Government has, understandably, sought to ensure service providers act ethically and do not engage in practices that can be considered unethical. That raises the ethical question – can and should consultants working within an agency use information gleaned from that agency? Stated another way, are we letting the foxes have the run of the chicken coop? The simple answer to that question is – there is no simple answer to that question.
Let me unpack that confusing question-and-answer about foxes and hen houses. To be clear, I am not talking about sharing confidential information. What I am focusing on is – how we share information collaboratively and effectively to drive the best outcomes for Australia, which we all want. It's also clear that ‘insider trading’ is unethical, i.e. consultants should not use information that is not in the public domain for a commercial benefit.
However, consultants with ‘corporate knowledge’ and an ‘insider’s perspective’ are likely to find themselves with a ‘leg up’ when bidding for work – and precisely because of that knowledge. That knowledge can, arguably, be linked to a commercial benefit. On that note, several Commonwealth agencies have started asking consultants and contractors to sign an “ethical wall deed.” That deed requires consultants to personally guarantee that they will not talk to their employer about work in an agency and be involved in any procurements which are put to market and arise from their work at the agency (directly or indirectly). Seems fair, right?
On the other hand, there are good reasons to give that consultant the leg up, key among which is lower transaction costs. That is a ‘fancy way’ to say that consultants with a corporate knowledge, or a history with an organisation won’t take as long to read into a file, find their way around the corporate structure, know who to call to get approvals, among scores of other advantages that come with incumbency. It would be nonsensical to ignore the value that consultants with ‘know how’ from current or previous engagements might bring to the table. Further to that point, would this knowledge not assist government to achieve better outcomes, not to mention work faster and more efficiently? In other words, could ethical walls be seen as an impediment to Commonwealth agencies, thereby limiting their ability to obtain value-for-money? That’s not to mention limiting agencies' ability to grow their corporate knowledge, facilitate the transfer of skills and uplift the performance of APS staff?
So how do you protect the ethical walls (of the coop) and achieve good outcomes?
- Be clever and realistic, rather than idealistic. By this, I mean that a lot of the functions would (ideally) be undertaken by the APS. But the reality is different – there are plethora of specialist (and even BAU) functions that are outsourced. Consultants are generally engaged to provide specialised and time-bound input – or where independent advice is needed. However, it is no secret that the APS, as well as State, Territory and Local Governments face significant capacity and resourcing constraints. As a result, consultants and contractors often fill the gap, so as to augment this capacity shortfall. There is nothing stopping Commonwealth agencies and other public sector agencies from recognising that ‘reality’, but also using it to their advantage. They can ‘lean into’ consultants’ expertise and ask them frank questions about what they think could be done better, more efficiently and could help agencies not hire them in the future. It’s a point of pride in our firm that we aim to make ourselves redundant at the end of an engagement, all while saving our clients time, energy and resources in the future with the productivity gains that we have delivered – and lessons-learned that we delivered. In other words, public sector agencies should build ‘productivity dividends’ into their contracting and procurement arrangements – and ensure that consultants don’t just deliver the ‘widget’ they were hired to produce, but to bring with them value-adds that will help the client work more efficiently in the future.
- Be informed – That brings me back to the distinction about insider information. Those involved in procurement activities don’t need to be experts, but they should have a broad awareness of what constitutes their agency’s sensitive data – be it commercial, personal or classified information. They also need to be well versed in procurement basics, i.e. understand the Commonwealth Procurement Rules (CPRs) and the broad sweep of legislation covering Commonwealth procurement activities, but start with the PGPA Act , and the Protective Security Framework…. which are there for a reason!
- Know your goals and how to get there – Information should be shared to get the best outcome. So, be clear on the requirements and tell the world what you want and how you want it. If it’s confidential in any way – then there are also parameters in the CPRs, which allow you to conduct procurements in a restricted manner. However, limiting participation can lead to less transparency, limited market and vendor participation – so tread with caution.
Understand that transparency is paramount – The short and tall is that the public sector needs to be transparent and open – that’s enshrined in legislation, government rules, practice and culture. While building ethical walls may respond to seemingly unfair activities (giving incumbents a ‘leg up’), there are other measures that can address those issues. One simple example is to increase the amount of information provided to tender participants – and to engage more fully with the question-and-answer protocols before tender bids are closed.
- Keep it simple, not to mention open and transparent – Procurements don’t need to be difficult, lengthy or overcooked. In fact, open procurement processes can be just as efficient as limited tender procurements. The key to ensuring good responses is, as always, in the planning – and building a fulsome Statement of Requirements!
At Synergy Group Law, we understand the nuances and challenges faced by the public sector, which enables us to identify and mitigate risks, provide practical and strategic advice, and help to deliver on legal and strategic sourcing priorities. Our team prides ourselves on upholding the highest ethical standards in all our projects.
