By Sarah Herbert and Scott McLintock

Government procurement sits at the intersection of public trust, fiscal responsibility, and operational efficiency. When procurement processes fail through fraud, corruption, or control breakdowns, the consequences ripple far beyond financial loss. They erode public confidence in institutions, critical services can be disrupted, and agencies may face intense media scrutiny leading to reputational, regulatory or legal consequences.

With the Commonwealth spending tens of billions of dollars on procurements each year, even isolated instances of misconduct can result in substantial waste and undermine confidence in government decision-making.  Recent high-profile cases have highlighted recurring vulnerabilities, including rushed emergency tenders, inadequate vendor due diligence, and cultural blind spots allowing unethical behaviour to flourish.

This article explores lessons arising from several prominent government procurement cases, together with observations from procurement investigations conducted by CurbyMcLintock across all levels of government. It explores common warning signs, emerging risk patterns and practical measures organisations can implement to strengthen procurement integrity, safeguard public funds and maintain public trust.

Where Opportunity Meets Risk

With high stakes comes high risk. Government procurements represent significant commercial opportunity for suppliers, with billions of dollars in public funds spent each year on goods, services and infrastructure. The scale and value of these opportunities inevitably attracts intense competition, but can also attract individuals and organisations seeking to exploit weaknesses in procurement processes for personal or commercial gain. A review of government tender portals highlights the sheer volume of procurement activity across the public sector. While government agencies have implemented extensive controls and governance frameworks, procurement fraud, tender tailoring, conflicts of interest and corruption continue to occur. When these incidents emerge, they not only  attract media attention but also undermine public confidence in the integrity and fairness of government decision-making.

Rigged Before the Race: How Procurement Processes Can Be Influenced

Department of Defence – Case Study

In November 2025, four individuals, including a Commonwealth employee, were charged in connection with an alleged $71 million Department of Defence (Defence) procurement fraud. According to the AFP, the matter arose after Defence identified procurement irregularities through an internal investigation and referred the concerns for further investigation under Operation Panton Hill, a joint AFP, Defence and National Anti-Corruption Commission (NACC) operation. It is alleged that the Commonwealth employee abused his position to influence the awarding of Defence contracts to a Northern Territory construction company and related entities in which the other accused had an interest.[1]

The case highlights the significant risks posed by undisclosed conflicts of interest, insider influence and procurement processes that can be manipulated to favour a predetermined supplier. It also demonstrates the importance of undertaking robust supplier due diligence and integrity assurance checks, including assessing ownership structures, related-party connections and potential conflicts of interest, particularly for high-value or high-risk procurements. Together with strong procurement oversight and independent review mechanisms, these measures can assist organisations to identify corruption risks early and detect unusual procurement patterns before substantial public funds are committed.

National Disability Insurance Agency – Case Study

In June 2024, a parliamentary inquiry identified significant concerns regarding the National Disability Insurance Agency’s (NDIA) procurement of its Provider and Participant Communication Environment (PACE) system from global technology company Salesforce. The inquiry found that the contract value had grown from approximately $27 million to $135 million through a series of substantial scope changes and contract variations, with concerns that alternative vendors were effectively denied an opportunity to compete for the solution ultimately delivered. The Committee also identified more than 100 instances of gifts and hospitality provided by Salesforce to NDIA officials over a five-year period, despite no related declarations being recorded by the agency. [2]

The case highlights the integrity risks that can arise from inadequate management of conflicts of interest, gifts and hospitality, procurement oversight and contract variations. It also demonstrates the importance of robust governance, transparent decision-making and independent probity oversight throughout the procurement lifecycle.

Department of Foreign Affairs and Trade

In 2024, the Australian National Audit Office (ANAO) found that the Australian Passport Office, within the Department of Foreign Affairs and Trade (DFAT), had procurement practices that fell well short of expected ethical and governance standards.  The audit conducted a detailed examination of 73 contracts worth $405 million from a broader population of 331 contracts valued at $1.58 billion and found that only 29% involved a genuinely open market process. In 53 of the 73 procurements reviewed, a preferred supplier had effectively been identified before the approach to market commenced, with some competing suppliers invited to participate despite the outcome already being largely predetermined. The audit also identified numerous undeclared conflicts of interest, inadequate record-keeping and concerns regarding value for money and probity. The findings ultimately resulted in 18 employees and contractors being investigated, considered for investigation or referred for further action.[3]  

The case highlights how procurement integrity can be compromised when competitive processes become a formality rather than a genuine mechanism for testing the market and achieving value for money.

CurbyMcLintock Insights from Procurement Investigations

Drawing on procurement investigations conducted across local, state and Commonwealth government agencies, CurbyMcLintock has identified recurring themes that can increase corruption, probity and procurement integrity risks if left unaddressed. While every matter is unique, many investigations reveal efforts to influence procurement outcomes long before a formal tender is released.

One recurring theme is the use of a “beachhead strategy”. Under this approach, a supplier secures a relatively small engagement that falls below applicable competitive procurement thresholds, often to assist an agency with requirements gathering, market analysis, business case development or procurement planning for a much larger future procurement. Through this initial engagement, the supplier gains detailed knowledge of the organisation’s needs, budget constraints, key stakeholders and evaluation priorities. In some matters investigated by CurbyMcLintock, the supplier partnered with, or provided intelligence to, a larger bidder participating in the formal procurement process. This can create an uneven playing field by providing one bidder with a significantly deeper understanding of the procurement requirements, evaluation criteria and commercial parameters than competing suppliers. The originating supplier may then benefit through subcontracting arrangements, resource augmentation opportunities or other commercial arrangements associated with the successful bid.

These arrangements can create procurement integrity and probity risks where conflicts of interest, information-sharing protocols and market fairness are not appropriately managed.

Another recurring theme involves what can best be described as “manoeuvring the pieces on the chessboard” before a procurement process formally commences. Investigations frequently identify extensive supplier engagement activities occurring before procurement restrictions or communication blackout periods take effect. While market engagement is an important part of effective procurement planning, risks emerge when suppliers are able to establish privileged access to decision-makers, influence procurement strategies, shape requirements or develop relationships with key stakeholders before competing suppliers have a comparable opportunity to engage. By the time a tender is formally released, the groundwork may already have been laid to favour a particular approach, solution or supplier.

These observations reinforce an important lesson: procurement integrity risks often arise well before tender responses are submitted or contracts are awarded. Effective governance therefore requires organisations to focus not only on the formal procurement process itself, but also on the planning, stakeholder engagement and supplier interactions that occur in the lead-up to a procurement activity.

From Compliance to Culture: Strengthening Procurement Integrity

Public sector procurement is especially vulnerable to corruption due to the significant value of government expenditure and complexity of procurement activities. Both employees and suppliers can identify warning signs, such as specifications tailored to favour certain bidders, repeated contract extensions, undisclosed conflicts of interest, and unusual bidding patterns. Common red flags include employees accepting gifts, failing to declare relationships with bidders, or exercising influence over multiple stages of the procurement process, as well as suppliers submitting sham bids or providing excessive hospitality. These vulnerabilities can arise at any stage of the procurement lifecycle, from tender design and supplier selection, through to contract delivery, payment approval and contract management.

A strong culture of procurement integrity starts with leadership and must be consistently reinforced throughout the organisation. To mitigate corruption risks, organisations should implement robust controls, including supplier due diligence, regular and targeted audits, secure management of sensitive information, and clear conflict of interest policies. Segregation of duties, rotation of staff in high-risk roles, and comprehensive record-keeping are also important safeguards. Regular training and clear expectations for both employees and suppliers can help embed a culture of ethical behaviour and strengthen accountability across the procurement process.[4]

Procurement failures are often far easier to prevent than to remediate. Once integrity concerns emerge, investigations can be complex, time-consuming and costly, while reputational damage may persist long after the matter is resolved. Applying lessons learned from previous incidents and responding quickly to address and investigate procurement irregularities can help organisations address emerging risks before they develop into significant fraud or corruption issues.

Final Reflections

As the case studies demonstrate, procurement controls can fail, established processes can be circumvented and positions of trust can be exploited for personal or commercial gain. When this occurs, the consequences extend beyond financial loss – public funds are diverted from essential services, confidence in procurement outcomes is diminished and trust in government institutions can be eroded.

Organisations that prioritise procurement integrity are better positioned to protect public funds, maintain community confidence and ensure procurement decisions deliver fair, transparent and value-for-money outcomes. By remaining vigilant to emerging risks and addressing warning signs early, agencies can significantly reduce the likelihood of procurement misconduct and strengthen trust in the procurement process.

References

[1] Fourth person charged over multi-million dollar fraud | Defence

[2] Significant concerns re Salesforce and NDIA procurement – Parliament of Australia

[3] At least 18 federal passport office officials under investigation after scathing audit report | Australia news | The Guardian

[4] Corruption in procurement – risks and warning signs | IBAC