- 1. Contracting in the Public Sector
- 2. Developing the Contract
- 3. Formalising the Contract
- 4. Entity Arrangements for Managing Contracts
- 5. Managing the Contract
- 6. Ending the Contract
- Managing the contract checklist
- Example contract management plan for simple procurements
- Example contract management plan for large/complex procurements
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PDF version of insert [207KB]
5.14. Behave ethically
Once a contract is signed, the risk of unethical behaviour still exists, although the circumstances in which ethical issues may arise are likely to be different to the earlier stages of the procurement cycle. The relationship with the contractor is a critical element of achieving the required outcomes and issues associated with ethical behaviour are likely to arise in this context.
Judgements on ethical issues will often involve a number of potentially competing considerations including:
- the need to uphold the APS Values and Code of Conduct;
- the need to achieve the contract outcomes;
- the need to maintain constructive working relationships with the contractor;
- whether the appearance of an actual or potential conflict of interest exists; and
- whether reasonable and cost-effective mitigation arrangements can be put in place that address any actual or potential conflicts of interest.
Judgements will also need to be made in the light of the particular circumstances that exist at the time. For example, the periodic offer of lunch with the contract team could be seen as an appropriate way to build relationships. However, it may not be appropriate at a time when the acquiring entity is in negotiations about a significant variation to the contract or towards the end of the contract when a new procurement process is underway.
Unethical behaviour may also be less visible, and therefore harder to detect and address, during the life of a contract. For example, where the contract manager is accepting lower standards of service delivery in exchange for personal benefit such as attendance at sporting events, it may be difficult to detect.
One common approach is to require all offers of gifts or benefits, no matter how small or seemingly harmless, to be disclosed to the contract manager’s supervisor or another nominated senior manager. Another approach is to assign responsibility for managing the contractor relationship to a person or team other than the contract manager.
Issues involving offers or acceptance of employment, briefly discussed at section 2.7, are also relevant during the contract management phase.
The following case study outlines two scenarios involving employment-related conflicts of interest.
Case Study: Managing conflicts of interest
At the mid-point of a large, complex contract, the son, David, of the contract manager who had been involved in the contract from its inception accepted employment with the contractor. The contractor was a large company and David’s responsibilities did not involve any direct involvement in the provision of services to the acquiring entity.
The acquiring entity decided that this situation could be effectively managed by taking the following actions:
- requiring the contract manager to provide formal advice of his son’s employment arrangement;
- requiring the contractor to confirm in writing that David had no direct involvement in providing services under the contract; and requiring the contractor to advise the acquiring entity if this situation changed; and
- formally reminding the contract manager that information in relation to the contract should only be conveyed to others on a strictly ‘need to know’ basis.
At the mid-point of a large, complex contract, Carol, the partner of the contract manager who had been involved in the contract from its inception, was appointed by the contractor to a senior management position within the company. One of Carol’s responsibilities was to oversight the contractor’s responsibilities for the provision of services to the acquiring entity. The contract did not require the contractor to consult the acquiring entity about such appointments.
The acquiring entity argued that the contractor had created a potential conflict of interest situation and therefore it should have been consulted before the company made the appointment. The contractor countered that because Carol was involved in a management capacity and was not directly involved in providing the services the situation could be effectively managed, and was not prepared to change Carol’s responsibilities.
Despite the potential effect on the contract and consideration of various mitigation strategies, including the greater involvement of another manager in managing the contract, the acquiring entity decided that another contract manager should be appointed to manage the contract.
The contractor accepted that this experience could have an impact on future relationships and agreed to a contract variation requiring the contractor to consult the acquiring entity before engaging key people that could give rise to a potential or actual conflict of interest.
Comment: This situation could have been avoided if the acquiring entity had included a conflict of interest provision in the contract, and procedures were in place for both staff and the contractor to sign conflict of interest declarations that were regularly reviewed.
Public Service Act 1999, sections 10 and 13.
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