Why is probity in tendering so important?

Introduction to tendering probity

Probity is also known as procedural integrity. It is a concept that brings together moral excellence, integrity, uprightness, conscientiousness, honesty, and sincerity in procurement processes. In tendering, probity is important in:

• assessing the tender objectively and consistently in accordance with the published criteria
• protecting and confidentiality of commercial and intellectual property
• identifying and resolving conflicts of interest

Maintaining probity in the tendering process is the responsibility of the organisation requesting the tender proposals (the principal). They must demonstrate, and be able to provide evidence of, ethical behaviour in their selection procedures.

The Australian Standard Code of Tendering (AS 4120-19941) provides a code of conduct and statement of ethics to underpin best-practice tendering.

The tendering contract

A tendering organisation has a right to expect probity in the tendering process. The contractual obligation between the principal (ie the organisation requesting tenders) and those submitting tenders is referred to as the tendering contract. Breach of the tendering contract entitles the injured party to apply for damages.

Tendering parties are obliged not to engage in improper practices. These improper practices include:

• collusion on tenders
• inflation of prices to compensate unsuccessful tenderers
• secret commissions.

Breaching these can lead to prosecution.

The importance of probity in tendering

The primary objective of maintaining probity in tendering is to maintain the integrity of the bidding process. There is an obligation on the principal to treat all tenderers equally and fairly.

If probity is not maintained, tenderers will be reluctant to bid on future contracts. This is because they cannot be confident that their proposal (often requiring a large amount of time and resources to prepare) will be fairly considered.

Probity is of primary importance in government tendering as the public requires that open competition for work is maintained. Open competition for government tenders ensures that the best value provider will be awarded the contract and therefore the taxpayers’ money is well spent. Corrupt behaviour in the selection of providers results in poor quality work, a waste of public funds and a lack of confidence in government procurement (which makes other potential tenderers reluctant to bid).

Transparency in the tender assessment

Transparency in tendering is required so that all tenderers are treated fairly. The contract award criteria must be established in advance of asking for submissions and be clearly laid out in the documentation. In Government contracting, transparency in the tendering process is essential so that tenderers and all stakeholders (including members of the public) have confidence in the outcomes.

An organisation, in principle, cannot reject or accept tenders outside the criteria that they have publicised, nor can they negotiate with individual tenderers outside the tendering process. These make the process non-transparent and susceptible to corruption.

For more information about probity refer to the Australian Department of Finance website.