Managing Unethical Procurement

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Author: Margaret Gilbert 

Procurement is mostly carried out in a professional manner. However, there are instances in which this is not the case. The question is: how do we ensure transparency and more importantly how do we manage in cases of unethical behaviour?

Clarity and expectations are required to be made clear by buyers. This has to be backed up by actions if there are instances found.

Theses action is to notify the appropriate people and to not keep quiet as often occurs now and let staff resign. This just moves the problem on.

Staff should be prepared to speak up and as questions. Having clear and concise systems and procedures assist. To that end, a code of conduct with consequences should be implemented.

We have to be clear about what is acceptable and what is not. Some buyers can accept fits from suppliers, some cannot. There has to be a better way of managing and realising that most organsiation’s cannot afford to lose monies.

Recent issues have been:

  1. Senior manager creating own business and siphoning monies to the amount of $1,000,000.
  2. Staff awarding contract to supplier and pocketing money for doing so.
  3. Staff person stealing monies due to lack of systems in place to check.

These examples are on the fraud end of unethical behaviour. This is seen as ‘wrong’ but do not see as unethical when suppliers provides gifts’. Both examples are unethical and which does not lead to transparent procurement.

Buyers have a responsibility to ensure a transparent process. It is not sufficient to ‘hope’ that unethical behaviours won’t occur.

We have to stop saying that ‘it is of minor nature so it is okay’ to operating in a zero tolerance manner. In this way, we have robust and effective procurement.

What can we do?

  1. Promote practices of robust procurement such as multiple signatures
  2. Operate a zero-tolerance policy
  3. Keep management informed
  4. Advise outside agencies such as Police if issues arise
  5. Advise suppliers of your organisational policy
  6. Suppliers be banned from procurement

Include wording in tender documents such as:

‘It is our policy that unethical practices are not acceptable at all and action will be taken by us if corrupt and unethical practices are found. We consider this so important that our tender documents and more specifically the evaluation criteria include ethical practices as a criteria.

 

Evaluation criteria                                        Evaluation weightings

Price                                                                              20%

Response to Scope of Work                                      20%

Technical                                                                      20%

Ethical Practices                                                          30%

Customer Service                                                        10%

_____

100%

Equally that unethical practices will have a high evaluation weighting.

We have to take steps to have a clean procurement process and not to allow unethical/corrupt behaviour become acceptable.  It is not acceptable.  We do not want standards to slip and our reputation – personal or organisational – trashed.

Useful checklist:

  1. Are there multiple sign off signatories?
  2. Do invoices look professional with business type information?
  3. Do suppliers provide ‘gifts’ during procurement process?
  4. Are there systems in place?
  5. IS there an official mechanism for approving new suppliers?
  6. Document issues that concern you.

There has to be a better way of managing. Each of us have a part to play. We cannot ignore, and more importantly, we have to take note of our own actions. Could you pass the ‘smell test’? What if your actions were on the front page of your paper?

Most of us do the right thing. Some are aware that what they are doing is wrong but do it anyway. Some do the wrong thing but do not know it. We should not be nervous about shining a light on the way we conduct procurement. We have a responsibility and we have to ensure that we undertake procurement following the procurement principles of: transparency, fairness, value for money and accountability.  Some of us are guardians of public monies.

Margaret’s book ‘Contract Matters: Procurement and Ethics/Business and Ethics’ can be obtained through www.contractmatters.com /email: margaret@corpcontracts.co.nz($30)

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