Ethical Conduct in Procurements.

Procurement with Integrity

Procurement with integrity comes down to government entities conducting themselves with ethics, rather than prescriptively adopting a mentality of “just getting things done”. Compliance requirements around procurement often have a legislative basis sitting behind them. In NSW, for example, there’s the Government Sector Finance Act, while at the Commonwealth level there’s the PGPA Act. However, ethical procurement often comes down to more than just legal compliance. It requires a positive and demonstrated culture, particularly from senior leadership, that ethics and integrity in procurement is critically important to support compliance and enforcement of the relevant procurement laws. The joint committee of public accounts and audit released a report in August: “The never-ending quest for the golden thread: Probity and ethics in the Australian public sector”. Referring to the report, acting Deputy Auditor-General Carla Jago delivered a speech at the Public Sector Assurance Forum on building a public sector with strong foundations of integrity and trust. “The Australian public sector operates largely under the principles-based frameworks established by the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Service Act 1999,” Jago said. However, she also observed the “golden thread” report stated that evidence shows that even when officials are found acting contrary to finance law, there’s usually a lack of malintent. Instead, there’s a focus on having acted in good faith and delivering on decisions of government, as if that somehow excuses a breach of the law. “The committee’s report stated that its firm conclusion is that any claim or view that it is somehow acceptable for an officer to breach finance law and fail to act with probity but still be acting in good faith and for a proper purpose, is clearly and unambiguously wrong,” Jago said. Put another way, Goodwin said, acting in good faith is clearly not enough, even if there is no ill intent associated with an official “just getting the job done”. “In my experience, the vast majority of public servants are professional and always act knowledgeably and with integrity. There are, however, instances where a small minority of people have not, and the excuse is that they’ve said they’ve acted in good faith, or they’ve just delivered on decisions of government. “Context is always important, just as integrity matters. While it is crucial to understand the context of what happened and how improvements can be made, claiming to act in good faith and fulfilling governmental decisions ought not to be seen as an acceptable reason for breaching a law or government procurement regulations. “The tone at the top must be clear: ethics, integrity and procurement compliance are as important as delivery. One should not be traded off for the other. It also risks detracting from the broader public service’s important and professional work.”

Culture and integrity

In the end, procurement with integrity comes down to the department’s culture and the tone of the leadership. While managers can emphasise that delivery and efficiency are important, everything a public servant does regarding procurement should be within the bounds of the law. “When things have not gone well, it can often be the result of a lack of training and clear guidance to properly support staff, and where decision-making or the pace and tempo around procurement decisions has been rushed,” Goodwin said. If decisions are rushed, it can inhibit guardrails such as risk-based internal controls and probity checks from acting properly and aren’t sufficient to address risks that may arise from pressures “to get it done”. The result is that the designed internal controls may not be targeted to where problems could occur, he said. Where things also get tricky is when there’s a limited or targeted tender process, which should generally only be used when a procurement is expected to cost less than $80,000. The Canberra Times recently revealed the federal government spent $33 billion on limited tender contracts in 2023-24. This represented a 25% increase in the dollar value of limited tenders over the previous financial year. When using a limited or targeted tender is deemed more efficient than an open process, Goodwin said it should be supported by comprehensive market analysis and precise documentation of decisions. These should show how the tender will achieve the agency’s goals and represents value for money for taxpayers. This highlights another potential procurement red flag — poor record-keeping — which is often the result of poor culture and leadership. Goodwin said anti-corruption bodies in NSW and Victoria have identified poor record-keeping as a signal a procurement process may not meet the standards expected of the public service. “As an auditor, if the record-keeping to support a significant procurement is not complete, accurate and accessible, then it may be a signal that other things, such as culture and leadership, could warrant closer consideration with respect to risk,” he said. “The risk may be elevated because the procurement may not have been carried out with the integrity demanded by legislation and the ethical standards expected of public servants, and may deserve closer scrutiny.” Goodwin adds gift and benefits policies must also be strong to safeguard procurement processes and decisions from undue influence from external factors. Ultimately, he said, procurement not carried out with integrity can undermine the public’s trust in government and the important work of the public service that supports the government of the day. “In the end, I’d reiterate that 99.9% of public servants do the right thing,” he said. “They want to do the right thing and the rules and culture within an agency or a department, as well as the leadership, needs to signal that abiding by the law when it comes to procurement is the right way to get things done.”