ETHICS MATTER! Guardrails for Managing Vendor Relationships
Keeping local government staff and the organizations they represent above board when it comes to commerce and their relationship with vendors
By Martha Perego, ICMA-CM | October 1, 2022 | PM MAGAZINE
As the nature of local government services has evolved and grown in complexity, so too have the relationships with those outside entities brought on to assist.
Tech firms are creating community engagement platforms vastly superior to anything most local governments could develop. Consulting firms, often led and staffed by former practitioners, now work in very niche areas like local government budgeting, goal setting for governing bodies, or executive recruitment. With a different business model, nonprofits remain an essential partner, providing technical expertise and/or delivering actual services.
In this environment, local governments benefit by getting critical support and technical expertise to supplement staff capacity. Beyond their profit motive, the outside entities benefit by gaining invaluable insight they can use to further enhance their products, services, and approach. In some ways, the arrangements are far less transactional and may even feel like a partnership, albeit one that has local government covering the full freight. But local government staff would be wise to always remember that while there may be a mutual interest in serving the public, this is not a partnership. This is commerce complete with contractual obligations.
Good stewardship of the public’s money is an enormous ethical obligation. When the procurement process is conducted with transparency and fairness on a level playing field, the outcome is acquiring the best product or service at a competitive price provided by the most competent of sources. When done the right way, it reinforces the message that residents can trust their officials to be good stewards of their money. It fortifies the critical principle that holding public office is a public trust.
The guideline on endorsements under Tenet 12 of the ICMA Code of Ethics (as seen in the figure) sets up guardrails designed to keep local government staff and the organizations they represent above board when it comes to commerce and their relationship with vendors. In revising the endorsement guidelines several years ago, we tried to construct clear guiderails. That said, as vendors adopt new approaches to developing and marketing their services, questions such as these pop up:
I was asked to serve on an advisory board for a global cybersecurity firm. The invitation identified me as a “thought leader” in local government. The “ask” of the advisory board members is to meet four times a year to share insight on the challenges cities and counties are facing. The invitation was very clear: there is no expectation that participants would be asked to use or endorse the firm’s products.
At face value, this firm seems interested in leveraging your experience, intellect, and time to benefit their business. On the flip side, participating in the group may also be a learning opportunity for you as colleagues discuss their approach to dealing with challenges. But an invitation to engage with an external party—whether a for-profit company, academic institution, or nonprofit—does raise ethical considerations.
If your organization has hired this firm or has plans to hire a firm in this field, you should decline the invitation. Your participation on their advisory board while concurrently vetting them as a potential vendor or being a client presents at a minimum an appearance of a conflict of interest. If none of those circumstances are present, then you can certainly join a board to offer your insight if they do not use your participation on the advisory board to market their firm. One other note of caution: you may be asked to be part of a panel to talk about their research or the contributions of the advisory board. Serving on a panel at a professional association conference may be okay if the content is fact based and not designed to promote the firm. However, do not agree to be on a webinar that will sit on the firm’s website. That is marketing and would be regarded as an endorsement.
For my very hard-working team, getting external recognition for our work is always appreciated. Over the years we’ve won awards from ICMA and other membership associations. We’ve just received notice that another award is coming our way. This one is different, however, because the award is coming from a firm under contract to provide services to our county. Also, the invitation to accept the award includes four complimentary registrations to the firm’s conference where the awards will be given. Is it okay to accept the award? Is it okay to accept the free registrations assuming that the county pays for staff travel to the event?
Giving awards to clients seems to lack the objectivity and perhaps credibility typically associated with professional awards vetted through a peer review process. That said, if the county wants to accept the award that is okay as long as the vendor does not include pictures of county employees or a quote from the county about the award on their website, in social media, or other marketing efforts. If the county wants to accept the award in person, the county should pay the cost of registration plus travel. The free registrations are a gift being offered by a vendor. Accepting a gift from a current vendor creates the appearance of a conflict of interest and could lead to actual conflicts down the road should there be any performance or contractual issues.
Shortly after arriving at the ICMA annual conference, I received an email from an executive recruiting firm. I am very familiar with this firm because they had the contract that resulted in me landing my current position as city manager. The firm was inviting everyone to meet for a photo opportunity. While I don’t know everyone on the distribution list, I’m guessing that it went to individuals this firm had successfully placed. Would it be okay to appear in the photo?
Before proceeding, it would be smart to ask the recruiter for more details. Who’s the target audience for the email? How will the photo be used? If the recruiter plans to place the photo on their website, share it on social media, or use it in printed marketing materials, that creates an ethics issue. Even the use of a member’s photo, without any accompanying comment, is considered an endorsement under the guidelines.
We had an excellent experience with a firm that specializes in helping cities dispose of surplus property. Their property evaluations were on target, and they moved quickly though the marketing, sale, and settlement stages. Now they have asked for our assistance in marketing their services to other cities. I’ve declined to offer any statement for their marketing materials as I know that crosses the line on endorsements. Can I at least offer them a letter of reference they can use when responding to RFPs? My motivation is simply to help other local governments hire competent firms.
Sharing your experience about this firm with colleagues to assist in their efforts in selecting the best vendor is fine. As with most things in life, how you do that matters. Rather than writing a blanket letter of reference that talks solely about your experience, it’s better to agree to serve as a reference. Serving as a reference gives you the opportunity to add context to your experience with the vendor when you talk with your colleague. After all, just because you had a great experience with the firm doesn’t mean they are necessarily equipped or suited to do the work for any local government.
Conclusion
Maintaining the public’s confidence in procurement decisions made by local governments is critical. Beyond ensuring that the mechanics of the procurement process are technically correct, ICMA encourages all to adopt a higher standard when it comes to interactions with vendors. The guiderails offered in the endorsement guideline exist to do just that. To ensure that the process is unbiased and above reproach, members should not leverage their reputation nor that of the organization to benefit a vendor.