Approval of the cost of procurement is a step in the procurement process.
Sometimes, the financial delegate will have a conflict of interest. For example, if they’re:
- an ex-employee of the recommended bidder
- an external secondee embedded in your organisation whose home firm is the recommended bidder.
External secondees can only be financial delegates if they’re given the status of ‘employee by exemption’. This scenario is uncommon.
How to manage this conflict of interest
If a financial delegate is in either of these situations they must declare a conflict of interest. This is because it is reasonable for people to believe that:
- a former employee may be biased towards or against their former employer
- an external secondee may be biased towards their home firm.
The financial delegate’s manager should develop a conflict of interest management plan in consultation with them.
When developing the plan, the manager should consider the relevant factors. For example:
Removing the person
The usual strategy would be to:
- remove the financial delegate from the particular procurement process
- appoint an alternative approver.
Appointing an independent probity adviser
Consider appointing an internal or external independent probity adviser (internal or external) to oversee the approval process.
Considering other good practice ideas
Your organisation can consider implementing these good practices as a precaution for all procurements:
- require the financial delegate to keep their duties separate and not be involved in the procurement process — this reduces but doesn’t remove the chance of a conflict of interest occurring.
- require the financial delegate responsible for signing off on the procurement to complete a conflict of interest form.