Important ethical concepts in procurement, are discussed.
Conflict of interest
Conflict of interest in procurement arises when people in the public sector are influenced by personal and financial consideration when doing their jobs thereby influencing their decisions. Decisions are made for the wrong reasons in favor of people to whom they are close thus impairing the objectivity and independence of their judgments on quality specifications. In procurement when handling a tender, all conflict should be noted recorded and the official involved should then exclude themselves from further involvement in the tender awarding decisions. Pope 2000, further asserts that the procurement process should have clearly stated and well understood policies and procedures as well as written codes of conduct to deal with actual, potential and perceived conflict of interest. He is of the view that if a relative is unquestionably the best evaluated bidder they shall be awarded the tender if the correct procedure is followed.
Leakage of information during the tendering process is a serious ethical procurement issue. This is where some officers leak information to their preferred bidder in advance of the advertisement and afford them an advantage in the preparation of bids.
Celentani and Ganuza 1989, consider a procurement problem when potential bidder have private information about their production cost since the procurement agent is also in charge of verifying delivered quality in exchange for a bribe, they argue that the agent can allow an arbitrary firm to be awarded the realization of the project and to produce a quality level lower than announced.
To manage conflict of interest, any person involved in the tender process, including contractors such as legal, business or probity advisers, should make a written declaration of any actual or perceived conflicts of interests prior to taking part in the process. This declaration includes other employment, prior employment or financial interests in organisations who may be potential suppliers and relationships with people who have interests in these organisations.
Confidentiality of information
Confidential information requires protection and should be shared with others only when needed. Access must meet ethical guidelines, contractual obligations, and government regulations. Examples of information that may be considered confidential or proprietary include:
- Pricing
- Contract terms and conditions
- Bids and quotations
- Product costs
- Descriptions of formulas and processes
- Designs and drawings
- Organizational plans, goals, and strategies
- Financial information not available from public sources
- Information that may influence stock prices
- Wages and salaries
- Personal information about employees, officers, and directors
- Sources of supply
- Computer software programs
For example in United Nations(UN) procurement, confidentiality needs extra consideration due to the delicate nature of the information that is handled in procurement processes, such as pricing of products, marketing strategies, etc. A breach in the confidentiality of the data handled in the procurement process could result in discredit of the UN and distrust from governments, partners or suppliers.
Confidentially might seem in contradiction with transparency, but what this means is, the way the overall procurement process is conducted needs to be clear and transparent, while truly proprietary data needs to remain confidential.
Transparency and accountability
Transparency means unimpeded visibility. Because public procurement involves the use of and accountability for public funds, transparency is, perhaps, paramount in all procurement activities.
All transactions are subject to scrutiny but not all organizations experience such scrutiny to the degree of the UN. Therefore, procurement officers and assistants must always conduct themselves in such a way that any scrutiny would not damage the UN or its leaders, member organizations, staff, or programs.
Procurement transactions and decisions must in all respects be fair, equitable and ensure value for money. Contracting authorities must be able to justify decisions made and actions taken.
In organizing the procurement function, management in contracting authorities must ensure appropriate separation of duties within the procurement cycle. For example, insofar as possible, ordering and receiving goods and services should be distinct from payment for goods and services.
Due diligence
Due diligence in the context of UN procurement refers to carrying out duties carefully and thoroughly and avoiding careless practices or techniques. Due diligence requires that all activities by procurement officers be pursued in a manner that goes beyond the minimum effort.
For example, diligent UN procurement officers should:
- Check the references of potential suppliers
- Develop impartial evaluation criteria
- Carefully analyze the offers received
- Not cut corners for the sake of convenience.
Use of an Appropriately Competitive Process
The method used for procurement processes should suit market circumstances as well as the size and nature of the procurement. It should also provide reasonable access for suppliers to public procurement opportunities. Procuring Entities should investigate the relevant market conditions and consider whether an open procurement process is appropriate. A key element of the procurement framework is open competition.
Procuring Entities should aim to ensure that the cost of tendering for opportunities does not deter competent suppliers. They must provide adequate and timely information to prospective bidders, and avoid asking for unnecessary information or requirements.
Requests for unnecessary information may occur when details are required for pre selection and then the same details are required again in the tender, making it time consuming and expensive to be a part of the tender process.
Procuring Entities should therefore be familiar with any pre-selection or prior processes to avoid requests for duplicate information. Procuring Entities should also set and meet reasonable time frames for any procurement process, to enable bidders to confidently allocate resources to their bid.
Integrity
This relates to reliability honesty and freedom from corruption.
Bidders and all other stake holders need to have assurance that they can rely on any information disseminated by the procurement entity, formally or informally. The integrity of the procurement process assures confidence in the procurement process
Gifts and Gratitude
Many purchasers argue that their decisions are not swayed by a free lunch. The concern is however after accepting many lunch/ dinner invitations, most people feel a sense of obligation to return the favour.
In some organizations, gifts are completely forbidden while in others, gifts are allowed up to a certain amount e.g the New York State procurement law prohibits any officer or employee from receiving or accepting any gift having a value of US dollars 75 or more.
One should not allow to be influenced by gifts in decision making
Compliance with Legislative Policies
Procurement must be conducted in compliance with all relevant legislation and Public policy. It is important that all staff involved in procurement have access to and are familiar with the relevant procurement policies. For example, PPDA (Public Procurement and Disposal Act, 2005)
