Conflict of interest: what it is and how to avoid it
If you have been keeping a regular eye on Caribbean procurement-related news, you would have observed a recurring theme: conflict of interest, or the appearance of conflict of interest. Although the situations vary, essentially, the allegation is that contracts have been awarded to individuals in circumstances where there seemed to be bias, or where there was a close relationship or affiliation with procuring organisation, the tender evaluators, or even with the political directorate, which may have influenced the procurement process, and the tender award.
Allegations of conflict of interest is usually levelled at decision-makers., as reflected in a typical definition for such a matter:
A conflict of interest occurs when a corporation or person becomes unreliable because of a clash between personal and professional affairs. Such a conflict occurs when a company or individual has a vested interest, such as money, status, knowledge or reputation, which puts into question whether they can be unbiased in their decision-making.
(Source: Investopedia)
Although in and of itself conflict of interest is not illegal – but it is behaviour that most countries would like eliminated – when it does happen, it undermines fairness and transparency, which is becoming increasingly important in both the public and private sectors. Further, and in many instances, the performance of contracts issued under those circumstances is not as closely monitored; thus essentially wasting taxpayers’ (or shareholders’) money, and resulting in poorly executed, or no, project outputs.
Avoiding conflict of interest
In many countries, safeguards addressing conflict of interest have been established. Further, donor agencies, such as the World Bank, Inter-American Development Bank, and Caribbean Development Bank, to name a few, address the issue in their rules and guidelines. Frequently, depending on the project, it is a matter that is specifically raised in the tender notice or invitation, where individuals interested in responding to the invitation are referred to the relevant sections of the organisation’s procurement guidelines to ensure that there is no conflict of interest.
It is emphasised that many procurement guidelines speak to conflict of interest by bidders. In other words, they put the onus is on the bidder to ensure a conflict of interest does not exist. Some of the situations that could be considered a conflict of interest and result in disqualification from the tender process include, but are not limited to the following in summary:
- An entity that provided consulting services to assist in preparing a project or in its implementation, it cannot subsequently provide goods, works, services resulting from, or directly related to, its initial project preparation or project implementation consulting services.
- An entity that has been engaged to provide goods, works, or services for a project, cannot also provide consulting services in relation to those goods, works or services (and vice versa).
- An entity already contracted for an assignment, where that assignment may be in conflict with another.
- Prospective bidders (including their personnel, and sub-consultants) who have a close business or family relationship with a member of the tender evaluation committee, the procuring organisation, the donor agency, or even with the ruling government.
- A prospective bidder who submits more than one proposal in the same tender process, either individually or as a joint venture partner.
- A prospective bidder who is a government official or public servant and wishes to participate in a government tender.
It is thus crucial to review the procurement guidelines for the tender process, before starting any work toward your participation. Further, if in doubt, consider contacting the designated representative for that procurement process, for advice on whether your circumstances could be construed as conflict of interest, and your bid subsequently rejected.
Image: Tumisu (Pixabay)