This Guidance explains how the principles of probity relate to managing conflicts of interest
Effective date: 1 July 2018
Objective: To outline transparent tender processes to manage conflicts of interest
The probity-specific Directions and Instructions should be an ongoing reference at all points of a tender process and contract management.
This Guidance discusses the probity requirements for managing conflicts of interest.
Identifying and managing conflicts of interest
Conflicts of interest affecting Agency staff
Conflicts of interest are not wrong in themselves. Any conflict of interest should be properly identified and declared, and effectively and transparently managed. Disclosing actual or potential conflicts is a continuous process, because conflict situations may change over time.
When a conflict of interest has been ignored, concealed, improperly acted on, or has influenced actions or decision making, either inadvertently or deliberately, that conduct (not the conflict itself) could be seen as misconduct, abuse of office or even corruption.
Follow the Agency’s procedures for identifying and managing conflicts of interest and refer to the Victorian Public Sector codes of conduct for more information.
Conflicts of interest between tender participants, advisers and the Agency
Conflicts of interest may arise between tender participants and advisers and between tender participants or advisers and the Agency. Find guidance on managing these situations in:
- the which requires tender participants to declare and manage conflicts;
- Tender Documentation which describes specific procedures that apply; and
- the contract conditions which describe procedures to follow during the contract period.
The team developing the business case or project specifications may include external experts. Be aware if the organisations providing these experts are intending to tender or have existing relationships with potential tender participants which could create conflicts of interest.
The likelihood of expert advisers contributing to the project development and subsequently being involved in a tender response is a significant risk. Consider the whole project and be aware of the interrelated involvement between early advisers, evaluators and tender participants. Manage the potential conflict and maintain an even playing field for all potential tender participants.
Consider probity issues early in the process with up-front planning:
- obtain probity advice at the concept development planning stage (pre-business case)
- ensure all advisers or contractors are aware of the need to declare real or potential conflicts of interest
- establish and document a strategy for managing potential conflicts based on risk
- introduce exclusivity and confidentiality requirements in early work contracts
- document any conflicts arising and how they were managed, and
Potential conflicts when contracted staff are involved in a procurement
Potential conflicts of interest arise when contracted staff are engaged to work on a procurement. If any of these staff are an employee of a potential tender participant, ensure that commercially sensitive information of competing companies is not passed on, and that the contractors behave in a way that does not advantage any party.
Strategies to manage conflicts of interest include:
- confidentiality requirements connected to the contractor’s engagement
- a requirement to divulge all potential conflicts of interest before and during the period of engagement, and
- restrictions on the use of material for a specified period.
Failure to meet these requirements at any time may be grounds for later ending the contract.
Gifts, benefits and hospitality
Public officials involved in any aspect of a procurement process are strongly advised not to accept gifts, benefits or hospitality from tender participants, because they can, or may be seen to, compromise integrity and impartiality.
Potential tender participants should be made aware of the Agency’s policies about accepting gifts, benefits and hospitality.
For more information, refer to guidance published by the Victorian Public Service Commission and Agency-specific policies and procedures.
Risks of probity breaches
Public sector employees have an obligation to act ethically and in the public interest at all times. There may be occasions where an officer becomes, through their actions or roles, the subject of accusations of:
- fraud – the false representation of facts with an intention to deceive or enable person or organisation to gain an unfair advantage (this includes falsifying documents and certifying statements known to be wrong)
- theft – stealing or dishonest misappropriation of money or property, and
- corruption – acceptance of any gift or consideration as an inducement or reward, misuse of information or misuse of position.
Robust procedures and processes that demonstrate strong probity principles will minimise the potential for officers to be exposed to such risks and allegations. In Victoria investigations of such allegations may be undertaken internally or by the Independent Broad-based Anti-corruption Commission, the Ombudsman, the Auditor General or the police.
Dealing with probity breaches
Unfortunately, mistakes do happen and the response to a probity breach should be appropriate for the nature of that breach.
In a suspected probity breach, first raise the issue with the chair of the steering committee or the project manager as well as the probity adviser (if there is one).
Material breaches such as fraud and corruption with legal consequences should be dealt with according to the Agency’s procedures and referred to the Independent Broad-based Anti-corruption Commission or Victoria Police.
It is important to document that a breach was identified and that the actions taken were appropriate and reasonable under the circumstances.
Managing conflicts in the context of private sector advisers has been identified in a Victorian Auditor-General's Office performance audit tabled on 29 March 2018. One recommendation, was to require probity reports or sign-off letters for major procurement transactions, to disclose any material probity issues that arose during the relevant project, even where the issues were managed to the satisfaction of the probity practitioner and project governance group.
Describe strategies to mitigate risks in procurement
Reviews complaints of conflict of interest within the Ombudsman’s jurisdiction.
Tools and support
Reviewed 30 October 2018