Importance of Ethical Procurement in the Public Sector & Best Practices

Creating a procurement process that is transparent, ethical and accountable is vital to ensure your organisation complies with upcoming laws and regulations and is up to date with best practices in procurement.

Today, we’ll be going over what ethical procurement is and how you can best incorporate it into your procurement process.

Jump Right to:

1. What to Consider When Creating an Ethical Procurement Process: Transparency, Socially Responsible and Ethically and Legally Sound
2. Ethical Procurement Practice Examples
3. Unethical Procurement Practice Examples
4. 5 Tips for Ethical Procurement in the Public Sector

What is Ethical Procurement?

In its basic definition, if something is ethical, it can be perceived as morally right and does not cause social or environmental harm.

What to Consider When Creating an Ethical Procurement Process 

When it comes to creating an ethical procurement process, there are 3 key things to consider:

Transparency

Transparency in procurement means being open and clear about what you are doing and how you are doing it. The public doesn’t need every bit of information relating to your procurement processes, but it’s important to meet enquiries such as freedom of information (FOI) or subject access requests (SARs) when required.

The idea of the procurement process becoming more transparent is being prioritised by the UK government, as highlighted in the Transforming Public Procurement green paper.

To summarise, upcoming changes and reforms in the Procurement Bill 2022 will aim to create a more “open and transparent public procurement regime”. This includes a register of suppliers and a central digital platform (built upon the current ‘Find’ service) that gives interested parties open access to a company’s contract portfolios, earnings, performance and more.

Socially Responsible

A socially responsible process identifies and reduces any negative social and environmental impacts. Whilst your own organisations might be socially responsible, it’s also important to know that external organisations you interact with, such as via sourcing products, are also socially responsible themselves.

Otherwise, you may inadvertently be contributing to something that is not socially responsible and causes harm. For example, the Modern Slavery Act 2015 aims to reduce and eliminate modern slavery, with the government offering specific guidance for eliminating this in procurement. We spoke to procurement professional, Gillian King, for her guide to building sustainable procurement. It may also help to maximise the social value in your organisation.

Ethically and Legally Sound

It’s important to have a good understanding of all bills and regulations, such as the Modern Slavery Act 2015, to ensure that your procurement process is ethically and legally sound.

Some organisations may also have a code of ethics, a guide of principles and what not to do to ensure you’re conducting business with honesty and integrity. These may differ between organisations, but here are some ethical procurement practices your organisation may adhere to and unethical procurement practices to avoid.

Ethical Procurement Practice Examples

Procurement practices that promote transparency are socially responsible and ethically and legally sound. These may include:

• Having your own code of ethics – Gives individuals a clear set of principles and standards they should be working towards and helps an organisation conduct business with honesty and integrity.
• Sourcing products from an ethically sound place – Ensuring that external organisations and individuals you work with are ethical and responsible.
• Having a good understanding of laws and procedures – Being able to navigate laws, procedures and regulations and applying them to your procurement process is incredibly important. Failing to correctly apply a law or procedure, either intentionally or unintentionally, can lead to severe repercussions such as fines or even criminal charges.
• Being open and transparent – Hiding or withholding information can leave you in a tricky spot if you later need to provide it. Having a tracking system related to your procurement processes means you’ll be able to provide this information should someone require access to it and allows you to analyse and evaluate your processes if anything goes wrong.

What is an Example of Unethical Procurement?

Unethical procurement includes practices that are unethical, have a negative impact socially and environmentally and may be of a criminal nature. These may include:

• Conflict of interest – A conflict of interest is something that could negatively affect your objectivity in carrying out your responsibilities and duties. If you feel that something may be in conflict of interest, it’s important you highlight it to your organisation so that the correct steps can be taken to avoid it.
• Accepting favours/gifts – This may include both individually and as an organisation, suppliers may offer favours or gifts in an effort to work with you or improve their relationship with you. As an individual, this may lead to a conflict of interest and in its worst case be counted as bribery, which could lead to fines and criminal charges.
• Not adhering to a code of ethics – You may feel that your procurement process is already legally sound without specifically adhering to a code of ethics, however, having one gives your employees shared principles and values they can work towards and evaluate themselves with. Whilst also ensuring that the lines between ethical and unethical procurement are clear to everyone and aren’t blurred.
• Sharing confidential information – Whilst being open and transparent is important, it’s also important that you aren’t sharing confidential information from suppliers and other external organisations. In some cases, this may mean knowing and understanding SARs Exemptions or when someone is entitled to in an FOI enquiry so that you’re both complying with the public and protecting suppliers' and organisations' confidentiality when needed.

5 Tips for Ethical Procurement in the Public Sector

Here are 5 tips you can use to ensure your procurement processes are ethical and legally sound:

1.      Adhere to a Code of Ethics

This gives your employees a shared set of principles and values they can work towards and allows for self-evaluation, organisations should be continuously monitoring and evaluating that they are meeting the standard of practice within their code of ethics.

This means ensuring you have an effective internal communication process, here are the types of internal communication you need to be doing in your organisation.

2.      Familiarise Yourself with Procurement Laws and Procedures

Knowing and adapting to law and procedure changes within procurement, such as changes in the Procurement Bill 2023, is vital to ensure your procurement processes comply with the law and remain ethical.

If you are struggling with understanding a certain aspect of law and procedure, it can be useful to reach out to someone in your organisation, such as a legal department, or externally to familiarise yourself with it and learn more.

3.      Conduct Thorough Research on your Suppliers and Other Partner Organisations

Whilst your own organisation may be ethically sound, working with organisations that are unethical themselves means you may be inadvertently contributing to something that is unethical.

Ensure you do thorough research on who you’re working with, though some organisations may appear ethical at face value the argument of ignorance may not hold up at a later point if they face issues for their unethical procedures and your organisation is complicit.

This is especially within the contract management process, where entering into the wrong contract with an unethical organisation can cause issues later. Want to improve your contract management? Check out our 5 top tips for successful contract management.

4.      Think of What You Can Do as an Individual to Promote Ethical Procurement

Whilst an organisation themselves may promote ethical procurement and adhere to a code of ethics, some individuals working may work against that, in the form of committing unethical procurement practices such as taking bribes or failing to admit conflict of interest.

If you feel like an action you are taking may be in breach of ethical procurement, such as a conflict of interest, it’s important that you tell someone within your organisation. So that steps can be taken to mitigate the effect it may have on ethical procurement.

5.      Attend an Ethical Procurement Training Course

Attending a training course that gives you the benefits, best practices and things to avoid when it comes to ethical procurement is a good way to learn what you can apply to your own procurement process to make it ethical. You may also gain a firmer understanding of the laws and regulations and how you can apply and navigate them.

Want to Ensure Your Procurement Process is Ethically and Legally Sound?

Explore best practices for ethical procurement, ensure compliance with domestic and international ethical standards and effectively monitor and challenge ethical issues with our expert-led Effective Ethical Procurement course. View the full agenda here.