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NSW Government Bulletin

22 July 2020

#Government

Published by:

Victoria Gordon

NSW Government Bulletin

New ICAC guidelines assist NSW public sector conduct due diligence checks

The NSW Independent Commission Against Corruption (ICAC) has released new guidance to help the NSW public sector conduct due diligence checks on potential suppliers.

The “Supplier due diligence: a guide for NSW public sector agencies published on 17 June 2020 (Guide) examines:

  • what is due diligence
  • why, when and how due diligence should be performed
  • who should perform due diligence.

The Guide should be used as a tool for NSW public sector agencies to ensure they are achieving the best value for money with the billions of dollars of taxpayer money spent on the procurement of goods and services each year.

What is due diligence?

The Guide defines due diligence as checks performed by an agency on a counterparty to understand whether the supplier:

  • is genuine
  • is capable and reliable
  • is financially viable
  • has the required authorities, licences and status
  • is of good repute and integrity.

In a nutshell, due diligence helps to answer the question: should we be doing business with this organisation?

Why, when and how due diligence should be performed?

The Guide states that supplier due diligence is important for ensuring:

  • value for money
  • preventing corrupt conduct
  • maintaining trust in public administration
  • complying with legal and regulatory expectations.

The Guide also advises checks may need to occur further along the supply chain should it extend into countries where practices such as forced labour or trafficking in children are common.

Due diligence is typically performed during the procurement or sourcing stage, after potential suppliers have been identified but before the contract with the preferred supplier has been entered into. However, due diligence needs to be considered in the procurement planning phase so that appropriate supplier questionnaires can be included in tender documents.

Supplier due diligence is also an ongoing process and agencies should be checking back in with current suppliers to see if their licences and insurances are up to date, and if they are complying with all legal and regulatory obligations.

In terms of how due diligence should be performed, the Guide recommends that agencies undertake a “risk-based” approach – which is expanded on further below.

Who should perform due diligence?

Due diligence is usually tasked to the procurement team of the agency but may also involve other teams including finance, human resources or legal.

Agencies can also engage third parties to provide due diligence services.

“Risk-based” approach to performing due diligence

The Guide recognises that due diligence takes time and money and recommends a risk-based approach as a result. Other factors the agency needs to take into its approach are the agency’s capability to undertake the due diligence (time, cost and effort involved), the financial risks to the agency, the risk of corruption or other regulatory breaches (known conflicts of interest or high-risk supply chains) and supply risks (importance of the contract to the agency).

The Guide focuses on five categories of checks for agencies to consider based on the following questions:

  • is the supplier genuine?
  • is the supplier capable and reliable?
  • is the supplier financially viable?
  • does the supplier have the required authorities, licences and status?
  • is the supplier of good repute and integrity?

The Guide provides good guidance and case studies on what to look for when considering the above five questions, as well as supporting resources and information to assist agencies in this process.

Practical issues

The Guide also provides helpful tips on practical issues when performing due diligence, including:

  • outsourcing due diligence
  • prequalification panels and schemes
  • keeping watch lists or do-not-engage lists
  • subcontractors and supply chains
  • post-engagement due diligence and contract management

Who should use the Guide?

The Guide is for anyone involved in procurement in the NSW public sector but can also be applied by public sector agencies in other jurisdictions. 

Private sector agencies can also look to the Guide as a “best practice” tool when performing due diligence checks on suppliers.

Finally, suppliers can also use the Guide to understand how public sector agencies conduct due diligence and equip themselves with the information they may be required to provide in a procurement process.

The Guide can be accessed from the ICAC website here.

Authors: Scott Alden & Victoria Gordon

In the media

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Correspondence between the Queen and Sir John Kerr sheds new light on Whitlam dismissal
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Non-government institutions that fail to join the Redress Scheme
Institutions are on notice that if they fail to join the National Redress Scheme for Institutional Child Sexual Abuse they risk exclusion from future NSW Government funding or contracts (14 July 2020).  More...

In practice and courts

High Court of Australia
High Court of Australia Bulletin [2020] HCAB 05 (10 July 2020).  More...

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New Law Council of Australia Guidelines - Equitable Briefing Policy
The Law Council’s portal for the annual reporting by Equitable Briefing Policy adoptees (Policy adoptees) will soon open on 1 July 2020. To assist in this process, the Law Council has updated its Equitable Briefing Policy Reporting Template and Guidelines in response to feedback from previous reporting periods. Policy adoptees have until 30 September 2020 to provide their annual report, and will be updated once the portal is opened on 1 July 2020.

Coronavirus (COVID-19): Current hearing arrangements to continue at NCAT
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The Court is endeavouring to ensure that as far as possible these defended hearings proceed as defended hearings and are not the subject of pleas of guilty on the day of hearing or of adjournments or delay. Read more.

Cases

Shapkin v The Council of the City of Sydney [2020] NSWLEC 1309
APPEAL – busker permit – revocation – proper notice

Application by the Planning Ministerial Corporation [2020] NSWSC 903
CIVIL PROCEDURE – parties – commencement of proceedings without naming defendant – proceedings for possession of land – where plaintiff was registered proprietor – where land occupied by squatters – order made under r 6.1A UCPR JUDGMENTS AND ORDERS – default judgment – where no defendant named – where judgment in rem sought – Rules

Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (No 3) [2020] NSWLEC 90
PROSECUTION – defendant company liable for the offence under s 144 of the Protection of the Environment Operations Act 1997 of unlawful use of land as waste facility PROSECUTION – defendant company director liable under executive liability provision for same offence as defendant company

Coffs Harbour City Council v Noubia Pty Ltd [2020] NSWCA 142
CIVIL PROCEDURE – hearings – procedural fairness – judge preferring evidence of one expert over another – earlier role of expert addressed during proceedings – basis of preference based on earlier role – no unfairness ENVIRONMENT AND PLANNING – consent – conditions – construction – transfer of land to Council – public purpose – importation of valuation principles from the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) JURISDICTION – Land and Environment Court – valuation of land – no compulsory acquisition – proceedings transferred from Equity Division – conferral of jurisdiction on transferee court – Civil Procedure Act 2005 (NSW), s 149B, 149E – Class 4 jurisdiction exercised – Land and Environment Court Act 1979 (NSW), s 20(1(cj) JUDGMENTS AND ORDERS – reasons – duty to give reasons – failure to give reasons – constructive failure to exercise jurisdiction distinguished VALUATION – methods of valuation – “before and after” method – developed land on alluvial floodplain – whether alternative hypothetical developments the most financially advantageous use of land – proposed alternative development subject to natural features of the land and associated constraints on use – whether alternative development would have received approval VALUATION – valuation of land – principles – whether detention and management of upstream water flows by downstream land owner a “public purpose” to be disregarded in a valuation exercise

Pastoral Investment Land & Loan Pty Ltd v Central Coast Council [2020] NSWLEC 85
APPEAL - appeal against Commissioner’s decision on questions of law – dismissal of proceedings for want of prosecution with due despatch under r 12.7 UCPR – whether misdirection, misconstruction and misapplication of r 12.7 – absence of assessment of significance of impacts on threated fauna species – significance assessment not a jurisdictional fact – absence of significance assessment not fatal to determining development application – absence of significance assessment did not delay proceedings – failure to consider and balance prejudice to parties by dismissing or not dismissing proceedings – whether denial of procedural fairness on summary dismissal – failure to give fair opportunity to be heard before dismissal – remitter of proceedings to Commissioner

Eberand v Department of Customer Service [2020] NSWCATAD 176
ADMINISTRATIVE LAW – Public access to government information – Legal professional privilege – Whether prejudice to the effective exercise of an agency’s functions – Balancing public interest considerations

ALL v Sydney Local Health District [2020] NSWCATAD 174
ADMINISTRATIVE REVIEW – health record – deletion of health record - personal information – review of conduct of agency – contravention of - Health Records and Information Privacy Act 2002 -contravention of Privacy and Personal Information Protection Act 1998 – order for compensation

Michael Brown Planning Strategies Pty Ltd v Wingecarribee Shire Council [2020] NSWCA 137
ENVIRONMENT AND PLANNING – development application – power to grant consent – local environmental plan – requirement that proposed development “is compatible” with the “flood hazard” of the land – assessing compatibility at date of determining application – whether future measures to ameliorate flood hazard relevant – future measures not part of application – Wingecarribee Local Environmental Plan 2010 (NSW), cl 7.9(3)(a) STATUTORY INTERPRETATION – extrinsic materials – dictionaries – usefulness of reliance on dictionaries in statutory interpretation STATUTORY INTERPRETATION – immediate context – consistency of operation – local environmental plan – statutory precondition to granting development consent – grammatical tense of clause – requirement for contextual construction of clause

Legislation

NSW

Regulations and other miscellaneous instruments
Public Health Amendment (COVID-19 Border Control) Regulation 2020 (2020-392) — published LW 8 July 2020

Reminder: Bills passed by both Houses of Parliament
Evidence Amendment (Tendency and Coincidence) Bill 2020
Enables more evidence about an accused person’s sexual interest in children to be considered by the jury in child sexual assault proceedings. The reforms commenced on 1 July 2020.

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Victoria Gordon

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