Practice note: guidance on managing conflicts of interest and unfair advantage during design and tendering for official development assistance
This guidance is for DFAT program areas involved in, or planning, a design process.
DFAT's practice is that organisations can participate in the planning or design of a DFAT project and then bid for subsequent work for that same project. An incumbent can also participate in the planning or design and bid for subsequent phases of a project it is already managing.
Rule 10.8 of the Commonwealth Procurement Rules states:
'Relevant entities must ensure that potential suppliers and tenderers are dealt with fairly and in a non-discriminatory manner when providing information leading to, or following, an approach to market. Relevant entities must promptly reply to any reasonable request from a potential supplier for relevant information about a procurement, and when responding to such enquiries must avoid a potential supplier, or group of potential suppliers, gaining an unfair advantage in a competitive procurement process.'
Paragraph 4 of the Traps in the Ethics and Probity section of the Department of Finance's (DoF) Procurement and Policy Guidance notes, states:
'It is not always essential or advisable for potential tenderers to be required to excuse themselves from participating in a tender for which they have either previously assisted (eg. planning and scoping work) or have been previously contracted due to a perceived unfair competitive advantage being gained by such potential tenderers. Rather, agencies may seek, if possible, to take appropriate measures to establish a level playing field for other tenderers (such as through the provision of comprehensive information through physical and/or electronic data rooms).'
This practice note deals with two issues:
- Conflict of interest – can an organisation influence the planning or design of a project in a way that creates an opportunity to its own advantage?
- Unfair advantage – does one potential bidder have access to information which is not available to other potential bidders?
Conflicts of interest1 and probity
Proposed DFAT projects are subject to approval by DFAT's Aid Governance Board (>$100million or high risk), peer review (>$50million or high risk), independent appraisal (>$10million or high risk), and quality assurance processes proportional to the value and risk prior to approval by a DFAT delegate. The project documents are scrutinised for any inclusions that create a benefit for any external person or organisation engaged in the process.
It is important to have a rigorous and defensible selection process for external persons or organisations involved in project preparation, and to ensure value for money.
All external persons or organisations will have confidentiality requirements in their contracts; however, DFAT program areas should check that these are adequate for the task and apply Deeds of Confidentiality to emphasise the confidentiality requirements.
DFAT programs should ensure a requirement in these contracts for reporting to DFAT if these persons or organisations are considering bidding on the opportunity, or being involved in proposals, either in proposal development or as proposed personnel. Program areas should then notify DFAT's Aid Business Branch (ABB) and consideration will be given to if additional measures need to be put in place. This is to ensure DFAT is aware of, and managing, potential probity issues.
Conflicts of interest are not only actual conflicts, but also perceived and potential. An unmanaged conflict of interest can lead to a delayed or failed project opportunity / tender and reputational damage.
The risk of unfair advantage can be mitigated by ensuring that all relevant information is made available to all potential bidders. DFAT is obliged to do as much as reasonably possible to create a 'level playing field' by providing information equivalent to that provided to persons or organisations involved in planning, and/or the incumbent, to the rest of industry where it would affect the business opportunity. This should be done as early as possible – existing project planning and reporting documents, context analyses, evaluations, investment concepts, design documents and any other relevant documents such as aid memoires, should always be made available on DFAT's business opportunities page /about-us/business-opportunities/Pages/business-opportunities.aspx.
Industry information sessions and workshops are a frequently used method for keeping industry informed on DFAT thinking through project preparation. Briefings and meetings with industry can also be used to seek views on implementation options, test assumptions, and share early findings. Dealings with industry should be 'even handed', honest and consistent. Records of all industry engagement should be maintained. Program areas should consult with ABB to ensure no organisation is locked out of industry engagement and that information shared is useful to both industry and DFAT.
In addition to sharing information with industry, DFAT can also ensure external persons or organisations are only involved in parts of the project preparation that are relevant to their input. For example, if an evaluation specialist is contracted to produce a theory of change, they may not be required to participate in discussions on implementation options, or to have access to the draft budget.
All parties involved (DFAT, and externals) must do everything reasonable to manage conflicts of interest and unfair advantage.
Once an opportunity is open, such as the issue of a tender, all enquiries from outside DFAT must be made via the contact details as advertised with the opportunity / tender. DFAT Officers must not make any commitments to potential suppliers or discuss procurement processes with those who do not need to know.
For further information, contact firstname.lastname@example.org
DFAT has a complaints handling guideline in relation to DFAT procurements, including the conduct of the process or outcome. This can be found at /about-us/publications/Pages/complaints-handling-procedures-procurement.aspx.