Purchasing Ethics and Vendor Relations

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Purchasing Ethics andVendor Relations

• John TrunkCity of Charlotte
• May 12, 2004

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Agenda

• Ethics and Ethical Behavior for Purchasing
  Professionals
• Purchasings Most Important Responsibility
• Dealing with Vendors and Surviving the Politics

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What is Ethics Anyway?

• Dictionary says it is...
• A discipline dealing with what is good and bad
• A set of moral principles or values
• The principles of conduct governing and
  individual or group

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Ethics Another View

• Ethics is about character and courage and how
  we meet the challenge when doing the right thing
  will cost more than we are willing to pay.
• Josephson Institute

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Components of Ethics

• Moral principles
• Trustworthiness
• Respect
• Responsibility
• Fairness
• Caring
• Citizenship
• Public Trust
• Objective Judgment
• Accountability
• Democracy
• Respectability
• Public Interest
• You Are Using Taxpayer Money in Political
  Environment

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Ethics Transcends the Law

• Ethics requires us to give up the idea that an
  act is proper simply because it is permissible or
  is ethical so long as it is legal.
• Compliance is about doing what you are required
  to do by laws or rules.
• Ethics is about doing what you should do because
  it is right.
• Josephson Institute

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Personal Credo

• Is It Legal?
• Does it Result in a Win/Win?
• How Does It Make You Feel?

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Case Study Riding Lawnmower

• Are there any ethical concerns for Ruth?
• Did Ruth benefit directly from her position?
• How should the purchasing agent have handled the
  situation?
• Is there any appearance of unethical behavior or
  taking unfair advantage of the situation?

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What Do You Consider Your Most Important Duty or
Responsibility?

• Getting the right item/service at the right
  price/time?
• Filling your customer's request as quickly as
  possible?
• Following all applicable laws and policies?
• All of the above?
• The PROCESS is our most important product

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Safeguarding the Process

• What's It All About?
• It's about providing a level playing field for
  all vendors
• It's about giving all vendors an equal
  opportunity to compete
• Ultimately, it's about your organization's
  perception in the marketplace

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Why is the Process So Important?

• Because Unlike the Private Sector,
• We in Public Purchasing have a Higher Calling
• Safeguarding the Public's Trust in Government in
  General
• Treating Every Tax Dollar as if it were Our Own
• Process Integrity More Competition More Value
  for Tax Dollars
• In General, Promotes the Public Good

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Transparency

• The general principle is that sufficient and
  relevant information should be made available to
  all interested parties consistently and in a
  timely manner through a readily accessible,
  widely available medium at no or reasonable
  cost.

APEC Government Procurement Experts Group
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Sufficient, Relevant Information

• The general principle is that sufficient and
  relevant information should be made available to
  all interested parties consistently and in a
  timely manner through a readily accessible,
  widely available medium at no or reasonable cost.

Enables potential bidders to make informed
decisions as to whether to participate or not
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Timeliness

• The general principle is that sufficient and
  relevant information should be made available to
  all interested parties consistently and in a
  timely manner through a readily accessible,
  widely available medium at no or reasonable cost.

Insures the Information is Valid and Useful
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Availability

• The general principle is that sufficient and
  relevant information should be made available to
  all interested parties consistently and in a
  timely manner through a readily accessible,
  widely available medium at no or reasonable cost.

Assures the Process Is Fair and Is Seen as Fair
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Medium

• The general principle is that sufficient and
  relevant information should be made available to
  all interested parties consistently and in a
  timely manner through a readily accessible,
  widely available medium at no or reasonable cost.

Insures the Information is Accessible
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Consistently

• The general principle is that sufficient and
  relevant information should be made available to
  all interested parties consistently and in a
  timely manner through a readily accessible,
  widely available medium at no or reasonable cost.

• The objective of maintaining a transparent
  procurement system can only be achieved if the
  system remains consistently transparent
• This also included making information up to date
  and informing relevant parties of changes and
  additional information promptly

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What Should Be Transparent?

• Laws, Regulations Policies
• Opportunities
• Purchase Requirements
• Bid Evaluation Criteria
• Award

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Fair Dealing

• The general principle is that the procurement
  system should be designed and buyers should
  conduct themselves in ways such that procurement
  activities are conducted in a fair, reasonable
  and equitable manner and with integrity.

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Fairness in Procurement Process

• Keep Communications Formal
• Treat Bidders Fairly During All Stages
• Bids or Specifications Should Not be Biased
• Keeps Bids Sealed
• Bid Opening Team
• Adhere to Clear Reasonable Time Limits
• Evaluation Committees
• Structure Negotiations
• Award Based on Published Criteria

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Fairness by Procurement Staff

• Staff Should, at All Times, Deal with Suppliers
  Fairly, Even-handedly and with Integrity
• Staff Should have Access to
• Advice on Legal and legislative and requirements
• Policies, such as Codes of Conduct
• Agency-Specific Procedures
• Including Dealing With Instances of Conflict of
  Interest

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Case Study SMARTPLAN System

• What do you think should have happened to Ms.
  Miller?

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Dealing With Vendors

• Vendors Love Them or Hate Them, Bottom Line is
  that We Need Them
• Treat Them with Respect

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Maintaining Good Vendor Relations

• Dont Waste A Vendors Time

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Maintaining Good Vendor Relations

• Keep Appointments

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Vendor Relations

• If Youve Made a Mistake Admit and Correct
• If Youre Leading an Evaluation Team Advocate
  the Process
• If Youre Making Changes State Business Reasons
• i.e. What objectives are you trying to achieve?
• Handle Incumbent Vendors Carefully
• Rule of ThumbDont do anything that you
  wouldnt want on the front page of the newspaper

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Surviving the Politics

• Vendors May Use the Political Card
• Understand and Accept It
• Do Not Internalize It
• Try Not to Take It Personally

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Vendor Protests

• Avoid At All Costs?
• Stick to the Business Issues
• The Process is Paramount
• Even when you prevail, management doesnt like
  protests because they are messy
• Have a Protest Policy and Procedure and Follow It

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State Protest Procedures

• All States Allow Protests
• All States Have Their Own Protest Procedures
• In 1997, 33 of 49 states reported that they
  publish their protest procedures in their vendors
  guide

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Examples of Recent Vendor Protests in Charlotte

• Rollout Containers
• IT Help-Desk
• Zone Wrecker

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NIGP Code of Ethics

• Believe in Your Organizations Worth
• Do Not Misuse Public Funds
• Avoid Conflicts of Interest (In Reality
  Perception)
• Work with Integrity

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NIGP Code of Ethics (cont)

• Inform Your Superiors of Upcoming Issues
• Treat Personnel with Respect and Integrity
• Handles All Personnel Matters on a Merit Basis
• No Personal Favors
• Avoid Suppliers Gifts Meant to Influence

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As Purchasing Professionals, You Must

• Advocate for the Process
• Preserve Integrity of the Process
• Stick to the Issues
• Foster Communication
• Be Justifiably Proud of What You Do

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Question Answer

• John TrunkProcurement Services DirectorCity of
  Charlotte
• Mecklenburg County
• (p) 704.336.5195
• (f) 704.336.2258
• (e) jtrunk_at_ci.charlotte.nc.us