Act Ethically – with Integrity and Accountability Guideline

“Accountability” requires that a State agency be able to publicly account for its decisions and take responsibility for the achievement of procurement outcomes. Elements of a procurement culture that promote and demonstrate high standards of accountability include the following:

• Responsibility for procurement decisions is readily identifiable through a clearly defined delegation matrix;
• Adequate records are maintained to enable internal and external scrutiny of procurement decisions;
• Information is made readily available to ensure procurement activities are undertaken in accordance with relevant government policies;
• Contract award details are made public as required by policy; and
• Processes are in place to provide feedback to unsuccessful bidders and to manage supplier complaints.

State agencies can implement a range of initiatives and mechanisms to promote and demonstrate high standards of transparency and accountability in their procurement activities. These may include, but are not limited to:

• Providing awareness training for officers on general procurement procedures and specific policy training for officers involved in procurement;
• Developing and establishing a procurement culture where expectations of behaviour are consistent with the provisions of the Western Australian Public Sector Code of Ethics;
• Developing and establishing a procurement policy (and culture) that strongly advises officers not to accept gifts or benefits, as they can be, or may be seen to be, a means of influence that can compromise or appear to compromise the integrity or impartiality of a procurement activity;
• Developing, publishing and enforcing agency purchasing procedures that incorporate and promote probity and accountability;
• Clearly separating procurement functions and responsibilities to ensure officers are not responsible for an entire procurement activity (i.e. from designing Request specifications to paying invoices);
• Establishing a purchasing delegation matrix where authority to award contracts and spend funds is clearly articulated;
• Advertising and communicating upcoming contracts to a degree commensurate to contract value and relative to the nature of the potential respondents;
• Establishing independent and objective evaluation panels;
• Ensuring procurement activities and decisions are open to reasonable scrutiny and can withstand a ‘public defensibility’ test in the context of fairness, equity and ‘value for money’;
• Ensuring procurement activities are consistent with employee obligations under supply policy and other government legislation;
• Adhering to established procedures except in cases with clearly justifiable and well documented reasons;
• Regularly and systematically monitoring supplier performance to ensure contract requirements are satisfied and issues of poor performance are documented and addressed;
• Defining document management and control procedures (physical and electronic) to protect and limit access to confidential information;
• Establishing and implementing clearly defined procedures for electronic security including information storage and communication processes; and
• Maintaining an independent and responsive complaints system.

In addition, when procuring, State agencies must ensure their staff:

• Develop and use a tender evaluation handbook to guide evaluation panels through the evaluation process and ensure officers understand their rights, responsibilities and obligations as a panel member;
• Ensure interested parties have equal access to information;
• Ensure interested parties have equal opportunity to respond;
• Give due consideration to each offer received;
• Objectively evaluate offers without favour or bias;
• Notify respondents of outcomes in a timely manner;
• Use selection criteria that do not favour a supplier or group of suppliers;
• Respond to legitimate requests for information in a timely manner;
• Record accurate procurement documentation throughout the procurement process (for internal and external audit); and
• Evaluate offers with evaluation panels consisting of more than one person (and involving experts as required).

Further information and guidance on due diligence and maintaining probity in procurement processes may be found here.

Probity Advisers and Probity Auditors

In the context of a government tender or procurement process, probity is often used in a general sense to mean a defensible process which is able to withstand internal and external scrutiny – one which achieves both accountability and transparency and provides tenderers with fair and equitable treatment.

For public officials and public sector agencies involved in procurement, creating and maintaining probity involves more than simply avoiding corrupt or dishonest conduct. It involves complying with public sector values and duties such as impartiality, accountability and transparency. Ensuring probity in public sector procurement is a key Western Australian Procurement Rules requirement - it requires procurement staff to conduct procurement activities ethically, honestly and fairly.

Procurement Rule C1 requires the involvement of the Department of Finance Building and Contracts team in a large number of procurement activities. There is a great deal of overlap between the role performed by probity service providers and the Department of Finance Building and Contracts team. For this reason, in most instances of Finance involvement, it will be unnecessary to engage external probity services.

There will, however, be times when it is appropriate to engage probity services. The use of a probity adviser or probity auditor should be confined to situations where:

• the matter is highly complex, unusual or contentious
• the procurement has a high profile (politically sensitive) and is likely to be subject to scrutiny both within government and externally (for example, significant media and other external stakeholder interest)
• there is a high probability of a conflict of interest
• there is an increased likelihood of grievances by tenderers (for example, competition between tenderers is expected to be intense)
• there has been a relevant history of controversy or litigation in relation to the requirement
• the evaluation process requires lengthy and detailed face-to-face meetings with individual proponents and/or site visits; and
• a proponent has already been involved in the feasibility study or pre-tender stages of the project, having thereby potentially obtained an unfair advantage.

The difference between probity adviser and probity auditor

Although the terms probity adviser and probity auditor are often used interchangeably, there is a distinct difference between them. A probity adviser works closely with those conducting the procurement process from the beginning, providing advice on probity/process issues that may arise, and providing advice on strategies to overcome potential problems. The probity adviser is therefore expected to give advice that is proactive and strategic in nature. A probity adviser is closely involved in the procurement process, and so cannot be regarded as an ‘independent’ party.

On the other hand, a probity auditor’s role is more generally an ‘after the event’ role, auditing the process after the process is completed, or at key stages during the process. The process and associated documentation are audited and any probity issues are identified. These may then be addressed in a probity audit report. A probity auditor must be completely independent, and therefore cannot be the legal adviser or other person already involved in the project.

Given this independence a probity auditor provides a greater level of transparency and accountability by auditing procurement processes to verify that they were consistent with legal requirements, government regulations, policy, principles and best practice guidelines.

It is important to note that obtaining probity advice or conducting a probity audit should not be confused with seeking legal advice on issues that arise during the procurement process or in the conduct of contract negotiations.

What affect do probity advisers and probity auditors have on the procurement process?

Professionals asked to provide probity services do so in an advisory capacity only. It’s important to remember that the Accountable Authorities undertaking procurement processes are the ones responsible for procurement decisions.

Accountable Authorities are not bound to follow the recommendations of probity service providers, nor should probity service providers direct the outcome of a procurement process by involving themselves in decisions about successful tenderers.

State agencies should establish a process for identifying, managing and resolving actual, perceived and potential conflicts of interest. This process should apply across agencies for all types of conflicts of interest – not just those relating to procurement activity.

The Integrity Coordination Group have published a series of Guidelines for managing conflicts of interest.

The obligation to declare conflicts of interest:

• extends not only to evaluation panel members, but to all those involved in the procurement process, including decision makers; and
• does not just arise at the beginning of a procurement process. Officers must declare any conflicts of interest that might emerge throughout the procurement process.

The Department of Finance has developed a Declaration of Interest and Confidentiality form for use when declaring any interests.

Under the State Records Act 2000, a state record is defined as any record of information (in any form) created, received or maintained by a government organisation or parliamentary department in the course of conducting its business activities. This includes:

• business case;
• procurement plan;
• advertising information;
• request document;
• addenda;
• details of suppliers invited to submit quotes;
• bids;
• evaluation report;
• negotiation log;
• preferred respondent and/or /acceptance of offer/award letter;
• unsuccessful letters; 
• contract management plan; and
• any contract variation documentation.

All State agencies under the State Records Act 2000, are required to create and implement a record-keeping plan. The record-keeping plan must set out:

• the matters about which records an organisation will create;
• how those records are to be managed in the context of the organisation's functions; and
• for how long records are to be kept.

Procurement documentation is required to be maintained in accordance with approved record-keeping plans. This will provide effective means of accountability and ensure that information is readily identifiable and available on request.

The creation of procurement documents should be commensurate with the type and risk of the procurement. For example, a $10,000 purchase would have fewer records than a $250,000 purchase.

Regardless of value, the documentation should capture:

• the requirement for the Procurement;
• the Procurement process;
• how value for money was considered, justified and achieved; and
• any relevant Procurement decisions, including the basis of those decisions.

Officers should also be aware of the specific requirements of the following Procurement Rules, in the context of keeping adequate records, including:

• Rule D7: Prepare Evaluation Reports (refer to Guideline – Evaluation of Offers)
• Rule E2: Apply Rigour to Contract Variations (Guideline – Varying a Contract); and
• Rule F5: Establish and Maintain a Contracts Register.

Officers should also be aware that several Rules require certain approvals or exemptions from the Rules to be recorded in a register (in addition to a written record on a project or contract file). Appendix 2 of the Procurement Rules: Approvals and Exemptions, provides a table that summarises these requirements.