Probity... The risk
By John (JJ) Lee, Procurement Office & Probity & Assurance, Peak Consulting
This article builds upon previous probity articles published by Peak Services Principal Probity and Assurance Advisors during 2023/2024 and presents the writer's thoughts on the major probity challenge occupying today’s procurement and probity professionals.
The Crime and Corruption Commission Queensland (CCC) has defined probity as evidence of ethical behaviour in a particular process. Probity is about ensuring there is a defensible process that can withstand internal and external scrutiny.
Demonstrating probity means more than just avoiding corrupt or dishonest conduct. Probity involves:
- Proactively demonstrating that a procurement process is robust and that the outcome is beyond reproach.
- Acting in such a way that there can be no perception of bias, influence, or lack of integrity.
- Demonstrating ethical conduct that exceeds the legal requirements.
Council staff should be aware of their obligation to act in accordance with the requirements of their Code of Conduct and that their actions are covered by the Public Sector Ethics Act 1994. Under the Act, employees are to observe the following ethical principles:
- Integrity and impartiality.
- Promoting the public good.
- Commitment to the system of government.
- Accountability and transparency.
The Crime and Corruption Commission restates these requirements annually and legislation requires that in managing probity in procurement, councils must comply with the sound contracting principles in the Local Government Act (2009) part 3 s104(3) viz:
- Value for money.
- Open and effective competition.
- Development of competitive local business and industry.
- Environmental protection.
- Ethical behaviour and fair dealing.
Why is probity important?
Probity is more than just regulatory compliance for the sake of compliance. It creates an honest, ethical environment that encourages the parties to be open and ethical and stimulates competition and the achievement of value for money. It is about reputation and confidence on the part of suppliers dealing with council. It makes sound business sense and is the responsibility of everyone who has a role in local government procurement. Sound probative behaviour is essential if suppliers are to offer competitive best value for money offers over time.
Managing probity should be relative to the value and risk of the project. The greater the complexity, size, and sensitivity of the purchase, the more likely that a poor procurement decision will have adverse consequences. The decision on whether to engage an external Probity Advisor must be taken having regard to the assessed risk, complexity and value.
Probity in a Nutshell
In practical terms, what is probity all about and how do you achieve it?
Probity is about ensuring that a procurement process is conducted in a manner that is sound, defensible and fair and which encourages participation by all tenderers to the fullest extent possible. The procurement process should be able to withstand public scrutiny, compliance, challenge and/or legal review. Tender responses must be evaluated against clear and predetermined evaluation criteria as detailed in an Evaluation Plan and Tender documents. Everyone must understand their role and the rules and have confidence in the integrity of the process and outcome.
Tenders must be treated equally and impartially and be provided with the same opportunities to be provided with the same opportunities to access information and advice.
The processes adopted for receiving and managing Tenders information should ensure the security and confidentiality of intellectual property and proprietary information. Note, this is becoming an increasingly concerning dimension that will be discussed in more detail.
Conflict of Interest Management. Participants must declare any actual, potential and perceived conflict of interests, normally by completion of a confidentiality and conflict of interest undertaking. These must be appropriately considered and addressed by the Evaluation Team Chair, the Probity Advisor and a management strategy put in place.
Value for Money. The Queensland Government guide “Probity and Integrity in Procurement” lists three objectives of probity in procurement, one being “to facilitate a value for money outcome”.
General Mitigation Strategies
A number of strategies have been developed over time to deal with these challenges including:
- The development of probity plans and protocols.
- The development of clear governance structures.
- Well defined process documentation and process rules.
- Allocation of accountability.
- Fair, equal and interactive treatment.
- Use of templates.
- Development of secure and appropriate protocols.
- Business as usual complications can arise e.g. current contractors can attempt to exploit their favoured position.
Other effective controls include quality recordkeeping, maintenance of a probity register and conflict of interest and confidentiality management.
The task for the Procurement Officer and Probity Advisor is to identify the likely probity issues to be associated with the specific engagement, identify the mitigation strategies that have or need to be put in place and address these in a probity plan. For example, an incumbent always has a perceived advantage over other prospective tenderers. An outcomes-based specification can negate an incumbent’s perceived advantage.
Emerging Risks – Intellectual Property
The main risk issues that currently occupy the minds of the Probity Advisor relate to intellectual property leakage.
Probity Advisors are becoming increasingly aware of the professional drought that exists among certain professional engineering categories across the Country and how this impacts local government. This can manifest itself in a shortage of organic professional resources at councils, such that some councils now frequently engage specialist consultants to produce specifications and participate in tender evaluations as scoring team members. These specialist consultants have invariably worked and built relationships across their respective industries.
This trend has become even more problematic with the growth in relationship contracting, particularly at the contract design phase of the early contractor involvement (ECI) process. When first launched, the early contractor involvement processes commenced with the selection of a short list of potential contractors/suppliers and the principal assigned dedicated resources to each bidder (including a ‘specialist/engineer”) to work with each one on developing their proposal. Workshops were then held with the principal. However, over time, this practice has changed, and principals more often than not assign the same one or two specialists to all shortlisted bidders.
As a consequence, when workshops are held, or indeed when other meetings with the principal are held, there are often specialists in attendance with knowledge of bid content at a time when bids are still under development and the probity risk comes about when the specialist inadvertently releases some information from a bid under development or asks a question that could only be prompted by knowledge of a bid other than the one under discussion. Furthermore, industry specialists have professional relationships across their industry and may well have worked for more than one bidder over time. A relaxed environment can inadvertently mention an idea that they have come across, particularly where the discussion is of a technical nature.
What this means is that Probity Advisors and procurement specialists will need to have an understanding of the technical and operational aspects of the acquisition and understand the detail in each submission. Probity Advisors will need to attend all workshops, remind participants of their obligations and seek clarification and confirmation whenever it appears that conversations are drifting into intellectual property space. The meeting debrief with the principal at the end of each meeting must address the security of intellectual property.
Above all, Evaluation Team Leaders, Probity Advisors (internal and external) and procurement specialists should regularly remind participants of the confidential nature of project activities when dealing with colleagues (Council and external), consultants, former colleagues, industry participants and the like.
Conclusion
To conclude, the four steps promoted by the CCC to assist a council in preventing wrongdoing in procurement are:
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Undertake comprehensive procurement fraud and corruption risk management analysis.
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Get your procurement policy and procedures right.
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Promote a probity-oriented culture through training and awareness.
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Develop and implement the right internal control activities.
If you have an experiences to share, we'd welcome your thoughts and contribution
Reference A. Probity and Integrity in Government. Queensland Government Website https://www.forgov.qld.gov.au/finance-and-procurement/procurement/procurement-resources/search-for-procurement-policies-resources-tools-and-templates/probity-and-integrity-in-procurement