ICAC recommends system redesign for government procurement in NSW

Thursday 14 July 2011

The Independent Commission Against Corruption (ICAC) recommends that the NSW Government establishes a procurement leadership role to combat the fragmented approach to government procurement in the state, which the Commission believes may have contributed to suppliers' perceptions that corruption in public sector procurement is a moderate problem or worse.

Recent ICAC research into the corruption perceptions of suppliers to state and local government in NSW found that 41% of 1,500 suppliers surveyed think corruption is a moderate or major problem when doing business with government, while 32% said they did not bid on a contract because of corruption concerns.

The Commission has made seven recommendations to the NSW Government in relation to procurement aimed at establishing clear leadership, a clear structure, and a simplified regulatory environment.

"The ICAC has identified procurement as a major risk area for corruption in the NSW public sector," the Commission says in its recent report, Corruption risks in NSW government procurement: Recommendations to government.

"Each year, approximately 12% of complaints received by the ICAC include allegations of corruption in NSW government procurement and approximately 30% of our public inquiries make findings of corrupt conduct related to NSW government procurement activities."

The Commission's new research report, Corruption risks in NSW government procurement: Suppliers' perceptions of corruption, showed that 55% of the respondents indicated that improper favouritism occurred typically in NSW government procurement. Other typical corruption-prone behaviours that suppliers believe occur at least typically in NSW included the offer of gifts and benefits over $20 (48% of respondents), the provision of unequal information to different bidders (39%) and the leaking of confidential supplier information prior to close of tender.

The Commission's research as shown in its recommendations to government paper indicates that it is clear that there is a general feeling from the perspective of not only suppliers but also public sector procurement practitioners that there is general confusion about the best way to handle procurement, where information is available and why decisions are made.

Concerns about the management of corruption risks in NSW public sector procurement included that the public sector is characterised by varying levels of procurement expertise, and would benefit from a more structured approach to training and development and from the application of minimum standards. Another concern was that there is a widespread lack of compliance with procurement policy procedures and there is an absence of sanctions within the system.

The Commission therefore 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.

The Commission also 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.

Both publications are available on the Commissions' website at www.icac.nsw.gov.au.

Media enquiries: ICAC Manager Communications & Media, Nicole Thomas, 02 8281 5799/0417 467 801

Corruption risks in NSW Government - Suppliers perception of corruption - (June 2011)

Corruption risks in NSW Government - Recommendations to government - (June 2011)