Conflict of Interest

A conflict of interest is a situation in which private interests could influence a public servant's official duties, or in which a person uses public office for personal gain. In procurement, it arises when someone involved in the process has a personal interest, such as a financial or professional one, that could influence decisions or actions or result in preferential treatment of a supplier.

The term applies to individuals and to organizations. An individual conflict concerns an evaluator, advisor or decision maker. An organizational conflict concerns a contractor whose other activities or relationships affect its objectivity or give it an edge over competitors. Canadian federal guidance and NATO procurement documents both address these situations, and both treat the appearance of a conflict as a matter that needs attention.

Real, apparent and potential conflicts

Canadian federal procurement distinguishes three kinds of conflict. A real conflict exists now. An apparent conflict looks like one to a reasonable observer. A potential conflict could develop as circumstances change. This framing comes from the definition in the Treasury Board Policy on People Management, which covers conflicts that are real, apparent or potential.

The same Treasury Board material explains that a conflict can arise in procurement when a participant's personal financial or professional interest could influence decisions or lead to preferential treatment. Related concepts include conflict of duties, recusal, reassignment and the protection of sensitive information.

Declarations in federal bid evaluations

Federal procurement-integrity training material states that participants in PSPC-led bid evaluations are to provide signed conflict-of-interest declarations. The requirement applies to employees and other participants who evaluate bids or otherwise take part in a solicitation. Its purpose is to protect independence, objectivity, impartiality and equal treatment of suppliers. The Procuring with Integrity training resource describes this practice.

Federal contracting guidance also identifies mitigation measures. These include documenting and maintaining records, protecting sensitive information, and recusing or reassigning individuals who have a conflict. The federal guidance publication sets out these measures alongside the supplier obligations in the Code of Conduct for Procurement.

Organizational conflicts in NATO contracting

NATO defines a conflict of interest as a clash between NATO's interests and a staff member's private or personal interests. It includes situations that compromise, or appear to compromise, the person's reliability and independence, even when no improper act occurs. The NATO Procurement Manual states that an appearance of impropriety can undermine confidence in NATO or in the staff member.

NATO contract terms also address contractors. An organizational conflict arises when a contractor's other activities or relationships impair, or could impair, its impartial advice, its objectivity in performing the work, or when they give it an unfair competitive advantage, including access to information unavailable to other competitors. The NCIA General Terms and Conditions extend these concerns to executives, directors, consultants, subsidiaries, parent companies and subcontractors.

NATO requires potential conflicts or impropriety by staff or other parties to be disclosed appropriately. Organizational-conflict provisions in NATO ACT solicitations apply to potential conflicts affecting the current contract or a future acquisition.

What it means for a supplier bidding on Canadian public contracts

Read the conflict-of-interest clause in every solicitation before you bid. Disclose any real, apparent or potential conflict as the clause requires. The specific obligation depends on the solicitation or contract, so check the wording each time.

• Identify the personnel and related entities that could be affected, including subcontractors and affiliates.
• Protect confidential and proprietary information, and keep records of how you handle it.
• Follow any required mitigation, such as recusal, separation of staff or information barriers.
• Review your obligations under the Code of Conduct for Procurement.

Raising a potential conflict early gives the contracting authority the chance to apply mitigation. Staying silent about a conflict that looks real to an outside observer carries more risk than disclosing it.