Conflicts of interest in property procurement

Learn about identifying and managing conflicts of interest when buying construction works and/or consultancy services for schools.

Level of compliance Main audience Other


  • Project Managers
  • Suppliers
  • Principals and Tumuaki
  • Property Managers
  • Boards
  • Proprietors

Identifying a conflict of interest

For managing conflicts while buying goods and services for schools, see the guidance below.

Conflicts of interest

A conflict of interest (COI) is a circumstance in which someone’s personal interests, obligations or relationships will or may influence the decisions that they make on behalf of the school they represent.

When a person 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 the school they represent.

Types of conflict of interest

There are 3 types of conflicts of interest.

  1. Actual: The conflict already exists.
  2. Potential: The conflict will, or could, happen in the future.
  3. Perceived: A third-party outside of the situation could interpret the circumstances as a conflict of interest.

How conflicts of interest happen

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.

Examples of conflicts of interest

Example 1

  • "Valley Road School" is seeking an electrician to re-wire a block of classrooms.
  • A person on the school's supplier evaluation panel is a friend of the owner of Electric Electricians.
  • Valley Road School selects Electric Electricians to complete the work.

What the conflict of interest is:

  • the evaluator’s judgement of Electric Electricians’ offer may have been (or seen to have been) biased in favour of the company’s owner.
  • Electric Electrician’s pricing or services offered may not be (or seen not to be) the best match for the school’s needs compared to the offerings of other electricians.

Example 2

  • Valley Road School is looking for a demolition contractor to destroy a caretaker’s shed and garage.
  • The school's principal of is the procurement owner and is also on the evaluation panel.
  • The principal’s brother used to work for Smashing Demolition, though resigned because of conflict with the manager.
  • Valley Road School turns down Smashing Demolition’s offer.

What the conflict of interest is:

  • the principal’s evaluation of Smashing Demolition’s offer may have been (or seen to have been) biased against the company’s manager
  • the demolition works purchased from another company may be (or seen to be) less suitable for the school than Smashing Demolition’s offer.

Example 3

  • Valley Road School is looking for a construction contractor to build a new artificial turf.
  • A person on the school's supplier evaluation panel is a part-owner of Up Construction.
  • Valley Road School selects Up Construction to complete the work.

What the conflict of interest is:

  • the evaluator’s judgement of Up Construction offer may have been (or seen to have been) biased due to their financial interest in the supplier
  • Up Construction’s pricing or services offered may be (or seen to be) not the best match for the school’s needs compared to the offerings of other suppliers.

Example 4

  • Lockley Security are installing a key-card access system across the entirety of St Linda School.
  • Since awarding the contract to Lockley Security 4 months ago, St Linda School’s project manager has begun playing in a rugby team alongside Lockley Security’s installation manager.

What the conflict of interest is:

  • If the installation is not completed as specified, the project manager may be accused of having not managed the execution of the contract appropriately due to their friendship with their teammate (the installation manager).

Why conflicts of interest must be managed

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.

Declaring conflicts of interest

If the value of a purchase is $50,000 or more including GST (either immediately or over a 12-month period), all persons involved in the purchase must sign a COI declaration (not just those staff with a conflict to declare). This confirms they have no COI.

A COI declaration must be signed before the purchasing process begins.

Staff involved in buying who have a conflict of interest (at any value over $10,000) must declare that COI and complete a management plan.

Managing conflicts of interest

When a conflict is declared, the person with the conflict, the procurement sponsor and the procurement officer must all agree to a management plan. This plan must then be endorsed by the procurement leader.

The procurement sponsor and leader must confirm that the:

  • proposed treatment is appropriate
  • plan includes a periodic review to ensure that the treatment remains appropriate.

The procurement evaluation team should also be advised of a declared conflict.

If the procurement sponsor has the conflict, their manager or the school’s board must approve the management plan instead.

Roles in property procurement

You will need to periodically review conflict management plans to ensure that they remain effective.

The management of a conflict must be noted in the procurement recommendation report, which is prepared shortly before a contract is awarded.

Management methods

Conflicts can be managed by the methods below.

  • Restricting: The person’s involvement in the procurement is limited.
  • Removing: The person is removed completely from the procurement.
  • Relinquishing: The person gives up their private interest so that they no longer have a conflict.
  • Resigning: The person resigns from the role in which they represent the school or the role which is creating the COI.

When project managers can provide additional services

Schools may get the best value by allowing their appointed project manager to provide other professional services, such as design or quantity surveying.

The project manager can provide the additional service only if both:

  • they have no conflict of interest
  • the maximum possible value of the other professional service is less than $50,000 (excluding GST) over a 12-month period.

Project managers must be approved to provide an additional service. Procurement sponsors can apply for this approval from the Ministry's school property advisor when submitting the project manager’s conflict of interest declaration to them.

The project manager cannot provide the additional service when either:

  • they have a conflict of interest or
  • the maximum possible value of the other professional service is $50,000 or more over a 12-month period.

Awarding a contract where a conflict of interest exists

After a staff or board member has disclosed their COI and it has been managed, your school might still choose to buy from a supplier where a conflict of interest has been declared.

For example:

  • a buying staff member has recognised that they may be perceived to have a biased preference for a local company
  • they disclose their COI and distance themselves from the buying process
  • in the buying process, your school finds that the company has made them the best offer and awards them the contract.

If 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, this 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

Last reviewed: Has this been useful? Give us your feedback