Contract Management

4 reasons why probity is critical in procurement

Operating fairly and with integrity when running a tender is vital for businesses that want to succeed. Probity is not something that can be ignored, as it directly impacts the viability of each tender process, as well as the reputation of your business in the wider industry.

Here are four reasons probity is of the utmost importance in procurement.

1. It protects you from legal and financial risk

With an unfair tender process comes the potential for legal and financial risk. For Government procurement in particular, probity requires that all parties have a fair opportunity at being awarded contracts. If there is evidence that one supplier has been favoured for reasons unrelated to the evaluation criteria, there's potential for legal action to be taken against the awarding party.

Running a fair tender in accordance with probity ensures that risks of this kind are minimised as much as possible. Working with the team at RESOURCE2SOURCE provides you with a source of independent oversight – giving you peace of mind that you're running your tenders in accordance with market expectations.

To build and maintain a strong relationship, suppliers need to trust you run your tenders fairly.To build and maintain a strong relationship, suppliers need to trust you run your tenders fairly.

2. It promotes and supports a healthy and competitive marketplace

When the industry is healthy, it improves the quality and number of tender responses through greater competition.

Not only does working in accordance with probity promote good outcomes for your business, it also helps support industry. When an industry is free from corruption and all suppliers are on equal footing in a tender process, it makes a big difference to the industry. If suppliers trust that they have an equal chance of being awarded contracts, they'll be more willing to put a higher level of effort into their tender responses. Whereas suppliers that don't believe they have a chance based on the fairness of the tender process and the tendering company, may choose to either not tender, build a risk premium into their pricing or participate in unethical activities to increase their chance of success.

When the industry is healthy, it improves the quality and number of tender responses through greater competition. When suppliers know they will be awarded a contract on merit, they're going to work harder to lower their prices and provide new innovations.

3. It builds trust with industry

The best supplier relationships are the ones where both parties get something out of it beyond just an everyday commercial engagement. A relationship that becomes strategic instead of merely transactional opens a line of communication between client and supplier that otherwise wouldn't exist. Each side becomes willing to share more information about what they think is going well. What may need to change and where they think improvements to efficiency could be made.

The benefits these kinds of supplier relationships bring are worth pursuing. But to bring such a relationship about, suppliers need to be able to trust you, and this requires running your tender processes in a fair and principled way. If you show a supplier you're the kind of business that doesn't operate with integrity, they may be reluctant to build a strategic relationship with you. Reputational damage is hard to repair, so it's best to avoid it in the first place.

4. It's the right thing to do

Integrity in business shouldn't just be something you pursue because it benefits you in the long run. Operating fair and ethical tenders is important simply because it's the right thing to do. The commercial benefits that come hand-in-hand with having a reputation for honest conduct are simply an added bonus.

At RESOURCE2SOURCE, we work together with our clients to make sure their procurement activities are held to the highest standards of probity. To learn more about what we can offer your business, get in touch with a member of our team today.

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