Procurement and transparency

by Margaret Gilbert

Corporate Contracts Management Ltd

Margaret Gilbert specialises in procurement principles, practice and processes

“Ministry of Transport staffer sacked, fraud investigation over missing $700,000”

“Schools can learn from recent high-profile cases of fraud; principal says”

“Businessman slams culture of kickbacks”

The above headlines suggest that there is still a lot to learn about how we do procurement in New Zealand. We can no longer ignore this matter and say that it is not a ‘problem’. Ethical behaviour, procurement principles and transparency are essential, as is the need to take action when issues such as above are known.

Corruption and fraud have a significant effect on the ability of governments to provide high-quality public services and on the healthy functioning of market economies. They cause higher prices and lower-quality services. The price of delivering services will be increased to meet the cost of corruption and fraud. Further such practices reduce competitiveness in the marketplace as a result of predetermined outcomes of tendering processes.

Procurement processes that have a clear direction and code of conduct protect an organisation and its staff from abuse of the procurement system.

Procurement practitioners are in a position of trust; they have a significant role to play to ensure procurement is and remains transparent. They provide education and guidance to their organisation and suppliers, ensuring that the process is transparent and fair.

Issues that lead to poor procurement behaviour include:

  • lack of oversight, controls and approvals in the procurement process
  • suppliers circumventing the process by offering product directly to buyers
  • buyers awarding contracts to suppliers and expecting personal benefits in return
  • suppliers offering trips or other perks to the buyers' personal benefit.

What is acceptable for the buyer or procurement practitioner to accept?

Offers from suppliers to the buyer or procurement agent—even minor ones—risk crossing the ethical line. Once the line has been crossed, what then? The question becomes: what is acceptable for the buyer or procurement practitioner to accept?

The simple answer is: you do not want to be seen to be ‘beholden’ to the other party. You do not want there to be an expectation that the other party is ‘owed’ something. If there is the slightest doubt, the safe approach is to refuse the offer.

By setting the tone and direction of how procurement is undertaken, transparency can be achieved. Communication is key to transparency, accountability and acceptable behaviour in the procurement process.

While establishing sound processes with checks and balances is essential, developing an appropriate Code of Ethics is equally so. Recommended practice is that the Code of Ethics be separated out from a Code of Conduct and explicitly signed by staff to indicate that they have read and understood it.

The question all organisations should be asking themselves is: Is our house in order? How are our procurement processes measuring up against the procurement principles of transparency, fairness, equity and accountability?

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Recent Activity

Protect our whistleblowers
Transparency International New Zealand (TINZ) is calls for better whistleblower protection. 8 Aug, 2017

Auditor General resignation requires transparency
Transparency International New Zealand (TINZ) calls on Parliament to release the report by Sir Maarten Wevers that lead to the resignation of Auditor-General Martin Matthews. 5 Aug, 2017

TINZ applauds decline in foreign trusts
Government implementation of tougher disclosure requirements for foreign trusts have led to around 75% discontinuing or exiting New Zealand. 9 Jul, 2017

Public Sector Integrity Media Release
State Services Commission took a very positive step in addressing a key recommendation of TINZ's Integrity Plus 2013 New Zealand National Integrity System Assessment by advertising a role for Deputy Commissioner, Integrity, Ethics and Standards. 11 May, 2017

Corruption Perceptions Index 2016 TINZ media release
Transparency International 25 Jan, 2017