This Direction deals with the procurement of probity advisory and probity audit services by or for a Government agency within the meaning of the Public Works and Procurement Act 1912, including services associated with the procurement of construction and infrastructure and the disposal of assets.

Generally, a probity advisor acts as part of a procurement/sale project team and works contemporaneously with project managers. The principal role of a probity advisor is to provide probity advice and solutions throughout the transaction.

A probity auditor works independently of a project team and is engaged to verify that processes followed during a procurement/sale are consistent with Government regulations and best practice principles, primarily after the fact.

Use of probity advisers and auditors

While there are circumstances in which it remains appropriate to employ an independent person to verify that processes followed by an agency are consistent with Government regulations and best practice principles, probity advisers and auditors should not be used as an ‘insurance policy' to avoid accountability for decisions made, or be allowed to become a substitute for good management practices.

The Procurement Board confirms that the use of external probity advisers and auditors should be the exception rather than the rule.

Each Government agency should have internal mechanisms in place to ensure that probity considerations are routinely taken into account in their decision making processes, so that all decisions can withstand public scrutiny.

Agencies should also ensure that staff involved with procurement and asset disposal activities are familiar with probity issues, and sufficiently trained in relevant NSW Government policies and procedures. 

Further, in appropriate circumstances agencies may consider using existing resources within their own agency or agency cluster or from elsewhere in the NSW public sector, before deciding to employ a probity advisor or auditor. Resources may be sourced from procurement professionals for probity advisory work, and internal audit professionals for probity auditing.

Criteria for determining whether to engage a probity adviser/auditor

Consideration should be given to the following matters when determining whether to engage a probity adviser/auditor:

• where the integrity of the process (or part of it) may be called into question

• where the project is politically sensitive and/or potentially controversial

• to avoid a perception of bias or favouritism

• where the process is extremely complex

• where there are substantial costs involved in preparing submissions or there is substantial Government funding involved.

The process for engaging probity advisers/auditors

Prior to any engagement, Government agencies should clearly set out in writing the scope of the probity adviser’s or auditor’s proposed engagement, including terms of reference for the engagement covering the intended role of the adviser/auditor, how to deal with conflicts of interest and disputes.

In relation to a probity adviser, at a minimum the terms of reference should also:

• enable a probity adviser to have access to sufficient information available to be an informed part in the procurement/sale process

• outline how the probity adviser can request access to additional information.

In relation to a probity auditor, at a minimum the terms of reference should also:

• give full authority to access records, personnel, meetings and premises

• describe reporting timelines and the expected completion date of the audit

• specify to whom the auditor is to report

• define ownership of the report (including working papers and supporting materials)

• specify arrangements to secure the materials during the audit.

Agencies should also set out clearly the general principles of probity which Government agencies and probity advisers/auditors are expected to apply throughout a procurement/sale process.

Selecting a probity adviser and auditor

Like other consultants, probity advisors and auditors should be selected competitively on merit and in accordance with the Procurement Board’s Value for Money Statement and Board directions, including Board Direction 2013-02, Statement on the Promotion of Competition.

Probity advisers and auditors should have an appropriate level of knowledge and skill (including knowledge of relevant Government policies), be independent and objective, be able to demonstrate professional competence and good judgment, be of good character and be willing to enter into a confidentiality agreement as part of their contract.

The Procurement Board requires agency heads to:

• be satisfied that the engagement will not create a real or perceived conflict of interest arising from work which is being performed by the probity adviser or auditor – this includes a general presumption against engaging auditors that are already engaged in other work within the agency

• ensure that probity advisers and auditors remain independent and objective by not engaging the same probity advisers/auditors on an ongoing or serial basis over a number of related or unrelated issues, recognising that continuing to engage the same adviser or auditor can at a minimum give rise to a perception of a relationship which is not robustly independent.

Agencies may be requested by the Board to report periodically on the use of probity advisers and probity auditors as permitted by this Direction.

This Board Direction was withdrawn from 1 July 2019. Mandatory requirements managing the engagement of probity advisers and auditors are in the NSW Government Procurement Policy Framework 2019. Guidance on engaging probity advisers or auditors is available on ProcurePoint.