Corruption Matters - June 2015 - Issue 45

Sponsorship under the procurement safety net

Sponsorship under the procurement safety net

The motivation for private sector sponsorship of government activities is rarely just an altruistic or charitable one. After all, paying tax is enough for most – why would you be willing to give more? In most cases, it is reasonable to assume that the sponsor is looking for some commercial advantage. But there are genuine opportunities for government that need not be passed up.

Where agencies approach sponsorship as a special case of procurement, employing similar processes and protections, they can reduce the risk of corruption and ensure value for money when engaging sponsors.

Whether it be building brand awareness, getting government endorsement of products and services, developing a “preferred supplier” status that greases the wheels for other government work, or even reducing their own costs by making government more effective in some area, companies tend to approach government for reasons that will be of benefit to them.

There is often a potential “market” of sponsors who are willing to transact support of a government activity in return for some benefit. In this regard, sponsorship is not that different from procurement; for example, there are questions of whether a need has been correctly assessed, whether the sponsorship represents value, and whether there has been delivery of what has been promised. There is the same challenge of acting impartially within a market of sponsors yet allowing the market to generate sponsorship “solutions”. There will inevitably be negotiations with preferred sponsors.

In this context, unsolicited sponsorship offers become as difficult as any other unsolicited proposals. This circumstance arises frequently for agencies that provide highly-valued community services and agencies that are highly visible with regard to the use of particular types of equipment or services.

When the potential sponsor approaches the agency unsolicited it moves control of the agenda to the potential sponsor. Opportunities for the public organisation to test the market might be lost and setting of any sponsorship criteria may become skewed by anchoring bias, where the public official over-estimates the positive qualities of an initial offer or idea. 

The ICAC has also observed that potential sponsors will often try to “sneak in” with unsolicited offers by initially offering semi-legitimate items such as conference places.  They later make these offers conditional on endorsement, resulting in wasted time and disappointment.
In Sponsorship in the public sector (2006), the ICAC outlines 10 sponsor principles, such as:

These principles are echoed in Unsolicited proposals: guide for submission and assessment (2014) by the NSW Department of Premier and Cabinet, which sets the criteria and process for evaluating unsolicited proposals, including sponsorships, in NSW. The guide emphasises the need to ensure that proposals are unique; that is, that they cannot be obtained via a competitive process.

Where sponsors present a genuinely unique opportunity, direct negations – although generally best avoided in any other circumstance – are needed here. The ICAC’s publication Direct negotiations (2006) suggests ways to achieve both value for money and impartiality in decision-making despite the non-competitive process. These include:

Where agencies approach sponsorship as a special case of procurement, employing similar processes and protections, they can reduce the risk of corruption and ensure value for money when engaging sponsors.

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