Following its recent examination of NSW Government procurement,
the Independent Commission Against Corruption
(ICAC) "has identified procurement as a major
risk area for corruption in the New South Wales public
sector".
According to the ICAC, in its 22 year history of investigations and
public inquiries, procurement has been found to be the most common
area for corrupt behaviour to occur. Approximately 12% of
complaints received by the ICAC each year include allegations of
corruption in NSW Government procurement and approximately 30% of
its public inquiries make findings of corrupt conduct related to
NSW Government procurement activities.
During July 2010, suppliers to NSW Government were asked to provide
their perceptions of corruption in NSW state and local governments
by responding to a survey that had been prepared by the ICAC. The
ICAC surveyed 1,515 government suppliers in relation to their
perceptions of corruption of which 42% believe corruption is a
moderate or major problem when doing business with government with
32% indicating that they did not bid on a contract because of
corruption concerns.
As part of its research into procurement corruption risk, the ICAC
analysed NSW Government's procurement policy, the regulatory
and legislative framework, undertook a survey of 153 state and
local government organisations, conducted interviews and focus
groups with public sector procurement specialists and suppliers to
government, analysed the ICAC investigation and complaint data,
invited submissions to a consultation paper as well as undertaking
the survey of government suppliers discussed above.
The ICAC released two reports which contain its research and
recommendations:
1. Corruption risks in NSW Government procurement: Suppliers'
perceptions of corruption, and
2. Corruption risks in NSW Government procurement: Recommendations
to government.
The ICAC's examination of NSW public sector procurement
"has revealed a system that has grown and evolved over time
without any clear leadership or direction". As a result, the
ICAC made seven recommendations aimed at establishing clear
leadership, a clear structure, a simplified regulatory environment
and effective assistance to operational agencies in NSW.
The seven recommendations are outlined below:
Recommendation 1: Establish a procurement leadership role in
NSW
The ICAC recommends that a single, administrative NSW Government
entity be given explicit leadership responsibility for:
a. formulating and maintaining the state procurement policy
framework, including standards of conduct or practice
b. building the capacity of the sector
c. promoting the policy and compliance with its provisions
d. monitoring and reporting on compliance and performance
standards.
Recommendation 2: Undertake a comprehensive review of the NSW
approach to procurement
The ICAC recommends that, as part of the reform program already
commenced, the NSW Government, under the leadership of the relevant
Ministers, conducts a broad-based review of the system of public
sector procurement in NSW that specifically includes the issues
discussed and recommendations made in this report.
Recommendation 3: Simplify the regulatory framework in NSW
The ICAC recommends that the NSW Government develops a simplified
regulatory framework for procurement that is contained in a single
source, clearly distinguishes between mandatory obligations and
advisory guidelines, has minimum exemptions and includes an
explicit role to monitor procurement compliance of agencies.
Recommendation 4: Align local government and state procurement
policy
The ICAC recommends that the NSW Government takes steps to unify
elements of the local and state government procurement policy
frameworks and associated procedures.
Recommendation 5: Improve information, advice and support
The ICAC recommends that, as part of the process of sector-wide
procurement reform, the NSW Government reviews the central
procurement information, advice and support functions and tests
these activities in order to ensure that they effectively meet the
identified needs of end users. As part of this review, the relevant
central agency should take steps to ensure that it:
a. fully understands the needs of end users (agencies and
suppliers)
b. implements client-centred advice and support services
c. obtains feedback from end users and implements a program of
continuous improvement.
Furthermore, during the review process, the relevant agency should
take into account the need for:
d. simplified, user-friendly processes and support materials,
including best practice guidelines, tools and templates
e. more accessible information about how the DFS is organised, the
services it provides and the value of using DFS services
f. the provision of experienced procurement advisers to
agencies
g. advisory services to be efficient, timely and user-focused
rather than serving the achievement of central-agency business
objectives.
Recommendation 6: Build procurement competence
The ICAC recommends that the NSW Government introduces a
sector-wide procurement education and training assurance framework
that provides for:
a. mandatory minimum standards linked to levels of procurement
responsibility
b. auditing of agency procurement capabilities and associated
training initiatives
c. a system for mandatory certification of procurement policy and
process awareness and compliance by agency staff.
Recommendation 7: Oversee policy compliance
The ICAC recommends that the NSW Government establishes a
centralised investigation/complaint management function with the
capacity to receive, assess and manage reports about breaches of
compliance with the regulatory controls that form part of the
procurement policy framework.
For further information in relation to the ICAC's recent
research see:
- Corruption risks in NSW Government - Suppliers' perception of corruption - (June 2011)
- Corruption risks in NSW Government – Recommendations to government – (June 2011)
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