Part 7: Goods and services expenditure

Controlling sensitive expenditure: Guide for public organisations.

In this Part, we discuss obtaining, disposing of, or using goods and services that are not covered by terms and conditions of employment.

Loyalty reward scheme benefits

Loyalty reward schemes benefit customers who continue to use a particular supplier.

It is important to preserve impartiality and integrity. We expect that staff making procurement decisions would not personally receive any loyalty rewards as a result of those decisions.14 There should be controls and clear guidance about expectations for all involved so that, to the maximum extent possible, the public organisation benefits from any rewards.

As with accruing air points, there are complexities to managing personal loyalty reward schemes. One option is for the public organisation to ask the supplier not to provide loyalty rewards for business purposes. Otherwise, where the rewards accrue to the individual who obtains the goods or service, we expect public organisations to follow the same advice relevant to air points in Part 5, regardless of who has paid for them.

Private use of public organisations' assets

Any physical item a public organisation owns, leases, or borrows is considered an asset for the purpose of this guide. This includes photocopiers, mobile devices, computer equipment, laptops, office furniture, uniforms, and stationery.

The principles of transparency and moderate and conservative expenditure are particularly relevant here. Personal use of these assets might be permitted in defined circumstances.

We expect public organisations to have policies that identify what, if any, private use of an organisation's assets is acceptable, the level of use (defined in terms of quantity), and the circumstances under which costs will be recovered. Generally, costs of private use should be recovered, unless it is impractical or uneconomic to separately identify those costs.15 We expect public organisations to prohibit an employee's use of an organisation's assets for their private business.

Public organisations' use of private assets

Sometimes a public organisation decides that reimbursing staff for using private assets is appropriate for reasons such as cost, convenience, or availability. An organisation might decide to do this for an asset that it would not regularly use if it acquired it directly, such as motor vehicles and mobile devices.

The main issue with an organisation using private assets is the risk that they then pay or reimburse the provider of those assets an amount that benefits the provider inappropriately.

The principles of a justifiable business purpose, preserving impartiality, and integrity are particularly relevant here.

Staff members must not approve or administer payments to themselves for the organisation's use of their private assets. We expect public organisations to have policies and processes in place, as well as monitoring and reporting, to ensure that this is the case.

Private use of a public organisation's suppliers

If a public organisation allows staff to obtain goods or services from a supplier on the same or a similar basis to the organisation, and staff are then able to obtain the goods or services at a discounted price not otherwise available to them, this is private use of an organisation's official procurement processes.

If staff have access to an organisation's suppliers on the same basis as the organisation, they might receive preferential access to goods or services at a preferential price not available to the public. The risk is that the availability of the discount to staff will influence the choice of suppliers to the organisation. Public organisations must not take preferential access to goods and services for staff into account when choosing suppliers.

In our view, it is inappropriate for public-sector staff to personally benefit from the purchasing power of their organisation. We expect it to be unusual and rare for a public organisation to give staff access to its suppliers on the same basis as the organisation. However, where this is allowed, staff should be moderate in their use of any preferential access to goods or services. These situations risk creating the perception that staff are privately benefiting from this access, which would need to be managed.

We expect public organisations to have a policy regarding staff use of preferential purchasing. Public organisations should ensure that the selection of suppliers is in their interest and not affected by the availability or possibility of purchasing privileges for staff.

Public organisations that allow staff to purchase directly from suppliers should set limits on the value and quantity of purchase. Public organisations should also monitor staff use to avoid any risks to future procurement decisions involving that supplier.

Public organisations' policies should state that staff cannot use purchasing privileges on behalf of any third party, such as family members or friends, and staff should pay in full and must not use the organisation as a source of credit. Resources of the public organisation, including staff time, should not be used to procure goods or services for employees' personal benefit.

Sale of surplus assets to staff

As part of their normal business, public organisations will occasionally dispose of their assets. Typically, this is when the assets become obsolete, worn out, or surplus to requirements. The procedures that public organisations follow when disposing of the assets need to be transparent and fair.

Public organisations should not sell assets at a discounted rate to staff if they can make more money through another method of disposal.

The principles of preserving impartiality and integrity are particularly relevant here. We expect that the staff disposing of the assets will not benefit from the disposal.

We expect public organisations to:

  • recognise the value of the asset and any potential for actual or perceived undue benefit by staff;
  • maximise the return to the organisation if disposing assets, including to staff; and be able to justify that amount (for example, market value); and
  • ensure that all assets identified for disposal to staff are valued and subject to a tender or other process that is appropriate to the value of the asset.

Maximising return to the public organisation can include considering non-financial benefits like sustainability. If the organisation is unable to sell or find an alternative use for its assets, it might be better that the assets are offered to staff rather than being taken to a landfill.

14: Refer to the government procurement rules, charter, and principles that set out clear expectations for staff involved in procurement – for example, government procurement principle five: Play by the Rules,

15: For further information in relation to directors of Crown companies, see: Crown Company Monitoring Advisory Unit (2004), Crown Company Directors' Fees and Reimbursement Guidelines.