Which type of procurement fraud scheme involves procurement employees who convince their employer that it needs excessive or unnecessary products or services?

• A. Bid manipulation schemes
• B. Need recognition schemes
• C. Bid tailoring schemes
• D. Nonconforming goods schemes

Answer: (B)

The idea being tested is recognizing or creating a need to justify unnecessary purchases. In a need recognition scheme, an insider persuades others that the organization requires more products or services than it actually does. By presenting inflated or fake business needs as essential—often with convincing but misleading justification—the perpetrator gains approval for purchases, and may gain benefits such as kickbacks or closer ties to a supplier. This focus on manufacturing demand is what sets it apart from other fraud schemes: bid manipulation centers on tampering with bids, bid tailoring on shaping requirements to fit a chosen supplier, and nonconforming goods on accepting items that don’t meet contract specs. Because the scenario describes convincing the employer of excessive or unnecessary needs, it aligns with need recognition.