Is anyone watching? (and other ethical questions)
You give the cashier at the grocery store a $10 bill, and you get back change for a $20 bill. What do you do? Your response has nothing to do with your professional ethics. Or does it?
As public purchasing professionals, ethical thinking and practice influence our lives at both personal and professional levels. But because “ethics” or “ethical thinking and practice” are so entwined into who we are and what we do, it is often difficult to separate the personal from the professional. In fact, mastering personal ethics enables professional ethics to become much more natural. Therefore, we need to focus on who we are and how we think and act.
All around us are stories relating to ethical behavior, and sometimes the outcomes are not favorable. Standards are defined to establish and direct ethical behavior in many areas of our lives. Speed limits, stop signs, yield signs and licensing are all designed to direct safe, ethical driving; there are consequences if you cross those lines. Doctors subscribe to a very strict ethical code including the Hippocratic Oath. Auditors and accountants have a code of ethics. Corporate “misbehaving” led Congress to pass the Sarbanes-Oxley Act to require acceptable, ethical corporate behavior. Everywhere you look is evidence of attempts to establish ethical levels.
Ethical expectations also pervade every area of our professional lives. The National Institute of Governmental Purchasing (NIGP), the Institute of Supply Management and other state and local entities provide a strict code of ethics. For public purchasers, state or municipal codes grant us specific direction and authority to conduct the responsibilities of our positions ethically, fairly and impartially. These statutes, codes and rules provide clearly defined direction on ethical behavior. However, it is in the “gray areas,” where clarity may be lacking, that we are challenged to make correct ethical decisions. The gray edges of ethical conduct are often misunderstood, and this article will highlight some common misconceptions – and hopefully help to highlight the ethical path.
MISCONCEPTION 1: “I can’t make a difference.”
If you think you cannot make a difference, you may be right. However, by refusing to accept that premise and insisting on high ethical practices, you can realize a positive, ethically sound outcome. The United States Army, in its most recent advertising campaign, calls itself “An Army of One,” recognizing that each soldier can make a difference.
Here’s an example of how one person can make a difference: A purchasing professional from the local area served on the advisory committee for the business management program of one of our local colleges, with the responsibility to evaluate the program curriculum. Discovering that students were graduating from the program without any ethics training, the purchasing professional recommended that an ethics class become a requirement for graduation. He gathered data and shared it with other committee members and the chair of the program, and the ethics class became a requirement. This same purchasing professional was working with a set of agency purchasing rules that were silent on the subject of ethics. To ensure that the agency followed ethical purchasing practices, he was instrumental in seeing that new administrative rules were written, reviewed in public hearings and implemented into the agency’s purchasing practices. One individual can indeed make a difference.
MISCONCEPTION 2: “No one is watching.”
“Our character is what we do when we think no one is looking,” says author H. Jackson Brown, Jr. There was an accounting clerk for a small city in the Northwest who apparently figured that no one was watching her – and she failed her character test. This 18-year employee of the city worked in the finance department with five other employees, and her responsibilities included canceling city-owned credit cards for former employees. Because of staff cutbacks, a review of credit card cancellations by another person had been eliminated. Police investigators later found at least four cards that were not canceled, but were retained and used by the clerk. This activity was discovered after a bank employee questioned the use of the city’s credit card to pay a utility bill on a private residence. Independent auditors revealed misuse of the credit cards totaled $108,000. Result: three years, two months in jail. But that’s not the end of the story. The recently promoted finance director of the same city was discovered writing checks to a bogus company. She was cashing the checks and depositing them into her own account. The additional step of her work being reviewed by the city manager had been eliminated. Independent auditors, brought in to clean up after the finance director resigned, discovered a trail of bogus checks totaling more than $1.4 million, resulting in a long jail term. City officials have implemented procedures to require two levels of review by different staff members. Someone should always be watching.
MISCONCEPTION 3: “If I didn’t know it was wrong, it must be OK.”
Often in our day-to-day work activities, we encounter others who unknowingly take actions to violate the rules within which we operate. Our internal customers usually rely on the central purchasing staff to keep them within the ethically acceptable boundaries or explain what those boundaries are. When customers are unaware of or attempt to elude the central purchasing authority, problems can occur. Here is an example: A large centralized purchasing agency had delegated certain informal purchasing levels to their offices scattered throughout the city and state. The agency also had established several agency-wide, mandatory-use contracts for commonly used products and services. A new employee wanting to make her mark on the agency negotiated a services contract with a provider near her office. Proud of her accomplishment, she sent an agency-wide email extolling the value of the newly established contract. When the purchasing manager saw the email, the new employee was advised to cancel the negotiated contract immediately because it violated the terms of an existing mandated contract. It also had terms unfavorable to the agency. It took considerable discussion between the new employee and the purchasing manager, and several references to the purchasing code, to make the new employee understand the risk to the agency and her personal risk for potentially violating the purchasing code. When the supplier of the new contract realized that the person who had negotiated the contract did not have authority for such action, they reluctantly canceled the contract. Ignorance is not an excuse.
MISCONCEPTION 4: “I can be objective!”
A purchasing manager from a Northwestern state had issued a request-for-proposal (RFP) for specialized services. After receiving the proposals, the manager met with the evaluation committee, coached the committee through the evaluation process and had them sign statements indicating they had no conflicts of interest in performing the evaluation. The committee returned their recommendation for award along with the scoring of each evaluator. After reviewing the recommendation and evaluation findings, the manager noticed an anomaly between the scoring of the evaluators and the chair of the committee. The recommended awardee was only scored high by the chair; the other evaluator scores had indicated that another proposershould receive the award.
The manager reconvened the evaluation team to discuss the recommendation. The other evaluators recommended a different award but had been encouraged by the chair to award to the firm he scored high. Pressed about why the chair had favored one vendor, he said, “I know they are a good firm because my wife works there.” The manager reminded him of the signed conflict-of-interest statement, but the chair insisted he was being objective. Further discussion finally convinced the chair that he indeed had a conflict of interest. His scores were removed and a new awardee was selected. The incident reminds us to always be sensitive to potential conflicts of interest and to deal with them even when we think we can maintain “objectivity.”
MISCONCEPTION 5: “As long as I am not receiving personal gain, it must be OK.”
One local agency had a motor pool with a dedicated fleet of vehicles. The mission of the agency required considerable travel, so the fleet was justified. The motor pool occasionally reordered new vehicles from the state contract to replace older vehicles in the fleet. Upon seeing the state contract price in one requisition for 10 vehicles to replenish the fleet, the director informed the purchasing agent and the accounting clerk that he was changing the quantity on the order from 10 to 11. The extra car would be for the director’s personal use and not used for agency business. The director would write out a personal check for the amount when the vehicle was delivered. The vehicles were delivered, the director wrote the check, and took possession of the car. Everyone was happy…or not!
One employee of the agency did not think the transaction was right and contacted the ethics commission. After investigating the purchase, the commission found the director had violated ethics rules. The resulting conflict ended in court. The judge said, “But for your position as an employee of the government agency, you would not have had the opportunity to make that purchase. Therefore you violated the ethics rules.” A civil penalty was assessed, as well. Employees of a government entity should not use their position for any type of personal gain.
MISCONCEPTION 6: “It will only be this one time.”
Unethical behavior rarely starts with the “million dollar deal.” After a small, innocuous action directs us down the path, it becomes harder and harder to change direction or reverse course, as a local athletic youth league found out when it needed one of the parents to step up and serve in an unpaid bookkeeping position. A single mom who had one child in the athletic program volunteered to serve. One evening after collecting some of the fees, she stopped by the grocery store. Reaching into her purse, she realized she did not have her checkbook, so she “borrowed” from the cash of the athletic fund. The cash was quickly returned to the fund. But the next time, she forgot to return the money, although it was only a few dollars. A year and many dollars later, an investigation requested by others in the league revealed a significant shortage of funds in the account. Such are the dangers of “only-this-time” thinking.
MISCONCEPTION 7: “If it happens outside of work, what I do does not matter.”
I was teaching an ethics class in one of the Midwest states last year and, during the course of the class, students shared ethics-related events in their work and personal lives. One young lady had a particularly gripping story that I still remember vividly. She was a young mom with two growing children, and there were always more bills than dollars. One evening after work with both children in tow, she had to do some grocery shopping. Walking toward the checkout line, she noticed a wad of money on the floor, more than $400. The cashier had not observed her “find,” so only she and her children knew about the money. Her children, ecstatic that the extra money could help them out, were baffled when the young mom asked the checkout attendant to call the store manager. She explained to the manager where and how she had found the money and gave it to the manager, over the protests of her children. She later explained to them that it was the right thing to do. Besides, she added, “The person who lost the money may have needed it even more.” She shared with the class that the single action of turning in the money had a far greater impact on her children than she realized. Later, they often mentioned the action and applied it to decisions they made. She had modeled ethical behavior, illustrating that what we do does matter.
MISCONCEPTION 8: “The end justifies the means (or if it saves the agency money, it must be OK).”
Occasionally people who have contracting authority do not see the harm of “steering” contracts to family or friends. This is an unethical practice, as illustrated by a fire department of a large city in the Pacific Northwest with multiple fire stations. One manager for the department was responsible for the maintenance and upkeep for those stations. Over a two-year period, the manager awarded 27 contracts worth more than $85,000 to a company owned by his son. Many of the contracts were just under the $5,000 requiring competition. In some cases multiple contracts just under the $5,000 threshold were issued to his son’s company for the same project within the same week. Investigators identified a pattern of routing contracts falling just under that threshold to his son’s company. The manager was quoted saying, “The work was performed satisfactorily, and I believe the city received a good product for a fair price. I received no personal gain from the work.” Fragmenting or other forms of dividing work or otherwise inhibiting or eliminating competition is a very unethical practice.
MISCONCEPTION 9: “Everyone else does it.”
A transportation agency in one of the Western states operated maintenance stations throughout the state to provide service to travelers. The agency practiced centralized purchasing but delegated certain purchasing thresholds to the maintenance stations for operational efficiency. The stations were required to use established contracts for many of the day-to-day operational materials. A telemarketer contacted one of the maintenance station employees to sell some janitorial supplies. The offer was for the employee who placed an order to receive a coupon valued at 10 percent of the order. As employees from other stations were contacted, they were told, “Others in your agency are already ordering from us and getting the coupons.” That was usually enough to “loosen” a purchase order or two. Eventually the law caught up with the telemarketer, and the company was closed down. As news of the criminal investigation reached internal auditors of the agency, they searched the purchasing database to find activity with that firm. Internal auditors found a total of 12 employees who had placed orders and received coupons. Those employees faced various levels of discipline. The unethical actions of others should never be allowed to influence behavior.
As these examples show, it matters a lot how we analyze and respond to day-to-day occurrences, both big and small, in our lives. Ethical decision-making and ethical behavior are critical, both personally and professionally. When we use ethical decision-making practices in our personal lives, the carryover of those practices into our professional lives is easier and more effective. The principles for a strong ethical foundation are not complex:
Believe that you can make a difference and that it does matter;
Model ethical practices to tell everyone you are ethical and to create a pattern for them to follow;
Don’t get caught up in the cloudy thinking that others are doing it, or that it will only be this one time;
Remember that the end never justifies the means if it includes any form of ethical compromise.
In public purchasing, our lives and actions are in a fishbowl. Everything we do is transparent. Our actions are evaluated after the fact so that the outcome is already known. We need to ensure that all our decision-making processes are of the highest ethical standards. We not only need to know our rules, but we need to follow them. If they do not achieve the highest ethical outcomes, we need to change them. We need to use “best practices” in the industry such as multiple levels of review when financial decisions are made. As purchasing professionals, we must make a difference. We can model the ethical standards for others to follow. Mark Twain said: “Always do the right thing. This will gratify some people and astonish the rest!” Let’s go out and astonish some people!
About the author
With more than 26 years of public purchasing management experience, Rob Rickard, CPPO, OPBC, currently serves as the chief procurement officer for the Oregon Secretary of State’s Business Services Division in Salem, Ore. Previously, he served many years as chief procurement officer for both the Oregon Department of Administrative Services and the Oregon Department of Transportation. Rickard serves as a master instructor for NIGP and is a regular speaker at its annual forums and through its Webinars, as well as at chapter conferences.