This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide.
In its April 2020 report entitled Management of Defence Housing, Australia’s National Audit Office (ANAO) called on Defence Housing Australia (DHA) to comply with its internal conflict of interest protocols, clarify its gifts and hospitality rules, and improve its related staff training.
The ANAO found that DHA’s compliance with its internal conflict of interest protocols remained a work-in-progress. As the report noted, as of April 2019, 20 percent of DHA’s non-senior executive service staff had failed to complete their conflict of interest declarations, but the ANAO also found that by March 2020, that figure was reduced to ten percent. However, the ANAO also raised concerns that DHA’s gifts, benefits, and hospitality policy was too permissive since that policy contradicted the stricter standards contained in the organization’s general conflict of interest rules:
DHA’s gifts and benefits register as at August 2019 showed that 126 declarations had been made between October 2016 and August 2019. Among these, in 12 cases the declarer had either declined or was proposing to decline the offer. Where the gift was accepted, the most common practices were either to donate the gift to be raffled at a social club function, which occurred on 45 occasions, or to share the gift amongst the team or local office of the recipient (28 occasions).
As at January 2020, DHA did not conform to current best practice advice for public service entities by publishing its gifts and benefits register on its website.
Tension between the conflict of interest policy and the gifts, benefits and hospitality policy
There is a tension between DHA’s staff conflict of interest policy and the gifts, benefits and hospitality policy. Whereas the latter outlines a framework under which a gift or benefit can be accepted by a DHA staff member, provided a number of conditions are met, the conflict of interest policy is unambiguous, stating that:
DHA is committed to ensuring that conflicts of interest are identified and managed so that they do not affect public confidence in the integrity of DHA and the APS. As such, DHA employees are not to derive any pecuniary or non-pecuniary benefit from their professional dealings with organisations or individuals as a result of their employment with DHA, outside their normal wages and conditions.
On its face, the staff conflict of interest policy precludes DHA staff from accepting gifts and benefits in any circumstances. DHA should consider the interaction of the two policies. In March 2020, DHA advised the ANAO that it would amend the relevant policies to ensure clarification.
The ANAO concluded that the DHA needed to focus on better training and controls, stating that “the non-compliances identified by DHA’s review process indicate the need for further training and guidance of staff engaged in procurement, and to improve the controls in the electronic workflow system.” As this report illustrates, clear rules and proper training are essential elements to achieving compliance with procurement governance standards.
