Conflicts of interest (COI)
Learn about identifying and managing conflicts of interest when buying for schools.
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All decisions made on the behalf of schools must be fair and ethical. If an actual, potential or perceived COI exists, it must be declared and correctly managed.
For managing conflicts while buying construction works and construction related services for school property, the school property procurement framework applies.
A conflict of interest is a circumstance in which someone’s personal interests, obligations or relationships will or may influence the decisions that they make on behalf of their school.
When a staff member has a conflict of interest, their decisions could be (or perceived to be) biased. Decisions could be (or perceived to be) made in their own personal interests and not in the interests of their school.
There are three types of conflicts of interest.
The conflict already exists.
The conflict will, or could, happen in the future.
A neutral person outside of the situation could interpret the circumstances as a conflict of interest.
A conflict might arise from:
- family relationships
- professional or personal relationships
- interests in businesses
- interests in trusts
- interests in other groups or organisations
- the acceptance of gifts or other benefits.
The existence, or perception of, an incentive to act in a particular way on a school’s behalf is a potential problem.
It does not matter if the individual would actually act on their incentive.
Example School is buying a van.
The person responsible for buying at Example School is a friend of the local dealer for Example Cars.
Example School’s buyer chooses to buy from Example Cars.
The school buyer’s evaluation of the car dealer’s offering may have been (or seen to have been) biased in favour of the dealer.
The vehicle purchased may be (or seen to be) not the best match for the school’s needs, compared to the offerings of other dealers.
Example School is looking for a new cleaning contract.
The school’s principal is the ex-mother-in law of Example Cleaning’s director.
Example School turns down Example Cleaning’s offer to provide cleaning services.
The principal’s evaluation of Example Cleaning’s offer may have been (or seen to have been) biased against the company’s director.
The cleaning services purchased from another company may be (or seen to be) less suitable for the school than Example Cleaning’s.
Example School is looking for a business to re-paint its hall.
Example School’s principal rents a property to two of Example Painters’ staff.
Example School awards the painting contract to Example Painters.
The principal’s evaluation of Example Painters’ offer may have been (or seen to have been) biased in favour of Example Painters.
The painting contract offered by another company may be (or seen to be) better suited to the school than that offered by Example Painters.
Mismanaged conflicts of interest make it appear as though a school is not acting fairly, ethically and impartially.
This can reduce confidence in the school’s buying decisions and can impact the school’s reputation.
If a school has a bad reputation, suppliers may be less likely to want to work with the school.
When fewer suppliers want to work with a school, competition amongst suppliers is reduced and the school is less likely to get a good deal on their purchases.
Staff involved in buying who have a conflict of interest must declare their COI to the school’s board.
The staff member must then distance themselves from the buying process. They should not have a role in evaluating the offers made by suppliers and purchasing the goods/services.
If the value of the purchase is $50,000 or more including GST (either immediately, or over a 12-month period), it is recommended that all staff involved in the purchase sign a COI declaration (and not just the staff with a conflict to declare). This confirms that they have no COI and must be signed before the purchasing process begins.
If in doubt, opt out.
Awarding a contract where a conflict of interest exists
Schools might still choose to buy from a supplier where there exists a conflict of interest for a staff or board member, after that staff or board member has disclosed their COI and distanced themselves from the purchase.
For example, a buying staff member may be perceived to have a biased preference for a local cleaning company. They would then disclose their COI and distance themselves from the buying process. Later, the school may find that the cleaning supplier who the staff member had a potential biased preference for has made them the best offer and awards them the contract.
If this is the case and the value of the purchase is more than $25,000 including GST (either immediately, or over a 12 month period), and the person declaring the conflict of interest is a board member, then the purchase must have prior approval from the Secretary for Education.
The Secretary must be satisfied that the board member who has a COI has not influenced the purchase, even after making their COI declaration and distancing themselves from the purchase.
The school’s application must include evidence that:
- all reasonable steps have been taken to ensure that all potentially interested suppliers have had an opportunity to tender for the contract.
- all tenders have been evaluated and the preferred choice can be justified on the basis of its cost and quality.
- the school has made an agreement to accept the contract only if the purchase is approved by the Secretary for Education. Both the school and supplier are therefore aware that the purchase is conditional on the Secretary for Education’s approval.
- the person with the COI clearly declared their COI and has been distanced from the purchase.
Send this application to firstname.lastname@example.org.
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