By the Hon David Ipp AO QC
Of all the many functions carried out by government agencies, procurement is one of the riskiest in terms of corruption.
Staff involved in procuring goods and services from external suppliers deal directly with companies and individuals competitively seeking government contracts and tenders. They make recommendations and decisions on the award of contracts and tenders, and they recommend or approve payments to selected companies and individuals.
Procurement staff may have greater opportunity than most to benefit themselves or their associates through corrupt conduct, and the goods and service providers they deal with may be motivated to try to corruptly influence procurement decisions.
Where the substantial corruption risks in procurement go unrecognised or unmanaged, the results can be disastrous.
A recent ICAC investigation uncovered almost $19 million in improperly allocated contracts that were awarded to companies owned by RailCorp employees, their families and/or friends in return for more than $2.5 million in corrupt payments.
The ICAC recommended that consideration be given to the prosecution of 33 people for a total of 663 criminal offences.
That investigation revealed corruption on an unprecedented scale within one organisation, but corrupt procurement has been a feature of many other matters investigated by the ICAC.
A recent ICAC investigation found that two project managers contracted by NSW Fire Brigades had submitted false tenders and quotes in order to award Fire Brigades’ contracts worth more than $6 million to companies controlled by one of the project managers.
The two project managers received more than $2.5 million from their scheme, which went undetected for over two years. The ICAC investigation identified serious deficiencies in tendering and contract management, staff supervision, internal audit, record-keeping and other key corruption controls.
Another recent investigation found that the managing director of an engineering firm had provided payments of $40,000 and other benefits to a civil engineer working for TransGrid, a state-owned corporation, in return for improper assistance in tendering for TransGrid work. This investigation also identified specific deficiencies in the public sector agency’s procurement and contract management processes.
The ICAC is assisting the public sector to manage the corruption risks inherent in procurement in a number of ways.
There is advice on identifying and managing specific corruption risks, including procurement, on the ICAC website, with links to more detailed and specialised resources produced by the ICAC and other agencies.
A Procurement, Outsourcing and Contracting taskgroup has recently been established within the ICAC’s Corruption Prevention, Education and Research division. This taskgroup brings together staff with diverse but complementary skills and experience, to develop policy and resources to assist the public sector in identifying and managing corruption risks in these areas.
Taskgroup members have already played a major role in the review of national competency training standards in procurement, and the development of new material for the NSW Procurement Certification Training program delivered by the NSW Department of Services, Technology and Administration.
Margaret Ludlow, a taskgroup member with expertise in training program development and delivery, undertook the recent review of national procurement competencies, which found that probity and anticorruption requirements were often absent or generalised in the competencies.
The majority of the recommendations made by the ICAC to strengthen probity requirements in the 23 competency standards were accepted and will be incorporated into the new national procurement competencies, which are expected to be introduced later this year.
The ICAC has also developed a practical guide to corruption risk and possible controls in all stages of procurement and other training materials for inclusion in the NSW Procurement Certification Training program from 2010.
These and other resources currently in development will provide substantial assistance to public sector agencies in managing this risky area.
Ultimately, however, the onus rests with individual agencies and staff to ensure that their own particular corruption risks are identified and managed effectively.
David Ipp AO QC is Commissioner for the Independent Commission Against Corruption in NSW.
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at editorial@governmentnews.com.au.
Sign up to the Government News newsletter
