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Procurement Ethics: Use DRD & Stay Clean

PurchTips - Edition # 201

By Charles Dominick, SPSM


How Can You Avoid A Procurement Ethics Scandal?

Plain and simple: it is unethical for a procurement professional to award an order to a supplier with whom he or she has a personal or financial relationship. However, finding an organization where none of its employees have a friend, spouse, etc. among its supply base's thousands of employees can be challenging.

So, what should you do if you have a relationship with a current or potential supplier's employee?

I recommend a process called DRD, which I pronounce like "dirty" for ease of remembering. DRD stands for Disclose, Recuse, Document - three steps to take so that decisions are made without unethical influence.

Disclose means to advise management of a relationship that may appear to be a conflict of interest.

Recuse means to remove yourself from participation in a decision in order to avoid a conflict of interest. When you disclose the relationship to management, advise them that you want no involvement in the decision due to the potential for real or perceived personal gain.

Document means to produce and retain written correspondence about your disclosure. Ethical accusations often arise months or years after a decision is made. By then, it can be difficult to remember the steps taken to maintain the integrity of the decision-making process. Forgotten details only strengthen the appearance of impropriety. Good documentation can prove that a decision was reached ethically.

A procurement department should then ensure that those with a personal supplier relationship are prevented from accessing sensitive information such as the pricing of competing suppliers. Some organizations even go as far as maintaining a conflict of interest database and requiring employees to disclose certain relationships upon being hired, when permitted by law.

Though you can't guarantee that every procurement team member will be free of relationships with supplier employees, good procedures can reduce the risk for accusations of unethical procurement decisions.

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