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Linda Scott | 15 Nov 2021 | 5 min read
How to Write Guidelines on Probity in Procurement
Wondering how to write guidelines when it comes to ensuring probity in procurement? This article covers how you should go about it, and other important things to consider. You can read our full comprehensive guide here to learn even more.
A Probity Refresher
Before we dive into writing guidelines, let’s quickly cover the key principles of probity. Probity is the evidence of ethical behaviour. The principles of probity in procurement can be expressed as follows:
- Act fairly, impartially and with integrity
- Be accountable and transparent
- Be trustworthy and act lawfully
- Manage conflicts of interest
- Secure commercially sensitive and confidential information
Probity relates to the whole procurement process, from planning the procurement all the way to managing the eventual contract.
The Strengths and Weaknesses of Guideline Documents
Many organisations have a procurement governance framework in place that determines what processes need to be followed, what approvals need to be obtained and how decisions are documented.
Following these rules is a great place to start to demonstrate good probity practice. However, there are two areas in which guidelines may fall short that are worth keeping in mind: grey areas and getting good outcomes.
Probity Grey Areas
If staff follow guidelines exclusively, they can eventually hit a snag where there are grey areas that require judgement.
Here is a fictional example of one such case:
The auditors have insisted procurement must get three quotes when buying cases of catering-sized cans of fish, vegetable, and fruit. George, who works in procurement, does a weekly ring-around of catering distributors. He gets verbal quotes and then asks the lowest-price supplier to confirm their quote by email, so there was a clear-decision making trail. All good?
Not quite. As part of this process, George always rings his preferred supplier last. By this time, he already knows Supplier A has quoted $105 per case, and supplier B has quoted $100 per case. If Supplier C quoted $98 per case, as they often did, George would say nothing. But if they quoted $102 per case – more than one of the other suppliers – he would say “You did say $99 per case, didn’t you?” to ensure they gave the lowest bid.
Was George’s behaviour ethical?
He followed a common rule in procurement: get three quotes. However, Supplier B could argue that George violated the principles of probity in procurement mentioned earlier. If you check them, you’ll notice he broke every single one but number four!
However, on the other hand, he probably thought this was a great way to get the catering manager a good deal and to stretch out the catering budget.
In this scenario, it is likely George would have been sacked for not engaging in ethical behaviour. His actions would have diminished the integrity of the process, and therefore the confidence of all stakeholders in how fair it is.
This shows how these grey areas can appear even when you are adhering to guidelines. While the principles of probity in procurement are simple, the application of these principles is where problems can occur.
It is likely that even if you wrote a hundred-page guideline document covering every scenario, someone like George would not have read or memorised it. And even then, there would be many cases not covered by such a document.
Getting Good Outcomes
When you’re trying to achieve probity by sticking to the rules, you can inadvertently compromise the quality of the outcome just so you can create a more defensible process.
Here is a second example that helps demonstrate that concept:
You are conducting some market research for an upcoming procurement project. As you are doing this, a supplier invites you to visit their facility to help you learn about the industry.
If you got this offer, would you accept?
For some organisations, there is the view you should only accept if you visit all potential suppliers. This way, you are showing no favour or preference when it comes to any individual supplier. This approach is considered somewhat dated. This is because the outcome of the project may be poorer due to the loss of market insight if the visit doesn’t go ahead.
This highlights a tension that can occur between a focus on outcomes and a focus on process. Good practice is to optimise outcomes consistent with managing an appropriate process. However, by skipping the visit, this is optimising the process regardless of the impact on outcome.
The second view is that instead of abandoning any visits (or insisting on visiting all suppliers), you should develop a plan for the visit. The plan might identify a set agenda and list questions to be asked, as well as what confidential information can’t be disclosed.
By trying to manage probity issues rather than avoid probity risks completely, this avoids compromising the quality of the outcome.
Five Tips for Drafting Guidance on Probity
Now that we’ve covered where guidance can fall short, let’s talk about how to go about drafting it.
Examples are Good, Word Salad is Bad
No matter how you write it, people are not going to write almost a hundred pages of guidance. To make it more digestible and stick in their minds, use bite-sized examples that bring principles to life instead.
Fence-Sitting is Not Guidance
If you make the guidance vague, such as “make sure the basis of your shortlisting is defensible”, it’s not going to be of much use to the reader. Something concrete such as “A gap of five or more in numerical scoring is defensible” is better. There may need to be some caveats, but guidance should address commonly occurring situations.
Make Use of FAQs
This can help share the wisdom of experienced practitioners with peers. A common example is that inexperienced practitioners tend to create too many mandatory criteria in evaluation frameworks. They then find that key suppliers are excluded, or, worse still, all suppliers are excluded. An FAQ suggesting that mandatory requirements be minimised to no more than two or three criteria might help avoid accidentally sabotaging the process.
Match Effort to Complexity
Match the rigour of probity management to the complexity of the procurement project. Low value and/or low risk projects should be capable of being managed in-house. The exception is if there is some sensitivity in the project, which we will come to later.
They Need Appropriate Experience
There is no substitute for engaging appropriately experienced and capable staff to manage the procurement. Every procurement project will have a core of issues that are common and can be managed using standard guidance. Make sure that your guidance has gateways to in-house experts who can deal with thorny issues, or even guidance on when to seek specialist external advice.
Using Procurement Software to Make Probity Automatic
One way you can ensure you’ve got a transparent, defensible, and auditable procurement process is with a dedicated source-to-pay solution like VendorPanel.
With VendorPanel, you can manage procurement on one secure platform, allowing you to create a full audit-trail of the decision-making process. There are many features built in to ensure ‘compliance by default’ so users can focus on getting better outcomes, secure in the knowledge that the process is taken care of.
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