Commonwealth
Procurement and
Contract Management
Conference
Combating corruption in
procurement
nacc.gov.au
Scope
•
A predominant theme in referrals
•
A strategic corruption priority
•
Case studies
•
Risk factors and vulnerabilities
•
Prevention frameworks
Corruption in procurement
• Corruption in procurement wil often lead to the
overpaying of goods and services, at a cost to the
taxpayer.
• It can also result in poor outcomes for projects that are
awarded to tenderers that were not the most suitable.
• This can have negative impacts on public trust in
institutions.
Themes in public sector corruption
Procurement
Public/private
Recruitment
interface
Preferring family,
Use of insider
friends and
associates
information
Compromised
Conflict of
decision
making
interests
Strategic
Corruption
Priorities
Operation Tardis
Case study 1
nacc.gov.au
Operation Tardis - scope
• Whether a staff member of the Australian Border Force
engaged in corrupt conduct in authorising two
milestone payments in December 2015 and July 2016,
during the acquisition phase of the Cape Class Patrol
Boat project.
• It was suggested that the conditions were not satisfied.
Operation Tardis - findings
• The investigation found
no corrupt conduct, but
identified a number of issues with the decision-making
process undertaken in authorising the payments which
created corruption vulnerabilities:
• Inadequate records had been kept by the ABF staff
member to explain their rationale for authorising
them.
• Governance structures of the project had fal en away
during the process.
• Legal advice was not fol owed.
Operation Tardis - recommendations
• Review records management policy/procedures
• Review contract management process & ensure
effective controls
• Review processes to ensure compliance with PGPA
Rules and other obligations for high value contract
management projects.
• Ensure employees in contract management know
legislative obligations.
Operation Turnover
Case study 2
nacc.gov.au
Operation Turnover - facts
• Joint investigation by the QLD CCC, Queensland Fire
and Emergency Services (QFES) and Queensland Police
into a former senior QFES employee.
• The employee had obtained secured secondary
employment as a contractor with two companies
tendering for QFES work and provided significant
assistance preparing their tender documents, earning
close to $200,000.
Operation Turnover - outcome
• The employee had engaged in multiple types of
misconduct including fraudulent procurement,
improper disclosure of confidential information, and
undeclared secondary employment.
• The employee pleaded guilty to four counts of official
corruption and was sentenced to three years
imprisonment.
• The investigation resulted in multiple recommendations
to the QFES relating to secondary employment,
conflicts of interest management and governance.
Operation Daintree
Case study 3
nacc.gov.au
Operation Daintree - facts
• IBAC investigation of procurement and management of a $1.2m
contract to provide training services for health workers.
• A training provider received assistance from ministerial advisors
to propose delivering training to health workers.
• Involvement of ministerial advisors led Department staff to
believe the government wanted the training provider appointed.
• Despite concerns about the capacity of the provider, was a non-
competitive procurement process which approached only the
provider.
• After concerns about delivery were raised, intervention from
ministerial advisors dissuaded department from terminating.
Operation Daintree – outcome
• The evidence fel short of ‘corrupt conduct’ but
revealed breaches of duties and improper influence and
misconduct by ministers, ministerial advisors and
senior public servants.
• Key recommendations included:
• Amendments to the Ministerial Code of Conduct to
ensure consistent understanding of ministerial
responsibility
• Revised guidance to ministerial staff and public
servants on their respective roles
WA CCC matter
Case study 4
nacc.gov.au
Geraldton Port
• In 2021 the Mid West Ports Authority executed a
contract for the provision of security services with a
total value of more than $2.8 mil ion to the incumbent
contractor, a company owned by the city’s former
mayor, despite it ranking second on the qualitative
criteria for assessment.
• The investigation could not identify a legitimate
justification for why the tender was not awarded to the
highest scoring applicant.
Geraldton Port – risks identified
The Commission did not form an opinion of serious
misconduct, but identified three crucial deviations from
standard procurement process which represented serious
misconduct risks:
• Failure to follow internal guidance;
• A presentation to the Executive which included misleading
and inaccurate statements that appeared to favour
awarding the contract to the incumbent;
• A failure to adequately record key information and
decisions during the tender process.
Operation Pelican
Case study 5
nacc.gov.au
Operation Pelican
Operation Pelican involved an Executive Procurement
Manager overseeing a multi-mil ion contract for facility
development for a Commonwealth entity approached the
Managing Director of one of the tenderers and asking for
5% of the contract value in return for an assurance the
company would be awarded the contract.
Key takeaways
nacc.gov.au
Procurement risks
• Failure to follow applicable processes
• Inadequate documentation of decisions and
reasons
• Influence of associates, including existing
connections and external actors
• Limited tender processes
• Misuse of inside information
Risk profiles
Entities are at a greater risk when they:
• Have a close relationship with industry
• Oversee very large and or very high value projects
• Have issues with governance, oversight, record-
keeping and reporting
Conclusion: mere compliance is not enough
• The rules are intended to support value for money
• But there is stil an overriding ethical obligation.
• Availability of a limited tender process does not permit
preference of friends and associates.
The National
Anti-Corruption
Commission
nacc.
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g
acc. ov
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v au
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Document Outline
