Written by: Phil Sealy – The Pro Forum Community of Practice
In a climate of increasing public scrutiny and evolving community expectations, organisations that supply goods and services to government are under growing pressure to demonstrate not just capability, but integrity. This has given rise to the concept of the ethical organisation — one that does more than comply with rules. It actively embodies ethical principles in its operations, culture, and relationships. But what underpins an ethical organisation? At the core lie two fundamental concepts: probity and ethics.
What Is Probity?
Probity refers to the evidence of ethical behaviour in the public sector, especially in relation to procurement and financial decision-making. It is about ensuring fairness, integrity, transparency, and accountability in all dealings. While often associated with government, probity is increasingly expected from suppliers and contractors who wish to do business with the public sector.
As the Australian Government Department of Finance states:
“Probity is essential to the conduct of public sector procurement. It involves more than just avoiding corrupt or dishonest conduct. It includes the ethical use of power and resources entrusted to public officials and their suppliers.”
(Department of Finance, 2020)
Ethics in the Private Sector
Business ethics relate to the values and moral principles guiding an organisation’s behaviour. An ethical organisation integrates those values into every level of decision-making — from leadership strategy to frontline operations. For suppliers to government, this includes:
- Demonstrating integrity in tender processes
- Avoiding actual, potential or perceived conflicts of interest
- Treating competitors and clients fairly
- Maintaining confidentiality and transparency
These expectations are codified in procurement frameworks such as the Commonwealth Procurement Rules (CPRs), which state that “officials must act ethically throughout the procurement” and that decisions must be “made with probity” (Department of Finance, 2023).
Commonwealth Supplier Code of Conduct: Setting the Standard
A cornerstone of ethical supplier behaviour is outlined in the Commonwealth Supplier Code of Conduct. This code sets clear expectations for all businesses that supply goods and services to the Australian Government. It provides a practical framework for ethical conduct across areas such as:
- Complying with laws and policies (e.g., workplace health and safety, modern slavery)
- Acting honestly and transparently in dealings with government
- Avoiding conflicts of interest
- Supporting environmental sustainability
- Maintaining high standards of workplace behaviour and governance
This code makes it clear that ethical conduct is not merely aspirational — it is a baseline requirement. By aligning with the Supplier Code of Conduct, organisations demonstrate their commitment to being ethical, trustworthy partners capable of upholding public confidence.
“Suppliers must act ethically, fairly and honestly in all dealings with the Australian Government.”
(Commonwealth Supplier Code of Conduct, 2023)
Why It Matters: Ethical Expectations in Government Procurement
Government agencies, as custodians of public funds, are duty-bound to engage suppliers who uphold the highest standards of conduct. A failure to do so risks not only legal and financial consequences, but also reputational damage and loss of public trust.
Suppliers that demonstrate strong ethical and probity frameworks are more likely to:
- Build trusted relationships with government clients
- Reduce the risk of disqualification from tenders
- Navigate complex compliance requirements more effectively
- Position themselves as values-aligned partners in public service delivery
Evaluating Ethical Organisations in Government Tender Processes
To truly embed ethical business practices into public procurement, government agencies must move beyond mere compliance checks and proactively assess the ethical maturity of organisations during the tender evaluation process. This is both a strategic and risk-based approach that ensures public funds are spent in alignment with community values and legislative requirements.
Establish Clear Ethical Evaluation Criteria
Agencies should include ethics and probity as weighted evaluation criteria in tender documentation. This may include:
- Supplier Code of Conduct compliance
- Corporate ethics frameworks and governance structures
- Track record on ethical conduct and compliance issues
- Commitments to ethical sourcing and responsible business practices
- Third-party certifications (e.g., ISO 37001, ISO 26000)
Use Ethical Questionnaires and Declarations
Tenderers can be required to complete ethical conduct self-assessments or declarations of compliance. These tools help assess:
- The maturity of internal ethical systems
- Conflict of interest management practices
- Measures to support fair labour and human rights in supply chains
Apply Ethical Weighting in Value-For-Money Assessments
Traditionally, value for money (VFM) assessments focus on price, quality, and risk. However, ethics and social value are now being recognised as legitimate components of VFM. The CPRs encourage broader outcomes, enabling ethical alignment to influence procurement decisions.
Ensuring Ongoing Compliance Post-Contract Award
Government’s responsibility to uphold ethical standards does not end at contract execution. Agencies must implement ongoing contract monitoring and compliance assurance to ensure that ethical standards are maintained.
Embed Ethical Clauses in Contracts
Contracts should include clauses that:
- Require ongoing compliance with the Supplier Code of Conduct
- Mandate reporting of breaches and ethical issues
- Allow for audits and inspections
- Enable termination for misconduct
Conduct Regular Supplier Reviews and Audits
Periodic performance reviews should assess:
- Ethical performance and complaints history
- Supply chain transparency and modern slavery reporting
- Effectiveness of ethics training and whistleblowing frameworks
Encourage a Culture of Ethical Partnership
Beyond compliance, agencies should foster long-term partnerships based on shared values. Strategies may include:
- Supplier briefings and capability building
- Recognition of ethical excellence
- Collaborative improvement initiatives
Why Ethical Oversight Matters: A Real-World Lesson
In 2021, a high-profile case involving Transport for NSW (TfNSW) revealed the consequences of poor ethical oversight. The NSW Independent Commission Against Corruption (ICAC) found misconduct in contracts awarded to a consultancy with undisclosed conflicts of interest involving TfNSW staff.
Issues identified:
- Contracts awarded without proper tendering
- Favouritism and undisclosed relationships
- False invoicing and lack of financial scrutiny
Outcomes:
- Criminal referrals and reputational damage
- Procurement process overhaul at TfNSW
- Strong recommendations from ICAC on integrity and governance controls
“The case highlights the need for government agencies to ensure appropriate procurement controls are in place to mitigate corruption risks.”
– ICAC Report: Investigation into Corrupt Conduct Involving Transport for NSW Employees and Contractors (2022)This case illustrates the risks associated with inadequate ethical vetting and the need for governments to be diligent in managing supplier relationships throughout the contract lifecycle.
The role of probity and ethics in defining an organisation as ethical is not a peripheral concern — it is central to maintaining the trust and confidence of government clients and the public they serve. As procurement frameworks evolve and community expectations rise, organisations that take probity and ethics seriously will not only meet compliance requirements but lead in ethical business practice.
For government suppliers, ethics is no longer optional. It is a foundation of enduring success.
How do you think organisations can better demonstrate ethics and probity when supplying to government? Share your thoughts below.
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