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Ethical standards in the public procurement sector

Stephen Bauld
Ethical standards in the public procurement sector

General adherence to the highest standards of public ethics is a keystone of good government.

There are clear and cogent reasons why municipal administration ought to be above suspicion when it comes to expenditure of public funds.

The difference between public and private sector is very clear.

When private companies spend money, they spend money that belongs to themselves; it was earned through a process of voluntary exchange. In contrast, public money is predominantly taxpayers’ money.

As such, it is money received by the government to pay for services and other things that people do not wish to pay for.

Even if it could be shown that those things are socially worthwhile or even necessary, the coercive nature of taxation and, therefore, public expenditure, is sufficient to necessitate higher standards of ethical conduct than those that prevail in the private sector.

People employed in public procurement occupy a fiduciary position. As such, they are legally required, and expected by the public, to display impeccable standards of conduct. They must not abuse their position or authority, for instance, to exact personal gain, misappropriate public funds or property or allow their decisions to be influenced by an improper gift or other consideration, such as personal friendship.

They must act with complete impartiality, giving preferential treatment to no one, except as required or permitted by law.

They must avoid conflicts of interest, including any appearance of such conflict, whether involving themselves personally or a third party to whom they also owe a duty of loyalty.

They should advance their employer’s interests and its interest alone. They must disclose fully to the appropriate decision-making authority all facts within their knowledge that are relevant and material to any decision to be made.

As public servants, they may be expected not to do anything that impedes or undermines government efficiency or economy.

As employees, they may be expected to do nothing contrary to the instructions that have been properly given by their superiors and to act only as approved or in an appropriate manner.

They should maintain their employer’s confidence and respect the privacy of its suppliers. By the same token, they must not assist or conceal a breach by any other person of their responsibilities to the municipality.

In my opinion, there are three foundations of ethical business practice: legal requirements, industry expectations and internal control mechanisms.

For municipalities, legal requirements include the law relating to fiduciary obligations and legislative requirements, prohibitions and restrictions stemming from the Municipal Act, the Municipal Conflict of Interest Act as well as municipal purchasing bylaws.

Industry expectations encompass a wide range of self-regulatory devices and procedures, from professional standards and rules of professional conduct to non-binding policy statements. Internal control mechanisms include different levels of signing authority, disclosure and conflict of interest avoidance mechanisms, requirements for transparency in the procurement process and so forth.

The extent of success enjoyed in implementing a formal structure to ensure municipal procurement is carried on in an ethical as well as an effective manner is a matter of debate.

As might be expected, some devices have been more successful than others.

Too often in the area of ethics, it is assumed behaviour will be ethical provided it is carried out in strict accordance with governing policies and procedures and provided the right forms are correctly completed at the right time.

I would disagree with that idea.

Every municipal employee should know the rules and follow the rules, but a person should not be a slave to the rules, for no rule could be drafted with a mind to every possible situation.

Mindless adherence to form and procedure with little regard to the substantive ethical concerns that underlie them can be counterproductive.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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