Ethics and Probity in Procurement
Applying Probity in Procurement
1. Probity provides a level of assurance to delegates, suppliers and the Commonwealth that a procurement was conducted in a manner that is fair, equitable and defensible.
2. In keeping with the probity principles, officials should:
- Enter discussions with the intent to promote genuine engagement, including assisting the potential supplier to understand the procurement outcomes. Where a potential supplier is provided clarification, this can assist the entity achieving better value for money outcomes.
- Make potential suppliers aware that where topics are discussed, this may be suitably de-identified and made available to other potential suppliers. Probity arrangements should not always automatically require that any questions raised in a tender process must be published for all potential tenderers. While questions of a generic nature should be provided to all tenderers, questions that may disclose a tenderer's Intellectual Property should be handled appropriately (for example, by generalising the query), while maintaining the need to treat all tenderers equitably.
- Not feel pressured into providing information that they consider might be sensitive, provides an unfair advantage or concerns another potential suppliers bid. If unsure, it is appropriate to take the request on notice and to respond after suitable consideration.
- Retain appropriate records - for low risk procurements this may be as simple as a file note indicating who the discussion was held with, and key discussion points.
- Industry briefings provide potential suppliers with an opportunity to engage directly with the entity and increase their understanding of the tender requirements or processes. It also provides the entity with an opportunity to gauge the level of market interest in the procurement. Such engagement may assist the entity in achieving better value for money outcomes and stronger links to new innovation practices in particular industries.
- Industry briefings provide an opportunity for suppliers to receive consistent information from the entity on the procurement, improving clarity on the procurement need and reducing the risk of suppliers receiving differing information over the course of a procurement. In line with the probity principles above, while industry briefings provide a forum for responding to potential supplier questions, the entity can continue to engage with potential suppliers outside of these forums. The procurement's level of risk will inform how potential suppliers are engaged outside the industry briefing process.
- Procurements which most benefit from industry briefings are medium to high complexity procurements that exhibit a degree of uniqueness. Briefings for open tenders should be advertised on AusTender. For limited tenders, officials should retain appropriate records of meetings with potential suppliers that, for low risk procurements, could be as simple as a file note indicating who the discussion was held with, and key discussion points.
Identification and Management of Actual, Potential and Perceived Conflicts of Interest
3. 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.
4. Effective conflicts of interest management does not require conflicts to be avoided at all costs; rather, they must be managed appropriately.
5. 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.
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.
6. External probity experts may include 'process advisers', 'probity advisers' and 'probity auditors':
- 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.
- 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.
- 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.
Establishing Probity Roles
7. Probity roles can be implemented in a number of ways. This includes using expertise from other areas of the entity, through to engaging external specialist advice.
8. External probity specialists should only 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 entity to fulfil the role. Factors that will influence the appointment of an external probity specialist include:
- The transaction is of high value, complex, unusual or highly contentious.
- The integrity of the project may be questioned.
- A prequalified or limited 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.
- There has been a history of controversy or litigation in relation to the matter.
- The matter is of high political sensitivity.
- The nature of the marketplace makes supplier grievances more likely (such as where competition is strong and commercial confidentiality is particularly important).
- The nature of the procurement is such that there is a high expectation of a material conflict(s) of interest.
9. 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.
10. Before the process commences, all parties should have a clear understanding about the level of assurance that the entity will be seeking from the adviser. Entities 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. Entities 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.
11. 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.