New procurement rules: the trouble with assessing ethical conduct

Ethical conduct joins the procurement rulebook, but without shared standards or data, assessing integrity may prove more theory than practice.

First published in the Mandarin

The government’s new requirement that public servants assess the ethical conduct of potential suppliers under the Commonwealth Procurement Rules will cause many public servants to sigh heavily and prompt many corporate executives to reiterate their statements on ethical practice.

In an already competitive market, these executives will pay closer attention to the rule that “only Australian businesses be invited for tenders below $125,000.” As global consulting firms rebrand as “Australian businesses,” they might find themselves in an uneasy tension with the ethical conduct clause. It will be interesting times for those involved in business development and corporate communications.

However, for public servants, the question is how to assess the ethical conduct of opaque businesses whose ‘proven experience’ and ‘ethical statement’ sections of the proposal have been carefully developed over years of daily dealings with the Commonwealth? 

Would such a clause have excluded PwC or KPMG? In practice, the inclusion risks becoming another procedural tick-box: a gesture towards ethical conduct that both sides recognise but neither can verify. The quality of the assessment only becomes relevant after a breach occurs.

Will ethical assessment make any difference?

The procurement system faces ongoing pressure to deliver quickly, efficiently, and responsibly. Procurement decisions are becoming more scrutinised. However, human behaviour tends to choose the easiest option, and suppliers who clearly and convincingly meet the compliance requirements will be favoured. The cultural belief remains that, despite recent evidence, when in doubt, ‘you can’t go wrong buying a big multinational’. 

Without established standards, assessors depend on reputation rather than solid evidence. Should transparency in pricing and reporting be a concern? Is trustworthiness the primary focus? Do they do what they claim? It might be enough that they have a clean legal and regulatory record or that they do not discriminate. What about their sustainability practices? Are they open to scrutiny? Do they care for their staff? 

The pragmatic view is that policing others’ ethics ultimately depends on the ethical resilience of the public service itself. Ethical procurement begins not with external evaluation but with internal integrity—the capacity of public servants to resist pressure, question appearances, and act in alignment with the public good.

The significant efforts by the APS Academy in promoting integrity and leadership across the public service can strengthen the APS’s ability to resist pressure and ask more insightful questions. This, along with improvements in on-demand training on the mechanics of procurement and contracting, and the growing professionalisation of commercial capability, may better enable public servants to make value-for-money decisions that benefit the long-term public good. 

Are there benefits to a focus on ethical conduct?

Despite the challenges of including an ethical assessment, it is not without merit. It signals that the government sees integrity as part of value for money. Even if it is not perfect, it promotes wider reflection on what defines value. 

An ethical assessment can act as an additional tool for analysing risk and improving quality control. Concentrating on suppliers who act with integrity, treat their workers fairly, and honour their commitments is likely to align with performance and reputation.

This assessment has broader cultural implications for suppliers. Procurement choices influence market behaviours. When public service favours ethical practices, it encourages industry-wide attention on those behaviours and practices.

Suppliers seeking government contracts must demonstrate not only their competence but also their integrity. The onus is on the supplier to provide evidence of their performance. Over time, this fosters a market in which ethical behaviour becomes a standard part of the business practices of suppliers aiming to work with the public sector.

The difficulty for those procuring services is not to view integrity as a fixed or yes-or-no trait, something a supplier either has or does not have during evaluation. Instead, integrity is more of a journey than a destination. The most meaningful assessment is how a supplier develops, evaluates, and upholds its ethical practices over time. 

Traditional assessment has mainly focused on compliance or ethical statements of intent in isolation. A more dynamic understanding of ethical conduct could lead to an approach that integrates systems, practices, and mechanisms with values, purpose, and commitment. The challenge will be how to operationalise that in practice.

The space in between

The assessment of ethical conduct alone cannot guarantee integrity, but without it, supplier integrity remains opaque.

The solution cannot rely on a scoring rubric or compliance checklist. For assessment to be meaningful, it will be an organisational judgment based on information sharing across the APS about experience, performance history, and ethical conduct. The emphasis on performance across these areas is not about reaching a destination but rather on the ongoing and thorough evaluation of the supplier’s improvement journey.

Including ethical conduct in procurement rules won’t eliminate poor behaviour, but it can help ensure that government procurement appropriately considers efficiency and integrity.

The main contribution of this update to the procurement rules is cultural and behavioural rather than procedural.