Bias, fraud and corruption happen. And in every culture, country and industry. Australia is no exception to that rule, nor is government immune as an industry, particularly considering the sheer scale of Commonwealth and State Governments’ procurement activities.
Fortunately, there are a number of processes in place which assists in upholding the integrity of procurements – and ensuring that Australian taxpayer’s funds are expended in a fair, transparent and consistent manner. National Anti-Corruption Commission (NACC) statistics show that serious fraud and corruption are rare – and Australia continues to enjoy a respectable score of 75 on Transparency International’s Corruption Perceptions Index – 14th in a field of 180. Gold went to Denmark, the Finns silvered and our ‘Friends across the ditch’ won the bronze. Despite Australia’s respectable showing, we are clearly not in medal contention. The simple fact is opportunities for fraud and corruption are all around us, with bias ever present in procurement processes. Bias, in particular, is forever lurking in the shadows. Often unconscious. Often difficult to detect. And even more often dismissed. Bias can hard to tackle, but there are ways we can minimise the risk, which, in turn reduces our fraud and corruption risk. Two birds, one stone = good value for money, if you ask me!
Firstly, let's go through some definitions – courtesy of the Oxford English Dictionary, so we are all aligned in what we are talking about.
Bias: Tendency to favour or dislike a person or thing, especially as a result of a preconceived opinion, partiality or prejudice.
Fraud: Criminal deception; the using of false representations to obtain an adjust advantage or to injure the rights or interests of another.
Corruption: Perversion or destruction of integrity in the discharge of public duties by bribery or favour; the use or existence of corrupt practices.
Our fraud and corruption risks are minimised through frameworks, such as the Australian Standard for Fraud and Corruption Control (AS8001), the Commonwealth Fraud and Corruption Control Framework 2024 and is underpinned by the Commonwealth Procurement Rules (CPR). The CPR and its Framework ensure that the negative impact of bias, fraud and corruption are minimised in Government procurement activities. This, in turn, ensures public confidence is retained. In addition, initiatives under the Commonwealth Procurement Rules and associated procurement connected policies seek to ensure that the concept of a “fair go” is afforded to a range of suppliers.
Let’s discuss fraud and corruption first. With both, and without meaning to sound cliché, if you see something, say something! But what can we do to minimise fraud and corruption in our procurements?
Manage conflicts of interests effectively. That means you need to declare, separate, manage and actively avoid any conflicts of interests. Ensure all conversations are documented and that the procurement team is sufficiently separated from the business-as-usual team.
Carefully manage relationships with industry – and ensure that any approaches from or correspondence with industry is well documented, in accordance with probity principles. (For probity considerations have a look at his article here).
Ensure security of documentation and processes – Both should be upheld with the highest level of attention to protecting commercially sensitive documents.
Brief the delegate – and do it honestly, with full details and in a timely manner.
Follow the rules! i.e. the requirements under the Commonwealth Fraud and Corruption Control Framework (for a quick read, have a look at this article here).
Bias is the more difficult matter to deal with. We all have biases that we contend with on a daily basis. Let me draw your attention to a few – do any of these ring true?
German products are better quality, French food and wine are the benchmarks for fine dining, Japanese electronics are the most reliable and innovative etc.
Clearly, these are all facts, right? Not opinions?
No! Facts are not facts, unless they are shored up by evidence. And without evidence, we are left with opinions – at best, and bias – at the worst.
To ensure that we minimise the risk of overt bias (Aussie tucker and vino beat the French any day. Plus, they were 20th on the Corruption Perceptions Index. And those pesky Germans are a little more believable – 9th, and Japan, well, they’re 16th, so I’ll let you be the judge. Joking aside, we do need to be particularly on guard for and aware of inadvertent bias in our procurements. In my experience, the ‘Top 6’ that tends to sway’ our procurement activities include:
Confirmation Bias – Giving weight to information that confirms existing beliefs or preferences,
Loyalty Bias – Preferring well-known or familiar brands over others, which may offer equal or even better value-for-money,
In-Group Bias – That’s the preference for working with individuals or companies that you know,
Status Quo Bias – I know what I like, and I like what I know, i.e. sticking with what/whom you know – potentially stifling innovation,
Stereotyping Bias – That’s the process of generalising or simplifying our beliefs. Think about those great high quality German products!, and those phenomenal Japanese electronic whizzes, and
Herding Bias – Yes, that means following the trends (or herd) and whatever else the rest of the group thinks.
Now for the hard facts. The Japanese are culinary artists. The Germans aren’t bad in the electronics sector. And the French, well they make some phenomenal industrial products.
In other words, we can never avoid biases fully. But awareness of these tendencies – to follow the herd, to continue to use the ‘trusted supplier’ and so forth, that can allow us, as procurement professionals, to minimise the potentially destructive impact of biases. Awareness can help us question our usual processes and, thereby achieve only value-for-money. Perhaps more importantly, that awareness can ensure that we engage fairly and transparently, which helps Commonwealth suppliers and procurements specialist meet and exceed the rightful expectations of the public to work in their best interests.
At Synergy 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 strategic sourcing priorities. Our team ensures that procurement activities are transparent, accountable, represent value for money and can withstand scrutiny.
