Ethical Public Procurement

(or how to avoid the 6 p.m. news)

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A Guide for Elected Officials and Senior Management

Agenda

• Why ethics in procurement are important

• Two simple action items

• How does your agency stack up

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Why ethics in procurement

are important.

Only one commandment:

Fairness, Openness and Transparency

By policy and law, procurement must be fair, open and transparent.

The question is how do we accomplish this?

Ethics is the very simple answer. By following a set of overarching principles governing how we conduct our procurement practices we can fulfill the first commandment. Sounds easy, but it often isn’t for some.

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Examples of Ethical Lapses in

Procurement Practice

Corruption Perceptions Index, Transparency International www.transparency.org

Irregular Payments in Public Contracts Index, OECD, Integrity in Public Procurement: Good Practice from A to Z, www.oecd.org

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Corruption Perceptions Index

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Corruption Perceptions Index

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Overview of the index of perception of corruption, 2018.

(Highest perception of corruption is colored dark red, and lowest is

colored yellow.)

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Irregular Payments in Public

Contracts Index (OECD)

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Encyclopedia of Ethical Failure

http://ogc.osd.mil/defense_ethics/resource_library/eef_complete.doc

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Story #1

“But, Judge, I didn’t get anything!”

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Story #2

Sergeant-at-Arms of the United States Senate Takes

Free Flight to Hawaii After Recommending Contractor

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Story #3

And the Band Played On…

While the Ship Sank Around Them

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Scandals Promote

Procurement Reform

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Scandals ARE NOT

Procurement Reform

Scandals are not enough

It takes action – not lofty words

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Two Simple Action Items

for Public Officials to Follow

(One ‘Do’ and One ‘Don’t’):

1. Do Model Ethical Behavior

2. Don’t let Politicians Interfere

With Procurement

Processes

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Action Item #1:

Model Ethical Behavior by

Building Ethics Into Your

Processes

What it really means

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What modelling ethical behavior means

1. Knowing the rules

2. Reviewing and improving

your practices

3. Providing support

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1. Knowing the Rules17

http://www.rfpmentor.com/electedfreecopyusa.html

What is the legal framework for procurement?

What values do our procurement people hold?

But what do procurement people do all day?

Why is "sole sourcing" a problem?

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Some Selected Questions

Reviewing and improving your practices

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1. Professionalization of procurement staff

2. Modernize your procurement function

3. Adopt the right tools

Professionalization of Procurement Staff

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Purchasing Management Association of Canada

National Institute of Governmental Purchasing

The Chartered Institute of Purchasing & Supply

1. Is the head of procurement professionally certified?

2. Are the majority of procurement staff professionally certified?

3. Is there a continuous professional development program for procurement staff?

4. Does staff participate in conferences or external workshops?

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How does your agency compare?

2. Modernize your Procurement

Function

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NPI’s Success Factors

(How would you compare?)

Do you:

1. Publish a “How to do Business” on your website?

2. Have a “Procurement Ethics” policy statement?

3. Have an up-to-date procurement manual?

4. Have a continuous improvement program for customer relations?

5. Have procurement authority based in law?

6. Complete procurement reports at a high level?

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Do you:

7. Have Internal Procurement Automation?

8. Utilize eCommerce?

9. Have a P-Card system?

10. Use term contracts extensively?

11. Require Professional Certification of staff?

12. Provide Education for your staff?

13. Have a Professional Development program?

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NPI’s Success Factors

(How would you compare?)

Do you:

14. Participate in a Purchasing Association?

15. Participate in public procurement conferences?

16. Adopt ‘best value’ ordinance?

17. Do environmental purchasing?

18. Lead agency in cooperative purchasing?

19. Have a procurement code, directive or policy?

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NPI’s Success Factors

(How would you compare?)

… Continuous improvement program for customer relations

(a) Has the Agency performed a formal

procurement survey of internal customers?

(b) Of external customers (suppliers)?

(c) Does the Agency offer formal internal

customer training?

(d) Formal vendor training?

(e) Are there performance measures specific

to the procurement function?

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How would your agency do?27

The 10-page description of

required features and capabilities

and the questions can be found in

The References and Notes file.

3. Adopt the Right Tools

Publish a Code of Ethics

Develop Ethics Guidelines

Provide Training

Adopt the Use of Fairness Officers

Expand Policies and Procedures

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The keys to ethical procurement

1. Enforcement

2. Monitoring & Reporting

3. Training

4. Transparency

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Action Item #2:

Keep Politicians Out of Your

Procurement Processes

Some examples

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Politicians should not be allowed

to interfere with Procurement Processes

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Recommendation #130

Councilors should separate

themselves from the procurement

process. They should have no

involvement whatsoever in specific

procurements. They have the

strongest ethical obligation to

refrain from seeking to be involved

in any way.

Hon. Madam Justice D.E. Bellamy

Commissioner, Toronto Computer Leasing Inquiry

The Toronto Leasing Inquiry

Clockwise from lower left:

Wanda Liczyk, Tom Jakobek,

Justice Bellamy, Dash Domi

and Jeffery Lyons.

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Source: http://www.thestar.com/news/city_hall/2010/03/16/mfp_players_where_are_they_now.htmlCOLIN MCCONNELL, RENÉ JOHNSTON, STEVE RUSSELL, RON BULL, RICK EGLINTON / TORONTO STAR FILE

PHOTOS

“People disgraced

themselves…”

~ Justice Bellamy

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Justice Bellamy’s Report

Judge Bellamy presented over

240 recommendations in her

report. These include

suggestions that:

Toronto create a code of

conduct for lobbyists.

Councilors and staff not use

their positions to further their

private interests.

Gifts received by staff and

politicians should be tracked

in a searchable database.33

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The Toronto Leasing Inquiry

The tawdry tale of how a $40M computer contract

between the City and MFP Financial Services

ballooned to over $100M

Ex-hockey player salesmen, conflict of interest

ridden sexual affairs, free trips, cash payoffs – The

City of Toronto’s Leasing Inquiry scandal had it all

At the heart of it all: Wanda Licyzk, Toronto’s former

treasurer

City of Toronto’s Procurement Melodrama

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A Test for Transparency54 simple questions

How does your agency compare?

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https://www.rfpmentor.com/pages/fotscore

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Fair, open, transparent (FOT) INDEX

Scoring mechanism

Topics covered

Sample questions for one section

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Areas Examined

The procurement organization’s structure

The Agency’s procurement web site

Evaluation Committee Report

The Vendor debriefing session

Vendor complaint process

Freedom of Information Act

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Organizations would answer questions

for each section, recording their section by section score in the table below:

AGENCY

Organizational

Structure

Web Site

Information

Evaluation

Committee

Practices &

Reporting

Debriefing

Process &

Practices

Vendor

Complaint

Process &

Practices

Access to

Information

Practices

TOTAL

FOT

SCORE

Maximum

Score9 13 14 7 8 3 54

Your

Score

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Evaluation Committee process

and Reporting PracticesItem

#

NO

0

YES

1

23 Does each Evaluator sign a confidentiality agreement?

24 Does each Evaluator sign a ‘no conflict of interest’ agreement?

25 Does the Procurement Dept. provide training or a briefing for each Evaluation

Committee?

26 Is there an Evaluator’s Guide provided by Procurement?

27 Are proposals scored using a consensus scoring technique based on discussions

among the Evaluators?

28 Is a Procurement person always part of an Evaluation Team?

29 Does the Procurement Person attend all meetings of the Evaluation Committee?

30 Is there a report prepared by the Evaluation Committee describing the evaluation

process and recommending an award?

31 Does the report contain a narrative of the Evaluation Committee’s activities?

32 Does the report describe the approach and methodology used in the evaluation?

33 Does the report contain a summary of the Evaluation Factors and Scores of each

Proponent?

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FOT Score Analysis

Score

Range Asner’s View of Results To-date

40-54

(75%-100%)

Excellent. The playing field is level. The organization demonstrates

that it is fair, open and transparent.

32-40

(60%-75%)

Good start. Agency needs to evaluate weak areas based on scoring

and move towards better practices to strengthen scores.

Below 30

(less than 60%)

Cloak of secrecy. Contrary to public policy. Improvements needed

immediately.

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Summary

Back to the First Commandment

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Fairness, Openness & Transparency

help create an Ethical Environment

Take action to learn, improve your practices,

support your staff , use the right tools, and

make sure your agency stacks up.

Take action to keep politicians out of the

process.

If you can’t answer yes to whether the process

is ethical…

Remember there is only one commandment:

Fairness, Openness and Transparency

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QUESTIONS

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