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Probity in Major Procurement – Risk and Reward

January 29, 2021

Most public sector organisations know that a robust Probity Plan is an essential aspect of major procurement, and that it is critical to ensuring transparent and defensible decision-making.  Yet there is no immediate and obvious “reward” associated with the development of a Probity Plan. 

So, what is the incentive? Simply, to avoid risk and reputational damage. Without a robust Probity Plan you are essentially “playing chicken” with every major procurement move you make – the consequences of not having a plan are significant.

High profile, high stakes reputational risk

There have been a spate of high profile cases, reported widely in the media, which underscore the need for quality, rigorous and strategic probity planning. The Commonwealth Government’s “once in a generation” second airport for Sydney is a recent case in point. 

The headlines should have heralded the achievement of important milestones in the construction of this economically vital piece of infrastructure. Instead, the significant achievements of the project have been overshadowed by the media and political storm surrounding the purchase of land for the airport.  Reportedly, the Federal Government paid ten times the value for land in what has been described as a "significant and unusual transaction".

A robust, quality and embedded probity plan built into the procurement process might have mitigated this risk for the government.  This could and should have been an opportunity for organisational and reputational reward of the government, instead of a barrage of negative media reports which will most likely plague the project for years to come.

Ineffective probity planning is a risk to your organisation

While this is certainly a high profile case involving reputational and political risk of the highest stakes, such failures of probity planning are far more common than sometimes seem apparent.  For example, a quick survey of IT investment and procurement across a range of disparate organisational contexts highlights the risks of ineffective probity planning:

  • Myer’s initial procurement of an online shopping system did more organisational harm than good due to ongoing outages
  • Queensland Health’s Payroll system reportedly cost the Queensland taxpayers an estimated $1.2 billion in underpayments
  • The Australian Customs Service paid upwards of $225 million to deliver an improved cargo system (the system was deemed a complete failure due to poor project governance and ineffective probity oversight)
  • The Victorian Auditor General identified a lack of proper project controls for the huge system failures of the MyKi Smart Card system (which cost the government $1.4 Billion)
  • A Victoria Health IT upgrade which put patients at risk

In each instance, building clear probity structures into the front end of procurement would have mitigated possible risks and produced positive outcomes for each organisation.  Such examples highlight the need not only for quality probity processes but for trusted and experienced probity advice. 

Is the potential risk to your organisation worth foregoing expert advice?

How to frame probity for your organisation’s procurement

Probity can be defined as complete and confirmed integrity, uprightness, and honesty. Upholding the highest standards of probity and integrity enables organisations to safeguard procurement activities to ensure those activities and processes are robust and can withstand scrutiny.

Probity is critical to an organisation’s ethical decision-making and incorporates the principles of accountability, impartiality and transparency. As the possible impacts of poorly conceived or implemented probity planning can be dire, it is important that organisations consider probity planning before commencing procurement or other potentially high-risk activities. However, once the “genie is out of the bottle”, “the bird has flown” and/or the “final act has begun”, it is too late to retro-fit probity into the procurement process.

The value of a probity advisor, probity advice and a probity plan

Seeking the assistance of a qualified and experienced probity advisor can be of immeasurable benefit to your organisation. 

In many ways, the “reward” of seeking, co-planning and implementing robust probity processes and principles in your organisation are best measured by what does not unfold as a result of ineffectively planned procurement.  

The value of engaging specialist advice lies in the ability of having a trusted advisor and partner who can foresee possible unintended consequences that are not always obvious. An advisor who both simultaneously understands your unique organisational context and who also has the ability to view potential risks with a critical lens can be of huge benefit.  A good probity advisor also works with you to build internal future capacity.

A quality probity plan should involve a thorough risk analysis and include a wide range of identified controls.  These might typically be:

  • probity principles and standard protocols
  • communications
  • accountabilities
  • fair dealing
  • conflicts of interest
  • discretionary issues
  • confidentiality
  • negotiation processes

How can Centium help you?

Centium offers transparent, activity-based probity advisory and auditing services for a variety of transactions, including procurement, divestment, re-contracting and recruitment. Our bespoke Probity Methodology ensures that key probity elements are incorporated in every aspect of your transaction – i.e. Transparency, Accountability, Fairness, Value-for-Money, Issue Management and Conflict of Interest Management.

An organisation’s procurement function can be its key business strategy enabler. We provide our clients with best practice and market leading experience to improve the efficiency and effectiveness of the procurement function and thereby enhance the financial performance of the business

As a first step, Centium Probity will work with you to review existing policies and documents and present recommendations including efficacy of existing controls and proposed changes to improve the overall standard of service.

Importantly, Centium will ensure procurement, contract administration and project delivery projects provide:

  • Fairness and impartiality
  • Use of a competitive process
  • Consistency and transparency of process
  • Security and confidentiality
  • Identification and resolution of conflicts of interest

Click here to read more about Centium’s Probity & Procurement services. Click here to talk to us about how we can help.

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