Government suppliers

Government suppliers' perceptions of corruption 2022

Summary of key insights

Theme

Key findings

Opportunities

Perceptions about corruption as a problem

  • Most think it’s a problem in procurement
  • 33% haven’t bid for work due to concerns
  • Worse for suppliers in the construction or commercial sectors
  • Prioritise these sectors for information
  • Address perceptions to increase likelihood of receiving competitive bids from suppliers

Behaviours /procurement stages most likely to be a ‘high risk’

  • Favouritism/nepotism
  • Some suppliers getting more information during tender processes
  • Assessments, contract management and evaluation
  • Prioritise these behaviours and stages for education, prevention and detection activities

Offering or accepting gifts or benefits over $50

  • Very few have offered gifts or benefits to public sector employees
  • Few instances of observing public sector employees accepting or asking for a gift or benefit
  • Continued reminders about responsibilities regarding gifts and benefits

Reporting corruption and misconduct

  • More suppliers would report serious corruption in procurement compared to 2016
  • IBAC is the main agency complaints would be made to
  • Most think it is important that IBAC exists, mixed views about whether a complaint to IBAC will be handled appropriately
  • Provide assurance that suppliers will not be affected and that meaningful actions will result from a complaint

Awareness and understanding of IBAC

  • Most are aware of IBAC, but level of understanding of what IBAC does is mixed
  • Information mainly from media reporting
  • Raise awareness of other ways to find out about IBAC (eg website, prevention resources)

Prevalence of corruption and misconduct

Suppliers to the public sector value honesty and integrity.

Almost all suppliers (98%) agree that ‘behaving with honesty and integrity is important to me’ and 93 per cent ‘agree’ or ‘strongly agree’ that they know what behaviour constitutes corruption. 

Most suppliers agree that corruption happens in Victoria.

Most suppliers (86%) agree that corruption happens in Victoria. Perceptions that corruption happens in Victoria are significantly higher among those who have tendered for work in the commercial (93%) or construction sectors (92%) and among those who have won local government work (90%). While 66 per cent agree that corruption is a problem in Victoria, only 9 per cent agree that it is a problem in their workplace.

Most suppliers (86%) agree that corruption happens in Victoria. Perceptions that corruption happens in Victoria are significantly higher among those who have tendered for work in the commercial (93%) or construction sectors (92%) and among those who have won local government work (90%).

Graph 1. Agreement with statements about public sector corruption in Victoria (%)

More than four in five suppliers think that corruption in public sector procurement is a problem.

Thirty-two per cent of suppliers think corruption is a ‘major’ problem in procurement, with the same proportion also considering it to be a moderate problem. Suppliers who have tendered for work in the construction (44%) and commercial sectors (40%) are significantly more likely to consider it to be a major problem, as do those who have not won contract work (46%). There has been a significant increase in the per cent who consider it to be a problem in 2022 (82%) compared to 2016 (64%).  

Thirty-two per cent of suppliers think corruption is a ‘major’ problem in procurement, with the same proportion also considering it to be a moderate problem.

Graph 2. Perception that corruption in public sector procurement is a problem (%)

A third of suppliers claim concerns about corruption led them not to bid for work.

While 82% of suppliers consider corruption in public sector procurement to be a ‘major’ or a ‘moderate’ problem, in the main, this perception does not prevent them bidding for work (62% state their view has not changed their decision to bid on work). However, 34 per cent have decided not to bid on at least one occasion in the last 12 months due to concerns about possible corruption or misconduct. This is consistent with the findings from the 2016 survey with business suppliers.

Gifts and benefits are more likely to be offered by suppliers than asked for.

Three quarters of suppliers (75%) think there is a ‘medium’ or ‘high’ risk of suppliers offering gifts or benefits worth over $50 to public sector employees with procurement responsibilities. The perceived risk that public sector employees would ask for a gift is much lower (47%).

Three quarters of suppliers (75%) think there is a ‘medium’ or ‘high’ risk of suppliers offering gifts or benefits worth over $50 to public sector employees with procurement responsibilities. The perceived risk that public sector employees would ask for a gift is much lower (47%).

Graph 3. Perception of risk occurring regarding gifts or benefits (%)

Instances of suppliers personally observing public sector employees accepting or asking for a gift is low.

While 26 per cent have suspected public sector employees of accepting gifts or benefits worth over $50 from suppliers, only 7 per cent have personally observed this in the last 12 months. Fewer have suspected public sector employees of asking for a gift, cash, or other benefit (17%) or personally observed this (3%).

Those who have not bid due to corruption concerns are significantly more likely to report having personally observed or suspected these improper behaviours occurring (56% suspected or observed public sector employees accepting gifts or benefits worth over $50 from suppliers, 40% suspected or observed employees asking for a gift, cash, or other benefit). Suppliers who have tendered for work in the construction (44%) and commercial sectors (40%) also reported a significantly higher incidence of ‘suspecting’ or ‘personally observing’ each of the improper behaviours. 

While 26 per cent have suspected public sector employees of accepting gifts or benefits worth over $50 from suppliers, only 7 per cent have personally observed this in the last 12 months.

Graph 4. Suspicions or observations of improper behaviours (%)

Few business suppliers state they have offered a public sector employee a benefit worth more than $50.

Three per cent of suppliers have offered a public sector employee a benefit worth more than $50 in the last 12 months. This is significantly higher among suppliers with more than 200 employees (7%). By comparison, in 2016, five per cent of business suppliers stated they had offered a public sector official a gift, cash or other benefit in the past 12 months.

Gifts and benefits are said to be offered mostly due to relationship building (73%) and to influence procurement decisions (64%).

Three per cent of suppliers have offered a public sector employee a benefit worth more than $50 in the last 12 months. This is significantly higher among suppliers with more than 200 employees (7%).

Graph 5. Perception of why offers of gifts and benefits are made to public sector employees (%)

The highest perceived risks are for favouritism or unequal information in tender processes.

The ‘high risk’ of improper behaviours occurring is considered greatest for favouritism toward certain suppliers when awarding a contract (80% consider this to be a ‘high’ or ‘medium’ risk) –17 per cent of suppliers indicated they have personally observed this and a further 41 per cent suspect this has occurred.

The next highest risk is for the provision of unequal information in a tender process (64% consider this to be a ‘high’ or ‘medium’ risk), with 10 per cent having personally observed this and a further 35 per cent suspecting it has occurred.

Suppliers who have tendered for work in the construction and commercial sectors are significantly more likely to have either observed or suspected these behaviours are occurring, particularly in relation to certain suppliers being favoured when awarding a contract (66% across both sectors).

The ‘high risk’ of improper behaviours occurring is considered greatest for favouritism toward certain suppliers when awarding a contract (80% consider this to be a ‘high’ or ‘medium’ risk) –17 per cent of suppliers indicated they have personally observed this and a further 41 per cent suspect this has occurred.

Graph 6. Likelihood or risk of different behaviours occurring between a business organisation and public sector (%)

Suppliers who have tendered for work in the construction and commercial sectors are significantly more likely to have either observed or suspected these behaviours are occurring, particularly in relation to certain suppliers being favoured when awarding a contract (66% across both sectors).

Graph 7. Observations and suspicions of behaviours occurring between a business organisation and public sector (%)

The majority of suppliers consider there is at least a ‘medium’ risk of improper behaviour regardless of the type of procurement method used.

The greatest risk of improper behaviour occurring is associated with procurement via non-tendered quotations (e.g. ‘three quotes’), where 66 per cent of suppliers rate the level of risk as ‘high’ or ‘medium’. Just over half of all suppliers rated the risk of panel contracts (53%) at the same level.

The greatest risk of improper behaviour occurring during the procurement process was identified by suppliers during the assessment and decision-making process – 64 per cent rated this as a ‘high’ or ‘medium’ risk.  Graph 9. Likelihood and risks of improper behaviour or corruption in the public sector procurement process (%)

Graph 8. Likelihood and risks of improper behaviour or corruption in the public sector procurement methods (%)

 

Assessments, contract management and evaluation are considered the most at risk of corrupt procurement process behaviours.

The greatest risk of improper behaviour occurring during the procurement process was identified by suppliers during the assessment and decision-making process – 64 per cent rated this as a ‘high’ or ‘medium’ risk. Approximately 60 per cent rated the contract management and contract evaluation stages as ‘high’ or ‘medium’ risks.

The greatest risk of improper behaviour occurring is associated with procurement via non-tendered quotations (e.g. ‘three quotes’), where 66 per cent of suppliers rate the level of risk as ‘high’ or ‘medium’. Just over half of all suppliers rated the risk of panel contracts (53%) at the same level.

Graph 9. Likelihood and risks of improper behaviour or corruption in the public sector procurement process (%)

Most suppliers have been provided with information about expected standards of conduct or business ethics and mostly consider it easy to understand, relevant and useful.

Sixty-five per cent of suppliers confirmed they were provided with information about the expected standards of conduct or business ethics from public sector agencies and almost all (98%) reported understanding this information. Seventy-nine percent agree the information was relevant and up-to-date and 74 per cent agree that it was useful.

 

Reporting corruption and misconduct

An increased proportion of suppliers state that they would report corruption.

A little over two thirds of suppliers (69%) are ‘very likely’ or ‘likely’ to report corruption in procurement of a serious nature (that is a criminal offence). This is a significant improvement since 2016 on the proportion of suppliers who were ‘very likely’ or ‘likely’ to report (64%). In particular, the proportion who are ‘very likely’ to do so has increased significantly over time (44%, up from 32% in 2016).

The likelihood of reporting corruption in procurement differs by supplier type. Among larger companies with 200 or more employees, there is a higher-than-average likelihood to report corruption in procurement (56% are ‘very likely’ to do so). The proportion who are ‘very likely’ to report corruption is significantly lower among those in the construction sector (36%).

A little over two thirds of suppliers (69%) are ‘very likely’ or ‘likely’ to report corruption in procurement of a serious nature (that is a criminal offence).

Graph 10. Likelihood of reporting corruption of a serious nature in procurement (%) 

For those who are unlikely to report (17% of suppliers), there are concerns about the impact on their organisation (69%), that nothing would happen (61%), or it could have a personal impact on the complainant (55%).

For those who are unlikely to report (17% of suppliers), there are concerns about the impact on their organisation (69%), that nothing would happen (61%), or it could have a personal impact on the complainant (55%).

Graph 11. Reason against reporting corruption in procurement (%)

IBAC is the organisation that most suppliers feel they would make a report to.

IBAC (54%), followed by the Victorian Ombudsman (34%) or the government agency involved (31%), are the places where suppliers would likely report public sector corruption.

Awareness and perceptions of IBAC

Most business suppliers have heard about IBAC but the level of understanding about what IBAC does is mixed.

Eighty-six per cent of suppliers have heard of IBAC but less than half (42%) say they have a good understanding of what IBAC does. Six per cent of suppliers state that they have heard of IBAC but are ‘not sure what they do’ and 13 per cent have not heard of IBAC. There is significantly higher awareness of IBAC among suppliers who have won a government contract (90%).

Eighty-six per cent of suppliers have heard of IBAC but less than half (42%) say they have a good understanding of what IBAC does.

Graph 12. Awareness of IBAC (%)

Awareness of IBAC is mainly generated through media reporting. 

Media reporting is the primary source of awareness of IBAC (77% of those who are aware of IBAC). Twenty-eight per cent heard about IBAC being discussed in conversations.

While most suppliers agree that it is important IBAC exists, there are mixed views about whether a report to IBAC would be handled appropriately.

Over 90 per cent of suppliers agree it is important that IBAC exists, including 73 per cent who strongly agree. However, just over a third of suppliers (36%) agree a report to IBAC would be handled appropriately. Confidence is significantly higher among suppliers who have won work with the Victorian public sector (42% agree a report would be handled appropriately). By comparison, two in 10 suppliers (21%) disagree that a report would be handled appropriately by IBAC.

Over 90 per cent of suppliers agree it is important that IBAC exists, including 73 per cent who strongly agree.

Graph 13. Agreement with statements about IBAC (%)

Approximately half of business suppliers have some level of confidence in IBAC’s abilities.

Fifty-eight per cent of business suppliers are ‘confident’ (either ‘somewhat confident’, ‘confident’ or ‘very confident’) in IBAC’s ability to inform the public sector, police and community about the risks and impacts of corruption and police misconduct, or to investigate this. Fewer are at least ‘somewhat confident’ in IBAC’s ability to detect (52%) or prevent corruption and police misconduct (47%).

Fifty-eight per cent of business suppliers are ‘confident’ (either ‘somewhat confident’, ‘confident’ or ‘very confident’) in IBAC’s ability to inform the public sector, police and community about the risks and impacts of corruption and police misconduct, or to investigate this.

Graph 14. Confidence in IBAC (%)

Among those who are not confident in IBAC’s ability in its areas of remit (around a third of all participants provided a response), themes raised include IBAC lacking independence, the inability to prevent corruption due to its embedded nature in Victorian businesses and governments, and IBAC being reactionary rather than preventative. Also mentioned were a lack of resources and powers, and little evidence of the outcomes resulting from investigations.

Among those who are not confident in IBAC’s ability in its areas of remit (around a third of all participants provided a response)

Context and firmographics

A snapshot of the context and organisational characteristics of participants who completed the government business suppliers survey:

Geographic location

Organisation operates in:

  • metropolitan Melbourne: 81%
  • regional Victoria: 61%

Company size

Number of full-time equivalent employees:

  • 0-19 employees: 53%
  • 20-199 employees: 30%
  • >200 employees: 17%

Tendered or quoted for work

Tendered or quoted for work in:

  • Victorian public service: 83%
  • Local government: 50%
  • Both: 17%

Contract wins

Have won a contract: 64%

  • Victorian public service only: 52%
  • Local government only: 29%
  • Both: 17%

Here is a snapshot of the context and organisational characteristics of participants who completed the government business suppliers survey

Graph 15. Types of work tendered or quoted (%)

About the survey

In May 2022, a variety of communication channels were used to promote an online survey to Victorian government business suppliers. IBAC sought assistance from the Department of Treasury and Finance and Health Share Victoria to email a survey link to all registered suppliers on their respective databases.

While all registered suppliers on the databases were invited to participate in the survey, only those who have either tendered for or quoted for work with the Victorian public sector or local government OR have won a contract to do work for the Victorian public sector or local government were allowed to complete the survey. In total, 1,430 Victorian government business suppliers completed a survey between 5-27 May 2022.

The findings from the 2022 survey have been compared with the IBAC survey of the Victorian government business suppliers undertaken in 2016. It is important to note that while some questions were retained, the questionnaire structure was updated in 2022, meaning results may not be directly comparable.

At the time the 2022 survey fieldwork was underway, there was media reporting relating to IBAC and several major operations. This may have impacted on some of the perceptions reported by participants in the surveys.