Around the world, there is a clear relationship between weak probity in public sector decisions and poor economic outcomes. Obviously in public sector procurement, probity must sit at the forefront of decision-making because it underpins trust, accountability and confidence in how public money is spent. The consequences of probity breaches extend beyond immediate sourcing outcomes and can have significant long-term economic effects.

However, probity is there to protect, not restrict, the pursuit of value for money. 

Central to probity is the management of conflicts of interest. A conflict is commonly defined as a situation where a person’s private interests could improperly influence, or be perceived to influence, the performance of their official duties. The inclusion of perception is deliberate, but it also introduces complexity, particularly in regional markets. When perceived or potential conflicts are mismanaged, fear of probity attack replaces sound judgement and value for money is often lost in the process.

Most contemporary public sector probity frameworks have been conceived and drafted in the ivory towers of capital cities, by policymakers with limited awareness of regional market realities. In city-market environments, supplier choice is generally broad, in-house capability deep and perceived conflicts are generally managed (rightly or wrongly) by simply selecting an alternative provider or rotating personnel.

That metropolitan management method often unravels in the regions. 

When policy is written without a practical grasp of regional markets and market failure, probity becomes process over purpose, paralysing projects rather than pursing value. The result is a framework that is operationally disconnected from project delivery reality.

As Justice Brandis once observed, “the greatest dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding.” The same risk applies in procurement. Well-intentioned probity rules, when applied without context or judgement, can embed subtly into policy and decision-making with little immediate consequence. The risk is that their cumulative effect is only felt later, when it manifests suddenly and materially compromises value for money on a major project.

In regional settings, markets are smaller, capability thinner and relationships are unavoidable. Public sector decision makers in regional areas may sit on the local sporting club board with a supplier, see them socially on weekends, or have long standing professional (and personal) relationships with the few, and sometimes only, capable providers available. These connections are more likely not improper, but they do heighten the risk of perceived/potential conflict.

Too often, these situations are managed poorly through cookie-cutter probity responses. The logic is simplistic, veneer thin and absolute: ‘you know them, therefore we cannot engage them’, even where they are the only viable supplier or offer best value for money from a competitive local market. Or ‘you need to step off the project’, even though there is no one else with sufficient knowledge of the project, the service, or the risks to make informed decisions at sourcing and throughout delivery.

The flow-on effects are predictable. We’ve all seen it before… projects slow down or pause altogether, decisions become less informed and often the wrong supplier is chosen because the fear of attack or ignorance in probity boundaries overpower sound decision making. When uncertainty arises, the default response becomes “NO”, because it feels safer, easier and more defensible on paper.

The impact of this approach is not felt evenly across the market. In practice, opportunities will then often default to larger metropolitan providers… providers who are adept at navigating process-heavy environments and can outlast smaller competitors when uncertainty, delay or risk aversion sets in. For these larger providers, the contract value is probably also immaterial. For a small or regional supplier, the same opportunity can be transformative. It can fund capability uplift, support local employment and determine whether a business grows or exits the market altogether. 

Let’s imagine a recent real example (adjusted slighted to protect probity…). The highest-scoring provider, let’s call them Barcoo Regional Advisory (BRA), had an employee with a prior professional relationship with one of the client’s stakeholders. There was no actual conflict of interest, no financial interest and full and transparent declarations were made in the submission.

Despite this, considerable time was spent managing perceived risk, adding layers of assurance and seeking comfort that any engagement would be defensible. The resulting delays impacted operational delivery and required significant effort to manage messaging. And these delays imposed a disproportionate burden on BRA compared to the next highest bidder, let’s call them Brisbane Consulting Group (BCG). 

Had BRA failed, the outcome would have defaulted to the BCG, by attrition rather than merit. For BRA, losing the gig would have been business-defining. For BCG, getting the gig would have been commercially immaterial. The cumulative effect would have been a material erosion of value for money and market integrity, driven not by genuine risk, but by an overly cautious response to perception that disproportionately disadvantaged the supplier best placed to deliver the work… BRA.

This is not a case for lowering probity standards. It is a case for applying them proportionately and intelligently with a clear understanding of market realities, particularly in the regions.

Probity frameworks should manage conflicts, not eliminate relationships. Declared, transparent and actively-managed relationships are not a failure of probity. In many cases, they are the only way complex  and/or regional projects can be delivered effectively.

Value for money is not achieved by avoiding the optimal option because of how it might look. It is achieved by making informed decisions, documenting them properly and managing risks in a way that is transparent and defensible.
A mature procurement system should be confident enough to say: a relationship exists, it has been declared, it has been assessed and it has been managed. And often that relationship enhances the efficient, effective and economic delivery of the project. 

Probity should be there to protect, not restrict, good decisions.

Hear more from Ben Smith at GovProcure 2026

Join Ben Smith and a host of other thought leaders at GovProcure 2026, 10th-12th March 2026, Sydney.