APS leaders warned about conflicts of interest in procurement


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Australian Public Service leaders have been formally reminded they are expected to fully comply with the rules around managing potential and actual conflicts of interest in procurement, at the behest of the parliamentary committee that oversees the auditor-general.

Department of Finance secretary Rosemary Huxtable and APS commissioner Peter Woolcott have written to heads of public service agencies, asking them to pass on the reminder to staff.

“It is fundamental to good governance that conflicts of interest are managed effectively,” they write in a joint letter to the committee confirming they have done its bidding.

“The public rightfully expects that decisions about how public resources are used will be made in the public interest and not for other reasons, such as personal gain.”

Huxtable also wrote to corporate entities covered by the Public Governance, Performance and Accountability Act to deliver the same message, as Woolcott has no authority over organisations that sit outside the APS.

The Joint Committee of Public Accounts and Audit asked for the reminder about conflicts of interest to be sent out after reviewing several reports from auditor-general Grant Hehir.

“Several concerns were raised during the course of the hearings regarding probity management with respect to procurement,” the committee commented in its report.

One major example of a conflict that caught the JCPAA’s attention was Hehir’s finding that a senior officer on the board overseeing the Department of Health’s National Cancer Screening Register project had supported a bid by Telstra while owning undeclared shares in the company.

While finding Health had at least followed the basic procurement rules, the auditor-general reported in June 2017 that the NCSR procurement was marred by “inadequate consideration of risk during planning and poor management of probity and conflicts of interest” that meant the government’s objectives were not achieved in the agreed timeframe and the cost blew out.

“We are using that particular case study as an example for all of our senior executive about the pitfalls of not being conscious and aware of all of the conflicts that you might have,” Health told the committee.

All members of the JCPAA agreed that the department should seek advice from the APS Commission if this was an adequate response, as they firmly believed it was not.

“It appears from the answers provided at the public hearing that although there was clearly a reasonable perception of a conflict of interest, Health’s response and the leadership signal to the organisation are inadequate,” the committee concluded.

“This is important as organisational culture is primarily set by leadership behaviour. Health provided no evidence that any sanction was even proposed or considered and it is entirely unclear from Health’s weak responses what the supposed ‘pitfalls’ from this ‘case study’ are when there is no evidence of real action.

“Conflict of interest is a primary consideration of the APS Code of Conduct, with agency heads and Senior Executive Service (SES) subject to specific reporting requirements.

“It is apparent that the department’s integrity framework is insufficiently mature given the environment allowed SES officers to make decisions regarding a significant procurement despite a number of those decision-makers having failed to declare conflicts of interest in relation to the project, and/or standard annual conflict of interest and personal interest disclosures.”


Read more: Nothin’ suss: Defence denies ‘nepotism’ accusation in limited-tender procurement deal 

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