New Victorian Government Supplier Code of Conduct – no more breaking bread together?

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A new Victorian Government Supplier Code of Conduct has been introduced with what seems to be little advanced notice, consultation or explanation, but it’s likely to affect all organisations providing goods and services to government.

The State Government has developed a new Victorian Government Supplier Code of Conduct that it expects any organisation providing goods or services (including construction works) to adhere to.

Whilst the Government is still preparing to publicly announce the Code and advise how it will be implemented, some suppliers have already been required to sign their acceptance of their new obligations under this Code. Many other suppliers are not yet aware of the existence of it.

So, what is this all about? Well, to quote directly from what I understand to be the approved version of the Victorian Government Supplier Code of Conduct, “it describes the minimum expectations in the areas of: integrity, ethics and conduct; conflict of interest, gifts, benefits and hospitality; corporate governance; labour and human rights; health and safety; and environmental management“.

Given a number of recent high-profile examples of unethical and illegal behaviour in the procurement and provision of services to the Victorian public sector, any initiative that seeks to restore integrity and public trust is to be applauded. It is understood that a number of agencies, such as the Department of Education, have recently tightened their gifts, benefits and hospitality policies for staff, covering either receipt or provision of said items or activities. The new Victorian Government Supplier Code of Conduct seeks to clarify similar expectations and obligations to suppliers across Government.

As you would expect, the Code expresses high-level expectations that “Suppliers must not engage in, directly or indirectly, fraudulent, corrupt or collusive activities”. No problem with that.

The Code also states that “all business activities should be undertaken with impartiality and any conflict of interest should be raised and managed”. Once again, no problem with this.

It is in the Code’s expectations relating to the offering of gifts, benefits and hospitality where I start to see the potential for unintended consequences. It is in this section where the Code becomes quite prescriptive. For example, “Suppliers are expected not to offer State personnel gifts or benefits, either directly or indirectly, and offers of hospitality will be limited to token offers of basic courtesy (such as tea and coffee during a meeting)”.

I understand the need to draw the line somewhere. However, is this the death of the business lunch or the business briefing for the Victorian public sector?

In my experience, having appropriate, professional business relationships based on mutual understanding and respect is an essential ingredient of a successful supplier/client relationship. It helps to ensure small issues can be resolved before they become big issues. It helps to ensure open and honest dialogue. It helps both sides better understand each other.

Victorian Government Supplier Code of Conduct
No more breaking bread together?

I am in no way suggesting the long boozy lunch at an over-priced venue is a good thing. Far from it. However, the ‘breaking of bread together’ is a time-honoured civil and cultural norm that, with appropriate regulation and transparency, can only benefit the Victorian taxpayer.

The Victorian Government Supplier Code of Conduct also leads to many questions. For example, the Code states that “Suppliers must provide evidence and confirmation of their compliance with the Code, including the provision of documents and records that support their compliance”. Does this mean the State Government has the right to look at an organisation’s expense management system? Does this raise any privacy issues? How will the Government enforce any request to see internal organisational records? What if an organisation refuses?

I hope the Government is intending to develop and roll-out a communication and consultation plan to ensure all suppliers are fully aware of their obligations, and that feedback can be gathered to ensure the Code will provide the outcomes envisaged.

I encourage all suppliers to ask their contract manager for information on the new Code and to discuss its implications.

As I was reminded at a Government briefing recently, unless industry effectively self-regulates, the danger is that Government steps in and over-regulates. I hope that is not the case with the new Supplier Code of Conduct, and that the Government is not inadvertently setting up an environment that will encourage people to find ways around the good intentions sought.

The Victorian Government (under both sides of politics) deserves praise for the way it has encouraged and facilitated positive engagement and dialogue between industry and the public sector to solve problems and find solutions. To continue this, perhaps relevant industry associations need to play a stronger, more formalised role on behalf of their members in the two-way communication exchange with Government.

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