Probity signifies integrity, fairness and honesty. Government often refers to probity in a general sense to mean good process demonstrated by transparency of actions, equity, confidentiality and managing conflicts of interest, whether actual or perceived.
In the procurement sector, probity relates to proper and ethical conduct, and propriety in dealings with the market. Probity is integral to the goal of achieving value-for-money outcomes.
Good probity practice is important for:
To achieve an ethical and transparent approach, procurement processes must be clear, open, well-understood and applied by all parties in the process.
In practice, probity requires:
Public officials are required to conduct themselves consistently with the public sector values outlined in section 7 of the Public Administration Act 2004 – some of these are directly relevant to probity in the procurement process e.g.
Integrity: public officials should demonstrate integrity by:
Impartiality: public officials should demonstrate impartiality by:
Accountability: public officials should demonstrate accountability by:
A conflict of interest occurs where there is conflict between the public duty and private interests of a public official. In procurement:
No, some conflicts of interest do not involve any direct or indirect financial benefit although that would be a clear and actual conflict of interest. Conflicts can also involve perceptions about bias or favouritism such as preferring to work with a particular supplier.A conflict of interest arises where a participant in a procurement team or an adviser to the team has an affiliation or interest which might be seen to prejudice his or her impartiality. (Such interests may be of financial nature, as well as of a non-financial nature involving personal or other relationships.) Conflicts of interest occur occasionally, but provided they are identified early and dealt with effectively, need not be indicative of any wrongdoing.[1]
[1] VGPB Code of Conduct for Commercial Engagements with Government
To properly identify and resolve conflicts of interest, every procurement process should:
The first step is for each person to make a disclosure indicating whether there are any circumstances or interests that do or could be perceived to create a conflict of interest. Once those disclosures are made and registered by participants in the procurement process, someone else should decide what action is warranted. Relying on individuals to make their own assessment of whether or not a conflict of interest exists, particularly where there is poor understanding of probity requirements, is inadequate. Best practice requires project staff to declare all related interests, with the project management responsible for assessing whether a conflict exists and documenting this assessment and, where necessary, any strategies to address it, in each instance.[2]
Agencies often use one or more of the following strategies to manage a conflict:[3]
These controls endeavour to influence the actions of the person with the conflict and/or reduce their influence over the decision-making process. However, perceptions of bias must also be managed effectively.
The following six considerations are often cited as an approach to managing conflicts of interest, not all of them relevant to every situation.
Register the conflict
The required responses to a conflict of interest or potential conflict vary greatly. At one extreme, a conflict may result in a public official being redeployed onto other full-time duties or an adviser’s engagement terminated. At the other end of the scale, it may be resolved simply by documenting and declaring the apparent conflict. The key point is to ensure that all the participants in the project team, including advisers to it, declare their interests before the tendering process begins and at critical stages throughout it, and to ensure that any issues arising are resolved.[4]
[1] VGPB Guide to Probity
[2] Victorian Auditor General’s Office report Melbourne Markets Redevelopment March 2012
[3] ibidem
[4] DTF Partnerships Victoria Practitioners Guide
Timely disclosure is critical to prevent or minimise risk to the process. The integrity of a procurement process can be adversely affected by a conflict of interest and in some instances, it is necessary to re-tender because of conflicts of interest that could have been identified earlier and managed to avoid impact on the process.
If management determines that the appropriate strategy to manage a conflict of interest is to remove a person from the procurement process, this decision should be made as soon as possible to avoid any impact on the integrity of the process. More than the actual situation itself, it is often the lack of adequate and timely disclosure and consequent lack of opportunity to manage a conflict of interest issue that leads to difficulties and potentially compromises the integrity of a project.
[1] VGPB Code of Conduct for Commercial Engagements in Government
The responsibility to address conflicts of interest in government procurement is a shared responsibility – it’s up to the participants in the process to make disclosures and it’s then up to the Evaluation Team chairperson and others responsible for oversight of the procurement process such as probity advisor or steering committee or an ethics board to consider the disclosures and to determine what response is required.
Public sector employees have a duty to put the public interest above their private interests when carrying out their official duties. Conflicts of interest may arise without any one being at fault. To maintain the highest levels of integrity and public trust, it is therefore critical that conflicts of interest are managed effectively.[1]
The chairperson of the evaluation team and the project sponsor have the primary direct responsibility to ensure that conflicts of interest are properly managed.
Yes, whether they are public servants, contract staff or consultant advisors all evaluators should disclose conflicts of interest.
The VPS Code of Conduct requires VPS staff to disclose conflicts of interest and also says:
Public sector employees avoid conflicts of interest (actual, potential or perceived) wherever possible. They ensure their personal or financial interests (including the interests of family members, friends, or associates) do not influence and could not be perceived to influence the performance of their role.
VPS staff are required to demonstrate integrity by … avoiding any real or apparent conflicts of interest.[1]
[1] Public Administration Act 2004 section 7
Openness, transparency and the even-handed dealing with all tenderers by all involved in developing a tender or making a tender decision, is paramount. It is important, therefore, that both perceptions and reality are properly managed so tenderers remain confident about the process.
Management of conflicts of interest and other probity issues is important for: