Corruption in procurement processes is not a risk unique to law enforcement agencies. Procurement includes all activities involved in acquiring goods or services, either outright or by lease. Procurement functions carry high risks for corruption because they involve discretionary decision-making combined with the transfer of often large amounts of public funds into private hands.

In ACLEI’s investigations into agency procurement processes, the main corruption vulnerabilities identified relate to abuse of office and failures to appropriately disclose or manage conflicts of interest.

Abuse of office in procurement

Abuse of office in procurement processes can involve officers responsible for undertaking a procurement circumventing procurement governance and integrity frameworks in order to manipulate outcomes in favour of a preferred tenderer. This may result in a contract not being awarded to the best qualified tenderer or at an inflated price. This can give rise to the misuse of government resources. In some cases, the official may receive a benefit from the successful tenderer.

Conflicts of interest in procurement

Conflicts of interest in procurement processes need to be effectively managed. Actual conflicts of interest can result in staff members involved in the procurement deriving personal benefits directly (for example, through increased dividends if the contract is awarded to a company in which they are a shareholder) or providing undue benefits to personal associates (for example, through granting contracts to companies owned or operated by family or associates).

State and Territory integrity agencies have concluded multiple investigations into corrupt conduct in procurement processes, identifying corruption risks including:

  • fraud
  • conflicts of interest
  • abuse of office
  • false invoicing, and
  • bribery and secret commissions.

Past recommendations of these investigations have included:

  • safeguarding confidential tender information
  • identifying and assessing corruption risks at each stage of procurement
  • properly declaring and managing conflicts of interest
  • undertaking adequate due diligence on contractors and suppliers, and
  • implementing systems for identifying and reporting red flags related to projects and procurement activities.

At the Commonwealth level, the Commonwealth Procurement Rules (CPRs) require officials undertaking procurement to recognise and manage actual, potential and perceived conflicts of interest. The Australian National Audit Office (ANAO) plays a key role in auditing procurement undertaken by Commonwealth agencies including the agencies within ACLEI’s jurisdiction.

Integrity in procurement processes is a key focus of ACLEI’s corruption prevention strategy. As this is a risk common to all agencies, we work across government to ensure that agencies have access to the latest information and best practice guidance on addressing this risk.

Contractor management

There are a range of corruption risks associated with the delivery of contracted services, outsourcing of functions and partnerships with non-law enforcement agencies.

Agencies will often engage external service providers to perform services for them under contract. This may include cleaning, security, payroll management, human resources, information technology, legal services and consulting services.

Agencies may also engage external parties to assist them in performing the law enforcement functions of the agency. For example, by engaging external parties to deliver specific aspects of a law enforcement function such as forensic analysis, investigations or audits. Some agencies outsource the delivery of a particular function, which may involve the exercise of an agency’s law enforcement function.

Agencies are generally unable to directly control which individuals are engaged by an external party to deliver services or perform a function under contract. Unlike agency employees, individuals delivering the functions or services on behalf of a contracted provider may not be subjected to the same level of pre-employment or ongoing suitability screening. This creates a risk that unsuitable people may be engaged to perform those functions or continue to perform functions despite no longer being suitable.

The terms of an employment contract or subcontract for those delivering the functions or services on behalf of a contracted provider are determined by the provider. They may not be the same as for agency employees. Contracted employees therefore may not necessarily undergo similar mandatory integrity training or have the same professional training requirements as their counterparts in Commonwealth agencies. For example, personnel or subcontractors are not necessarily subject to the same expectations of behaviour, such as that outlined in the APS Code of Conduct.