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ETHICS IN PROCUREMENT By Fred Mugambi Mwirigi JKUAT
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Definitions Ethics: Guidelines or rules of conduct that govern our lives, work, behavior and communication in both public and private undertaking Conduct: The way we carry ourselves, behave in the public eye, do things, respond to situations, give instructions, obey rules and think of or perceive the needs of the other human beings Code: A body of rules of conduct which people with common interest, aspirations, objectives, goals, duties, activities and responsibilities have to adhere to all the time so long as they continue to remain in the profession, group or trade
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Which way? … the ends justifies the means ….the means justify the ends
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Main Ethical Issues in Procurement Gifts Hospitality Conflict of interest Confidentiality of Information
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Principles of ethical behavior In carrying out their duties and responsibilities appertaining to work and the profession, procurement officers should: 1. Be loyal to the employing organization (i.e. the employer) 2. Do justice to those with whom they deal with and interact 3. Be faithful to their profession 4. Abstain from temptations and acts that are harmful to themselves and members of the society or community
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Conflicts in Procurement 1. Financial conflict- working for or in a company that directly affects your financial position 2. Social conflicts- Being a member in a club that has direct procurement dealings with your office 3. Political conflicts- soliciting for business from entities in which you have political interest 4. Gifts – solicited and unsolicited 5. Informational conflict- basing business on subjective information that you may be having about the supplier. E.g. he has promised to employ a friend if the friend brings business.
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Minimums of Ethical Behavior (General) i. Strive to obtain the maximum value for each shilling of the organization spent in procurement ii. Decline personal gifts or gratuities. iii. Grant all competitive suppliers equal consideration iv. Conduct business with potential and current suppliers in an atmosphere of good faith, devoid of intentional misrepresentation. v. Demand honesty in sales representation whether offered through the medium of a verbal or written statement, an advertisement, or a sample of the product. vi. Accord a prompt and courteous reception insofar as conditions permit to all who call on legitimate business missions. vii. Foster fair, ethical and legal trade practices.
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Ethical Minimums (as per the Act) Procurement personnel may not Use their official duties to solicit, agree to a bribe proposal accept bribes, rebates, gifts, preferential transactions or any other improper benefits from the supplier. Accept meals, accommodation, transportation, entertainment, travel, dirty entertainment, or any other similar situations with free charge or preferential treatment from the suppliers connected with their official duties Conduct procurement not in accordance with laws and regulations of the country Obstruct the efficiency of procurement. Waste organizational resources.
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Contd. Disclose confidential procurement information. Use the premises of the entity or public property for personal business or activities. Use their official duties to raise funds or engage in commercial activities. Use confidential information obtained in the course of duties for improper personal interests. Work concurrently for the supplier while having the employment relationship with the entity.
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Contd. Use their official duties to introduce their relatives or friends to work for the supplier. Use their official duties to borrow from the supplier, or to invest with the supplier Requesting a supplier to provide services not related to the procurement. Lobby for the supplier within or without the procuring organization. Make use of personal occasions such as weddings or funerals to solicit money or property from the supplier.
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Self Approval Test for Procurement Officers 1. Check the intent- is the intention driven by personal rather than personal drives? 2. Check the value and frequency of ‘gifts’- Is the gift or entertainment modest and infrequent or could it place you or the other party under an obligation? 3. Check the timing of activities- did a supplier call to ‘just say hallo’ about the time you are short listing suppliers? 4. Legality – Are you sure that the gift or entertainment is Legal? 5. Compliance with the other party’s rules – Is the receipt of gift or entertainment allowed by the recipient’s organization? Special care must be taken when dealing with government officials as many countries do not allow officials to accept gifts or entertainment. 6. Transparency – Would you be embarrassed if your manager, colleagues or anyone outside your firm became aware? 7. Hypocrisy – Are you adopting double standards? You should only offer what you would be comfortable to accept (and vice versa).
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Reducing unethical behavior A business ethics program has nine structural components that reflect global standards and best practices of responsible business conduct: 1. Standards and procedures to guide member behavior and foster reasonable stakeholder expectations 2. Adequate structures and systems that provide for authority, responsibility, accountability, and sustainability 3. Communication of standards, procedures, and expectations to the enterprise’s members 4. Programs that monitor and audit member conduct 5. Encouragement of members to seek advice and report concerns 6. Due diligence in hiring, especially for sensitive positions in, for example, management, finance, and contracting 7. Encouragement of members to follow standards and procedures 8. Appropriate responses when standards and procedures are violated 9. Regular evaluations of program effectiveness
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The need for a code of ethics and conduct Our society, employers, peers and workmates are genuinely concerned about our individual and organizational ethical behavior Our work performance and standards can only be of manifestly acceptable quality and appreciable level if good rules of ethical conduct are not only obeyed but also seen in practice Discipline can only be instilled in our behavior through a codified procedure. The surest way of disciplining errant members of a group is through a code of rules and conduct A group of profession can only stand the test of time, defend itself and spread its influence if its members are ethically upright and steadfast in doing the right things, at the right time, in the right place, in the right way and at the right level of performance The overall need for a code of conduct is that it will bring respect to, enhance recognition for, uphold discipline and harmony within the profession
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Guidelines on applicable ethics by PPOA There are ethical positions to be adopted by all procurement officers: i. Avoid collusion or appearance of it ii. Avoid any real or apparent conflict of interest iii. Do not discriminate on basis of race, gender, party affiliation, religion or ethnicity. iv. Protect the confidentiality of all the information pertaining the tenders 14
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Guidelines on applicable ethics by PPOA v. Avoid all corrupt practices vi. Avoid undue delays and abstraction in procurement processing vii. Do not exert any inappropriate influence on any procurement procedures viii. Do not open sealed bids and divulge their contents prior to public openings 15
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Thank you
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