Australian procurement corruption means suppliers refuse to bid

15 July 2011

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15 July 2011 | Angeline Albert

Corruption by procurement staff in New South Wales (NSW), Australia, has led to a third of its suppliers refusing to bid for contracts.

A survey of 1,515 suppliers to NSW’s state and local government conducted by the Independent CommissionAgainst Corruption (ICAC) found 67 per cent think corruption is a problem and 32 per cent do not bid because of it.

The commission’s report Corruption risks in NSW government procurement: Suppliers' perceptions of corruption, highlighted poor behaviour, including the offer of gifts and benefits, the provision of unequal information to different bidders and the leaking of confidential supplier data prior to the close of the tender.

One large supplier, with 50 or more current NSW government clients, said: “There is inconsistency in procurement. I have dealt with procurement areas/officers who are extremely ethical. There are other times when the guidelines are ignored.”

A second report, Corruption risks in NSW government procurement: Recommendations to government, said the ICAC had “identified procurement as a major risk area for corruption in the NSW public sector”.

It added: “Each year, approximately 12 per cent of complaints received by the ICAC include allegations of corruption in NSW government procurement and approximately 30 per cent of our public inquiries make findings of corrupt conduct related to NSW government procurement activities.”

The commission said there is a feeling from suppliers but also public sector procurement practitioners that there is “general confusion about the best way to handle procurement, where information is available and why decisions are made”.

The ICAC also analysed the NSW government’s procurement policy. It surveyed 153 state and local government organisations, interviewed public sector procurement staff, suppliers and assessed ICAC complaint data. This revealed varying levels of buying expertise and concluded it would benefit from a more structured approach to training and development. Responses obtained by the ICAC highlighted a “difficulty in recruiting procurement specialists and finding staff within agencies to undertake procurement activities”.

The commission recommended the NSW government clearly distinguish between mandatory procurement obligations and advisory guidelines. It also suggested it put in place a policy to monitor agencies that carry out procurement on its behalf.

The reports can be found here.

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