
b) Estimated cost of procurement is
higher and half of threshold value
Other procurement procedures may be
applied only in certain cases those mentioned
in the Law.
ECOSAI - 2019
The fundamental principles of public
procurement in Turkey are competition and
transperency. As a reflection of principle of
competition; the law keeps application of
principal procurement procedures obligatory
in order to maximise the competition in
public procurements. Misuse of other
procurement procedures may cause
administrative or judicial investigation for
public serveants who are responsible.
Beside principal ones, other procurement
procedures are listes as:
1. Negotiated Procedure
2. Direct Procedure
3. Exceptional Purchases
1. Negotiated Procedure
This procurement procedure is divided into
two sections. The first section deals with
urgent procurement process. Due to urgency
of the need, publication of tender notice is
not compulsory. However, if tender notice is
not published, at least three tenderers shall
be invited to submit their qualifications and
price offers in order to protect and provide
principal of competitivenes in public
Examples of this procument procedure are:
ü Unexpected and unforeseen events
such as natural disasters, epidemics,
risk of losing lives or properties
ü Events that could not be predicted by
the contracting authority
ü Immediately occurrence of specic
events relating to defence and security
ü Needs up to 301.228 (updated annually)
Turkish Liras
In the second section of negotiated
procedure, a two-staged procurement
process exists. In the first stage, tenderers
submit their their initial proposals, which do
not include price, such as technical details
and realization methods of the contract that
is subject matter of the tender.
Tender commission interwievs methods and
solutions of need with each tenderer. After
clarication of conditions and technical
interwievs, tenderers are invited to submit
their offers including price. This procurement
method is mostly applied for unique needs of
public authorities such as:
ü No tender is submitted in open or
restricted procedures
ü D u e t o s p e c i c a n d c o m p l e x
characteristics of the need, it is
impossible to define the technical and
financial aspects clearly
ü The needs those requiring a research
and development process, and not
subject to mass production
2. Direct Procedure
Altough this purchase is regulated in Public
Procurement Law, it is not a procurement
procedure. That means; requirements such
as adve rtisin g, est a blish i ng ten d er
commisson, receiving securities and applying
qualification provisions are not compulsory.
Needs of public authorities are provided by
market research.
There might be some cases it's impossible or
not eective to apply procurement
procedures. Direct procurement is a method
of purchase applied depending on the nature
of needs or items to be purchased are of low-
cost or the items required in urgency by
authorities rapidly. There are a few examples
for direct procurement listed below:
ECOSAI - 2019
ü The needs those can be met from only
one natural or legal person
ü Purchase or lease of immovable
ü Procurement of medicine, vaccination,
serum, antiserum, blood and blood
products which are not economically
stored due to their nature
ü Procurements not exceeding 90.358
Turkish Liras (updated annually) for
needs of authorities within the
b o u n d a r i e s o f m e t r o p o l i t a n
municipalities and procurements not
exceeding 30.101 Turkish Liras (updated
annually) for needs of other authorities
3. Exceptional Purchases
Exceptional purchases are not governed by
Public Procurement Law. These kind of
purchases are listed in Public Procurement
Law name by name. That means, this
purchase method may be applied in allowed
cases only.
Although exceptional purchases are out of
regulation area of Public Procurement Law,
prohobition and criminal provisions of Law
are in force. This case has two circumstances:
a. Commitment of forbidden acts during
any stage of exceptional purchase by
suppliers causes getting prohobited
from public procurements.
b. Prohobited tenderers shall not submit
for exceptional purchaces as well as
other procurement proceures.
There are some examples for exceptional
purchases allowed in Law listed below:
ü Needs for confidential national defense
and national intelligence
ü Procurements of branches of Turkish
institutions in foreign countries
ü Research and development projects
ü Preservation and restoration of
movable and immovable cultural
Introduction To Public Procurement
Pu b li c P ro cu re me nt Au th or i t y - t he
independent regulation and supervision
agency for govermnent procurements- was
established in 2002. Structure, duties and
authorities of the instutition is regulated in
the third chapter of Public Procurement Law.
Public Procurement Authority is organized as
affiliated instutition of Ministy of Treasure
Finance and it has independence in fulfilling
its duties. Fundamental duties of the
authority are regulation and supervision.
Besides, Public Procurement Authority is the
only authorized executive entity for
settlement of disputes on goverment
Duties and authorities of Public Procurement
Authority are briefly listed as:
ü Preparing, developing and guiding the
implementation of all the legislation
ü Eval ua ti n g a nd con cl ud ing an y
complaints and settling disputes
ü Keeping the records of prohibited
parties from participating in tenders
ü Publishing Public Procurement Bulletin
in printed or electronic media
ü Issuing the standard tender documents,
form contracts, regulations and
c o m m u n i q u é s r e l a t i n g t o t h e
implementation of Public Procurement
ECOSAI - 2019
Introduction To Electronic Public
Procurement Platform (EKAP)
EKAP can be briey summarised as
government procurement information query
system of Turkey. The system is established
and operated by Public Procurement
Transperency is the one of two fundamental
principles of procurements as well as
competition. In purpose of providing and
p r o t e ct i ng t r a ns p er e nc y i n p u b li c
procurements, EKAP has been established as
a public-access website.
All tender notices, advertisements,
informat ion of awa rded ten derers,
information of amounts of contract and
estimated cost and all documents of
procurements conducted by the instutions in
the scope of Public Procurement Law, all
prohobited persons could be queried and
seen on EKAP.
Government Procurement Audit
Practice of Turkey
Legal frame of Turkish Court of Accounts
bases on Constitution of Republic of Turkey.
As a constitutional instutituon, Turkish Court
of Accounts performs. audit and judgement
activities on behalf on Turkish Grand National
Turkish Court of Accounts and auditors carry
out audit activities independently, impartially
and in accordance with legistlation and
generally accepted international auditing
In this direction, audit types of Turkish Court
of Accounts is divided into two main topics:
Regulatory and performance audit.
Regulatory audit consists of financial audit
compliance audit.
Audit of government procurement is a part of
compliance audit which means examination
of the compliance of accounts and
transactions related to the revenues,
ex p e n d i t u r e s a nd a s s e t s o f p u b li c
administrations with laws and other legal
Government Procurement Audit
Stages of government procurement audit are
audit planning, implemention of audit
program, reporting, submission of reports to
Turkish Grand National Assembly and
forwarding them to the relevant public
instutitions and following up.
The most challenging stage of government
procurement audit process is considered as
audit planning. Due to resctriction of time
and energy, auditors can not examine all
p u b l i c i n s t u t i t i o n s a n d a l l p u b l i c
procurements. Because of that, government
procurement audit should base on risk
Datas like expectations of Turkish Grand
National Assembly, attention level of public,
previous audit reports and other inspection
reports about the instutition determine the
intention level of audit. Particulary, diversity
and amount of public procurements
conducted by the instutition directly effect
the risk level of procurement audit.
Depending on main activity area and purpose
o f i n s t u t i t i o n , f r e q u e n t l y a p p l i e d
procurement procedures should be detected
and procurements should be sampled.
ECOSAI - 2019
ECOSAI - 2019
Sampling may be performed randomly or
selectively. However, it should involve all
procurement procedures and represent all
procurements of public instutituon.
Despite direct procurements, exceptional
purchases have a small proportion in total
p u b l i c p r o c u r e m e n t s , s y s t e m a t i c
implemention irregularity about these
procurements may cause a snowball effect. In
order to reduce risks of this hazard, direct
procurements and exceptional purchases
should be audited for an acceptable level of
E x a mp le s f o r F in d i n g s A b ou t
Government Procurement Audit
1. Selection of unsuitable procurement
As mentioned in the law, procurement
procedures except open and restricted
procedure may be applied only in certain
cases allowed by the law. If one of other
procurement procedures have been applied,
it has to be relied on a reasonable and
acceptable excuse.
Reasons for applying other procurement
procedures must be investigated by auditor
carefully against th e risk of public
instutituon's purpose of avoiding principal
procurement procedures in order to commit
3. Incorrectly disqualication of
Final decision of tender commission has a
critical importance on procurements. If there
are disqualified tenderers in bidding period
because of insuicient experience or
financial ineligibility, it must be examined and
confirmed by auditor. The most common way
of incorrect disqualification is insufficient
experince because of similiar procurement
experiences of disqualied tenderer.
Disqualification of a tenderer who submitted
a lower bid than contract awarded tenderer
also causes public loss.
4. Missing legal cuts or mandatory
Every contractor instutiton is obligated to
protect interests of government. Acoording
to this obligation, contractor instutituon has
to inquire whether the supplier has any over
due debts against government and cut legal
payments such as taxes, stamp duties, social
security payments accurate and in full from
progress payments of supplier. Deficient
fullfilment of this obligation causes public
5. U n s u i t i b i l i t y o f s u b j e c t o f
procurement to provisions of contract and
tender documents
The most time-consuming part of goverment
procurement audit is auditing whether the
good, service or construction that is served or
built b y supp l ier is suita b le to t he
specifications of procurement.
In order to audit errors or deficiences of the
subject of procurement, various ways of
collecting audit evidences may be applied. In
particular, inventory or field-audits must be
conducted to make sure that there is nothing
missing or errors in the progress of
procurement or the subject of procurement.
The government procurement is a huge
national expenditu r e , according to
estimation of the World Trade Organization
that the total amount of government
procurement accounts for approximately 20
% of the gross national production, showing
that the implementation of government
procurement has a huge impact on the
development of the national economy.
According to Government Procurements
Surveillance Report 2018 that was published
by Public Procurement Authority; 112.446
public procurements have been conducted
by 10.769 public instutitions that have an
overall contract value of 37.849.221.000,00
Des pit e ex emp tio ns s uch as d ire ct
procurements and exceptional purchases,
Public Procurement Legistlation is designed
as inclusive and absolute to prevent avoiding
the principal procurement procedures. The
fact that 71% of public procurements in 2018
were conducted by open procuredure proves
su c ce s s in i m p l e me n t io n of p u bl i c
procurement legistlation in Turkey.
As a substantial piece of government
expentitures, government procurements are
a sensitive audit area for Supreme Audit
Instutituons. In audit session 2017, topic of
916 findings reported by Turkish Court of
Accounts were public procurements. That
means 14 % of overall findings.
The main duty and reason for existance of
Supreme Audit Instutituons are ensuring
effective, economic, efficient and legal usage
of public resources. As public procurements
h a v e a h u g e p r o p o r t i o n i n p u b l i c
expenditures, developing new and effective
audit techniques and improving auditing
skills of auditors have a crucial importance.
ECOSAI - 2019