Scenario 2: Being friendly with suppliers

What is the situation?

A DHB wants to find a supplier from an existing panel of approved providers of print and related services. The DHB uses a secondary procurement process that asks providers for a formal proposal.

Priya is a member of the evaluation panel. She declares that she has a “business as usual” relationship with Ari, a staff member from one of providers bidding for the contract.

Priya manages the existing contract with the provider for the DHB. Further investigation reveals that she worked with Ari in a previous role and that the two remain close.

Why is this a conflict?

It is not unusual for public sector employees to have a relationship with staff at a supplier. It is also often likely that an incumbent supplier already working with a public organisation will compete for a new opportunity.

The DHB needs to manage two risks here.

First, it needs to ensure that Priya is managing the existing relationship in the DHB’s best interests.

Second, it needs to ensure that her relationship with Ari has not become a close personal friendship (or one that can be perceived as such) where Priya’s interest in Ari’s well-being could conflict with the DHB’s interest in choosing the best supplier.

Even in the absence of a friendship, staff often have regular relationship management meetings with suppliers – for example, over a regular coffee catch up. This can create the perception of a close relationship even if it is not a conflict.

Management plans that do not mitigate the conflict

The DHB identified some management plans to deal with this scenario. However, these plans do not address the perception that a conflict exists.

Proposed management plan Why it does not work
Priya will not see Ari during the tender process. This would be impossible to verify. It is also unlikely to address competitors’ perception of a conflict.
It does not remove any conscious or unconscious bias that may exist.
Priya will delegate management of the existing contract during the tender process so she is not involved. The existing contract needs to continue being managed.
Managing the existing contract does not cause the conflict. Priya’s involvement in the procurement process does.

What might be a better plan?

If Priya has a close personal friendship with Ari, she should not be involved in the procurement process. If they were not friends, Priya’s ongoing relationship with Ari in managing the existing relationship is not a conflict.

However, it is also important to consider whether there is an actual or potential advantage for the incumbent supplier Ari works for. If there is, the DHB needs to decide how to mitigate that advantage to make the procurement a level playing field.

The DHB also needs to consider perceptions – in particular, how the situation might look to a competing supplier who has less information about the full circumstances.

During the procurement process, contact with the supplier, and particularly Ari, should be kept to essential business only. It should be carried out on DHB premises and should not include any hospitality from the supplier.

It would be prudent to include more than two people and to carefully document each meeting. This would help mitigate the perception of a close relationship or conflict.