Ethics and Probity in Procurement

Practice

Identification and Management of Actual, Potential and Perceived Conflicts of Interest

  1. A conflict of interest arises where an official, an adviser or a supplier has an affiliation or interest that might prejudice, or be seen to prejudice, his or her impartiality.
  2. The APS Code of Conduct requires APS employees to disclose, and take reasonable steps to avoid any conflict of interest (real or apparent) in connection with APS employment. 
  3. Agencies should in the first instance seek to eliminate actual, potential and perceived conflicts of interest.  When this is not possible (such as where it would exclude needed expertise or the conflict is so widespread as to be impossible to avoid completely), effective management strategies should be implemented.
  4. Officials must be mindful of potential conflicts of interest that might arise and must not use their position to gain or seek to gain a benefit for themselves or any other person.  Officials should strive to avoid situations in which there may be actual, potential or perceived of conflicts of interest including not allowing themselves to be improperly influenced by family, personal or business relationships
  5. Effective management of conflicts of interest does not require conflicts to be avoided at all costs; rather, they must be managed appropriately.

Probity Experts

  1. External probity experts may include ‘process advisers’, ‘probity advisers’ and ‘probity auditors’:
  1. A ‘process adviser’ generally provides advice on tender process structure, to appropriately address probity issues, as well as on specific probity issues. Such an adviser could provide advice on drafting, implementing and monitoring compliance with a comprehensive tender process plan.
  2. A ‘probity adviser’ would typically advise on probity issues as they arise during a tender process, possibly in accordance with a probity plan that provides guidance on how probity is to be addressed during the procurement.  If the probity expert is an adviser and will not be involved in auditing the process, they can offer advice and solutions if any problems occur.
  3. A ‘probity auditor’ seeks to report an objective opinion on probity issues, generally after the process has been completed. A probity auditor should not be called in during a process to try and remedy problems, but could provide sign-off after a problem has occurred to ensure the probity issues have been addressed and it is appropriate to continue with the process. If a probity expert is engaged as an auditor, they need to maintain their independence and objectivity, and should therefore not be involved in offering advice to solve any probity problems that arise during the tender process.
  1. External probity specialists should be appointed where justified, and not automatically just because an open tender process is being undertaken. The decision on whether to engage an external probity specialist should weigh the benefits of receiving advice independent of the process against the additional cost involved and include consideration of whether or not skills exist within the agency to fulfil the role. Factors that could influence the appointment of an external probity specialist include:
  1. the transaction is of high value;
  2. the matter is complex, unusual or highly contentious;
  3. the integrity of the project may be questioned;
  4. a select or direct tender process is proposed that is in accordance with the Commonwealth Procurement Rules but the integrity of the selection of suppliers to be invited to tender may be questioned;
  5. there has been a history of controversy or litigation in relation to the matter;
  6. the matter is of high political sensitivity;
  7. the nature of the marketplace makes supplier grievances more likely (such as where competition is strong and commercial confidentiality is particularly important); and
  8. the nature of the procurement is such that there is a high expectation of a material conflict(s) of interest.
  1. Probity and, if required, the role of a probity expert can be addressed within either a tender process plan or a probity plan. It is important that the tender process plan or probity plan is carefully drafted and all parties clearly understand the role a probity expert is being engaged to perform.  Before the process commences, all parties should have a clear understanding about the level of assurance that the agency will be seeking from the adviser. Agencies should specify whether a final sign-off is needed for the entire process, whether sign-offs should be provided at the end of specified phases of the tender process, or at particular milestones, and should clearly specify the timing and the nature of the sign-offs required.  Agencies should ensure that external probity experts clearly understand the nature and extent of sign-off they will be asked for, with this requirement appropriately documented, such as through the external probity expert’s contract.  Probity experts should be independent and free from conflicts of interest, and have a sound knowledge of all relevant government policies and procedures. Sign-off by external probity experts cannot replace officials’ own accountabilities and obligations in regard to the proper conduct of procurement activities.