Ethics in Procurement

ENGR. SALUD
 1.1 Introduction
There are two definitions of ethics as
follows:
1. The moral principles governing
or influencing conduct.
2. The branch of knowledge
concerned with moral
principles

MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering

 1.1 Introduction
-Ethics is the basis on which most
of the procurement related
principles, such as fairness,
integrity, and transparency, are
based.
-Professional standards of ethical
conduct, no matter what the
organization, contain typical
characteristics, including
commitments to:
-Behave honorably in all aspects of work and professional
activity.
-Conduct oneself in such a manner as to maintain trust and
confidence in the integrity of the acquisition process.
-Avoid “clever” practices intended to take undue advantage of
others or the system.
-Uphold the organization’s standards and policies and all
relevant legislation.
-Avoid conflicts of interest.
MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering
1.2 Ethical concepts and principles

•loyalty and respect for rules and regulations

•integrity
•impartiality and fairness
•transparency
•confidentiality
•avoidance of appearance of impropriety
•due diligence.

MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering

1.3 Why ethics are important for procurement
professionals?
•Procurement represents their organization and is responsible for awarding
business to suppliers. Any unethical behavior will have a negative impact on the
brand image of the organization

•Procurement professionals experience enormous pressure from internal and

external forces to act in unethical ways as they usually have control over large
sums of money.

•Ethical behavior in conducting business helps in establishing a long term

relationship and goodwill with suppliers

•An ethical person is respected in the business community. Once a buyer earns a
reputation within an industry, it is difficult to change it. A professional reputation
is something a buyer carries throughout his entire career.

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 1.4 Types of Unethical Behaviors
Accepting supplier favors & gifts: Accepting gifts, favors and
freebies from suppliers is the most common unethical
practice. This may affect buyer’s decision to evaluate and
select a supplier.

Conflict of interest: Conflicts of interest arise when buyers or

their close family/friends have direct financial interest in a
supplier’s organization. This is a major unethical practice and
a serious breach of ethics.

MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering

 1.4 Types of Unethical Behaviors
Confidentiality of information: Confidential information should be
shared only when needed and with the persons who are liable to
get the same as part of their profession. Confidential information
should be carefully shared with the internal and external world.

Fair and unbiased treatment: All suppliers should be treated

fairly and in an unbiased manner. Any biased treatment to any
particular vendor raises unethical behavior.

Integrity: Integrity is the quality of being honest and having strong

moral principles. Any compromise on the integrity has a negative
impact on the overall procurement process.

MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering

1.5 So how do you ensure that your organization’s
procurement ethics are upheld?

An ethics policy

An ethics dispute should never be the result of a difference of opinion between

the procurement department and a company employee. Every organization
should have a written policy making clear what top management considers
ethical and what it considers unethical.

A process with checks and balances

Every major procurement should require management review to confirm that all
guidelines were followed and that no ethical violations have occurred or will
occur.

MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering

1.5 So how do you ensure that your organization’s
procurement ethics are upheld?

Ethics Training

Ethics training is one of the most essential components to ensure that employees
are aware of the importance of ethical practices. An innovative training will
provide employees with all the important information about ethics so that they
are able to deal with their day-to-day jobs in an ethical way. The great part about
having an ethics policy is that the rules are in a tangible, indisputable form. The
unfortunate part is that no one reads ethics policies! Supplement an ethics policy
with procurement ethics training for anyone who is involved with the purchase of
products or services and/or who meets with suppliers.

MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering

1.5 So how do you ensure that your organization’s
procurement ethics are upheld?

Audits

Periodically, audits should be performed to verify that all procurement activities

were conducted ethically and in accordance with procedures. Audits also serve as
a deterrent to future unethical behavior.

Conclusion:

Organization must have a strong code of ethics for their business processes and
procurement process. Employees must be given training regularly on ethical
behavior. The advantages will be greater efficiency and value from procurement
activities, a better brand image for the organization concerned, and increased
loyalty from end-customers and appreciation from the public in general.
MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering
Ethics play a major role in procurement and are considered more important as
technology and consumer behavior change. Being ethical means being in
accordance with the rules or standards for right conduct or practice, especially
Ethics in Procurement: What are you doing to keep procurement ethical? the
standards of a profession. For instance: procurement is involved in supplier
selection, evaluation, negotiation, contracts sign off and awarding business to
suppliers. When interacting with suppliers, procurement should treat them in
fair and unbiased manner.

MAPUA UNIVERSITY – School of Civil, Environmental and Geological Engineering