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Guidelines for managing public sector projects

Probity and probity advising

Probity Cover_final.indd 8/11/05, 5:33 PM2

Probity and probity advising

Guidelines for managing public sector projects

N O V E M B E R 2 0 0 5

P R O B I T Y A N D P R O B I T Y A D V I S I N G2

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This publication is available in other formats for the vision-impaired upon request. Please advise of format needed, for example large print or as an ASCII file.

ISBN 1 920726 74 8

© November 2005 – Copyright in this work is held by the Independent Commission Against Corruption. Division 3 of the Copyright Act 1968 (Cth) recognises that limited further use of this material can occur for the purposes of “fair dealing”, for example study, research or criticism etc. However, if you wish to make use of this material other than as permitted by the Copyright Act 1968, please write to the Commission at GPO Box 500 Sydney NSW 2001.

This publication and further information about the Independent Commission Against Corruption can be found at www.icac.nsw.gov.au

Caveat on use of this publication

This publication provides readers with advice, guidance and /or recommendations regarding specific governance issues.

The advice contained herein relates to what the ICAC considers at the time of publication to be best practice in relation to these issues. It does not constitute legal advice and failure to implement the advice, guidance and recommendations contained herein does not constitute corrupt conduct, which is defined in the Independent Commission Against Corruption Act 1988.

Public sector organisations are welcome to refer to this publication in their own publications. References to and all quotations from this publication must be fully referenced.

Independent Commission Against Corruption

ADDRESS: Level 21, 133 Castlereagh Street, Sydney, New South Wales, 2000

POSTAL ADDRESS: GPO Box 500, Sydney, New South Wales, Australia, 2001

PHONE: 02 8281 5999 1800 463 909 (toll free, for callers outside metropolitan Sydney)

FACSIMILE: 02 9264 5364

TTY: 02 8281 5773

EMAIL: icac@icac.nsw.gov.au

OFFICE HOURS: 9.00am to 5.00pm, Monday to Friday

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Contents

Commissioner’s foreword 4

Glossary 5

Acknowledgements 6

Introduction 7

Chapter 1: Understanding probity and the role of the probity adviser 8

What is probity? 8

Probity fundamentals 8

What is a probity adviser? 10

The probity adviser’s reporting structure 15

About the probity advising profession 16

Chapter 2: Deciding whether to use a probity adviser 19

When to use a probity adviser 19

When not to use a probity adviser 21

Alternatives to using an external probity adviser 22

Chapter 3: Engaging a probity adviser 24

Finding and engaging a probity adviser 24

Important considerations in engaging a probity adviser 24

Scope of a probity adviser’s work 26

What specific tasks should a probity adviser perform? 30

Chapter 4: Probity plans 32

Using probity plans 32

Elements of a probity plan 33

Appendix 1: NSW Premier’s Department requirements for

engaging consultants 37

Appendix 2: Contacts and resources 38

Appendix 3: Probity plan templates 39

Bibliography 40

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Commissioner’s foreword

This publication provides important information and guidance about the role of probity in public sector projects.

Probity involves more than just avoiding corrupt or dishonest conduct: it involves ensuring that often-complex public sector processes – such as procurement, disposal of assets, sponsorship and administration of grants – are conducted in a manner that is fair, impartial, accountable and always in the public interest.

Probity plans are now part of the planning and management of many large, complex and/or potentially controversial projects. In some jurisdictions, they are mandatory for very large projects – in New South Wales, for example, state agencies are required to submit a probity plan as part of their reporting to Treasury on projects that are valued at over $10 million and/or are classified as high risk.

A number of organisations and individuals now provide advice on probity issues to public sector organisations on a commercial basis.

This publication provides guidelines for public sector organisations on probity and probity advising, including the development and use of probity plans.

The publication also deals in some detail with the role of probity advisers. It advises that generally speaking there is no need to retain a probity adviser on routine projects. The publication identifies 15 important criteria which may be relevant when considering whether or not to engage a probity adviser.

This publication will help ensure that major public sector projects achieve best value for money and are conducted in a manner that is impartial, accountable and transparent.

I trust that you will find this a useful resource.

The Hon Jerrold Cripps QC Commissioner

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Glossary

Agency Any public sector organisation including, but not limited to, departments, statutory authorities, courts, tribunals and commissions, state owned corporations, public trading enterprises, boards and committees, advisory bodies, trusts, area health services, Aboriginal land councils, universities and local councils.

Conflicts of interest A conflict between the public duty and private interests of a public official where the public official has private interests which could improperly influence his or her official duties and responsibilities.

EOI Expression of Interest

Probity adviser An individual (internal or external) or organisation engaged to observe, review and provide guidance on the probity framework and/or processes of a project.

Probity plan Is the control framework document that establishes tasks, procedures and treatment options for managing the probity-related aspects of a project. The probity plan should include, or follow from, a risk assessment of the known and likely probity risks.

Project This term is used generally to describe any public sector undertaking such as an acquisition, construction of a building, a development application, a grant, a sponsorship, a privatisation, etc.

Proponent A party that is actually or potentially seeking to enter into a transaction or contract with an agency. The term includes but is not limited to tenderers, bidders, buyers, sellers, joint venture partners, sponsors, development applicants and grant applicants.

RFT Request for Tender – is generally any request for a detailed proposal, be it in the form of a tender or some other type of submission, application or bid.

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Acknowledgements

The principal author of this publication is Lewis Rangott, Senior Corruption Prevention Officer, Independent Commission Against Corruption.

This publication could not have been completed without significant input from a number of organisations and individuals that met with the ICAC and provided feedback on early drafts. The majority of the suggestions received have been incorporated into this publication.

The ICAC wishes to thank:

Acumen Alliance

Blake Dawson Waldron

Cosoff Cudmore Knox Lawyers and Mr John O’Grady, Partner

Deloitte Touche Tohmatsu

Ernst & Young

Internal Audit Bureau of NSW

Institute of Internal Auditors and Mr Neil Adams, President NSW Chapter

NSW Audit Office

NSW Crown Solicitor’s Office

NSW Department of Commerce

NSW Ombudsman

NSW Treasury

RailCorp NSW

Mr Bill Rock, Director, Risk Reward Pty Ltd

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Introduction

Probity has become an increasingly important aspect of major government projects in New South Wales. The supply of probity advice services and consultancies has expanded considerably, as have the accountability expectations of government. The increasingly complex nature of many public sector projects and the use of non- traditional contracting arrangements (such as privately-financed projects and alliance contracting), has meant that probity expertise is often sourced from specialists outside the public sector.

Probity considerations most often arise when public sector agencies undertake substantial acquisitions of goods and services, major information and communications technology upgrades, or major construction projects.

However, probity considerations can also arise during the course of other activities, such as the disposal or privatisation of assets, assessment of development applications, the awarding of government grants, consideration of sponsorship offers and entering into joint ventures.

In fact, any significant or complex public