Ethics in government procurement is an area that must be followed each and every time any purchase is made.
The difficulties that an effective ethics policy must deal with may be quickly explained. In a May 2008 speech praising the New York City Conflicts of Interest Board for being practical in its approach to the administration on the city's ethics policy, New York's mayor David Bloomberg stated: "If we rule out every potential conflict, then we are going to keep the best and brightest out of government and not get their services...So it is finding the right balance."
There is much merit in this view.
Contrary to widespread belief, municipal staff — particularly at the management level — are not well paid in comparison to their private sector counterparts.
If municipal staff are prevented by municipal ethics policies from participating in the same kind of events in which their private counterparts engage, they are unlikely to view the relevant ethics rules as fair.
A reputation for treating workers unfairly does not attract good people and it encourages the best employees within an organization to leave.
Nevertheless, there are serious concerns in relation to fraternization between municipal staff and a municipality's suppliers.
At least in major cities, for the most part, the relationship between such staff members and those suppliers is professional and is tied to the work done for the municipality.
The objections to bribery and graft are so obvious and require no comment. However, threats to the best interests of a municipality may arise even where no bribe is contemplated.
Humans are naturally gregarious. People who work together tend to socialize together, particularly where they have a similar background and attitudes to life, and are involved in carrying out a major assignment that frequently brings them into each other's company.
Over time business associates may become friends. Many people meet their eventual spouse or life partner through workplace contacts. In smaller towns, municipal employees will frequently deal with lifetime friends and acquaintances in the course of carrying out municipal business.
These are the realities within which ethics rules must be applied.
Unfortunately, the problem with such fraternization is that it compromises the objectivity that should be associated with the procurement process.
To give some obvious examples:
- Poor performance in carrying out municipal work is tolerated because the purchasing manager (or the manager of the client department) knows that the supplier is going through a tough time.
- Municipal staff prefer to buy from Bob's Supply (a local company) rather than Jane's Supply (in the next town down the road) because Bob coaches the local rep hockey team and everyone knows Bob.
- How objective can municipal staff be when carrying out a comparative assessment of two suppliers, one whom they have known since grade school, while the other is a complete stranger?
- How careful are municipal staff in verifying that the municipality is receiving exactly what it paid for when dealing with a person who they consider to be a friend?
- How carefully are contract documents, payment schedules, invoices, etc. checked for accuracy, when the person who prepared them is a long-time acquaintance?
The reality is problems associated with conflict of interest and other causes of ethical concern arise long before any typical person would be likely to recognize that a potential for such problems exists.
Prudence dictates that care be taken in any business relationship. The supplier-customer relationship is not necessarily an adversarial one but it is one in which care must be exercised.
However, the personal acquaintance that forms through dealing in business often builds a false sense of security. Such a lowering of guard is even more likely true when dealing with an old friend or acquaintance.
Stephen Bauld is a government procurement expert and can be reached at email@example.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.