Skip to content
EMPOBase
en

How to manage conflict of interest in procurement

By the EMPOBase team · · 5 min read

Short answer

Manage conflict of interest in three steps. First, ask everyone who touches a purchase to declare links to suppliers, in writing, before they act. Second, when a link exists, remove that person from the evaluation and the approval of that purchase. Third, record the declaration, the decision and who replaced them. A declared conflict is manageable. A hidden one is the real problem.

Key points

  • A conflict of interest is a link that could affect judgement, even if no one has done anything wrong.
  • Collect declarations from staff, evaluation panel members and approvers before each tender, and again each year.
  • The fix for a declared conflict is to step aside from that purchase, not to leave the organization.
  • Keep the declaration, the decision and the replacement on file; an unrecorded decision cannot be shown to an auditor.

Why does conflict of interest matter in procurement?

Buying is the point where an NGO’s money meets private interests. A supplier wants the contract. A staff member may know the supplier, own part of it, or owe it a favour. If that link is not visible, no one can tell whether the best offer won.

The harm is not only loss of money. Donors can refuse to reimburse costs that came from a tainted award. Honest suppliers stop bidding when they think the result is fixed. Staff lose trust in the process.

Most conflicts are not scandals. A cousin runs a transport company. A manager used to work for a supplier. A board member’s firm sells printing. The goal is not to avoid every link. It is to make each link visible and to keep it away from the decision.

What counts as a conflict?

A conflict exists when a personal interest could reasonably be seen to affect how someone does their job. Interests fall into a few groups:

TypeExample
FinancialOwning shares in, or being paid by, a supplier
FamilyA spouse, child, parent or sibling who owns or works for a bidder
PersonalA close friendship or a recent dispute with a supplier’s owner
ProfessionalA former employer, or a job offer from a bidder
GiftsMeals, travel or presents from a supplier

Read the list as questions. Would an outsider doubt this person’s fairness? If yes, treat it as a conflict and declare it. Do not argue about whether you personally would be biased.

Who needs to declare?

Anyone who can influence a purchase:

  • the requester who writes the specification,
  • staff who invite, receive or open quotations,
  • members of an evaluation panel,
  • approvers at every level,
  • store and receiving staff who accept deliveries,
  • board members and managers who can steer contracts.

Specifications deserve a special mention. A requirement written around one brand or one supplier’s product is a quiet way to favour that supplier. Whoever writes it must declare any link.

How to run the declaration process

  1. Write a short policy. Define a conflict, list the interests that count, and say what happens after a declaration. One page is enough.
  2. Collect a standing declaration each year. Every person with a procurement role signs, even if the answer is “none”.
  3. Ask again for each larger purchase. Before a panel opens bids, each member confirms in writing that they have no link to any bidder. Do this after the bidder names are known.
  4. Make it easy to declare. Treat early declarations as good behaviour. If people fear punishment, they will stay quiet.
  5. Keep declarations where the procurement file is. A form in a drawer in another office does not help the auditor.

What do you do when a conflict appears?

The standard response is separation. The person with the link steps out of that purchase, and someone without a link takes their place.

  1. Stop their involvement. They do not write the specification, score bids, negotiate or approve.
  2. Appoint a replacement. Name the person, their role and the date.
  3. Record the decision. Note who declared, what the link was, who decided the response and what the response was.
  4. Review what they already did. If the person already worked on the purchase, ask a neutral reviewer whether that work needs to be repeated.
  5. Inform others if needed. Some donor agreements require a report. Read yours.

If the conflict is serious or unclear, send it to a manager with no link, or to your governance or ethics contact. Do not let the person with the link judge their own case.

Which controls make this harder to bypass?

Declarations rely on honesty, so add controls that work even when honesty fails:

  • Separate the roles. The requester does not approve, and one person does not approve two steps of the same purchase. Our article on approval limits for NGO procurement shows how to set this up.
  • Use panels, not individuals, for larger awards, so one person’s bias is outvoted.
  • Rotate duties. Avoid one officer handling the same supplier for years.
  • Review supplier data. Compare supplier details, such as addresses and bank holders, with staff details. A match is a reason to ask, not proof of wrongdoing.
  • Set a gift rule. Many organizations ban gifts above a small value and require all gifts to be logged.

How should you record it?

An auditor wants to follow the story without asking you to remember it. Keep, for each affected purchase:

  1. The declaration, with date and signature or approval.
  2. A short note on the link and how serious it is.
  3. The decision on how to manage it.
  4. The name and role of the replacement.
  5. The final approval record for the purchase.

If you cannot show these, assume the conflict was not managed.

Where EMPOBase fits

EMPOBase has a Conflict of Interest area under Governance, where you record disclosures and track annual certification submissions. Staff must still review outstanding submissions; a record does not renew by itself. In Procurement, the person who raised a request cannot approve it, and one person cannot approve two steps of the same request. Each decision records who acted, when and any note. EMPOBase does not decide for you whether a link is a conflict, so your policy and your judgement stay in charge. See the procure-to-pay workflow for the approval chain.

Questions people ask

Is a conflict of interest the same as fraud?

No. A conflict is a situation where a personal interest could affect your judgement. Fraud is a deliberate act. Most conflicts are honest and manageable when declared early. Hiding one is what turns it into a serious problem.

Do small purchases need a declaration?

Yes, but keep it light. A standing annual declaration covers most small buys. For larger purchases, ask for a fresh declaration each time, because the supplier list changes.

What if the only supplier in the area is a staff member's relative?

Declare it, document why no other supplier is realistic, and have someone with no link to the supplier negotiate and approve. Tell the donor if your agreement requires it.