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New case highlights the importance of compliance with organisational procurement policies

CaseFlash 26 March 2013

Dragan Marijan v Rail Corporation NSW T/A RailCorp [2012] FWA 5639

A recent decision of the Fair Work Commission highlights the importance of compliance with organisational procurement policies. Key takeaways are:

  • agencies need to ensure that their procurement policies are clear, that adequate training is provided and that non-compliant procurement practices are managed and, where possible, eliminated; and
  • individuals whose role involves procurement must be aware of procurement policies and comply with them, even if they believe that it is acceptable or justifiable to depart from the policy under some circumstances. It is also important to document the fact that procurement policies have been complied with.

This interesting case is Dragan Marijan v Rail Corporation NSW T/A RailCorp [2012] FWA 5639.

The RailCorp Procurement Policy says 'Probity must be an integral part of the procurement process and not a last minute consideration'.

The Case

In September 2012, the Fair Work Commission heard an unfair dismissal claim brought by Mr Dragan Marijan against his former employer, RailCorp. Mr Marijan was employed as the Plant and Equipment Manager at a RailCorp depot and was dismissed for failing to comply with RailCorp’s Procurement Policy. The decision sends a clear signal that breach of an organisation’s procurement policy may be given greater weight than other factors that may have led to the relevant conduct.

Reasons for dismissal

The Commission agreed that findings of an internal investigation into the procurement activities of Mr Marijan were sufficient grounds for his dismissal. The investigation revealed that he had ‘a preference for allocating work to friends and not following procurement procedures’. The investigation further revealed that Mr Marijan had failed to obtain quotations, had issued purchase orders after invoices were received and updated invoice information at his discretion. In addition, established panels were in place for much of the work that Mr Marijan allocated, however Mr Marijan failed to use these panels. The investigation noted that ‘given the time and expense involved in tendering, such practices have the potential to discourage good suppliers from bidding for a place within the Panel system’.

The Applicant's contentions

Before the Commission, Mr Marijan submitted that his actions were not uncharacteristic of general workplace practice at the depot. He submitted that, since being promoted to the position, he had simply continued established operational practice.

Mr Marijan further asserted that:

  • at all relevant times he was under stress due to being understaffed and overworked;
  • he had made no gain from any of the work he awarded and that no ‘corruption’ was involved;
  • while he had received basic procurement training, he had never been provided with a copy of RailCorp’s Procurement Policy;
  • he was not aware, and was never made aware, that a panel system existed in relation to the relevant works;
  • the respective values of the relevant works were under the threshold amount for multiple quotes; and
  • the entity in question was already providing a range of other services to RailCorp.

Probity is integral

Despite the submissions from Mr Marijan, Senior Deputy President Hamberger determined that Mr Marijan was guilty of serious breaches of RailCorp’s Procurement Policy, which constituted a valid reason for his dismissal. In making this determination, the Commission emphasised the objectives of the Procurement Policy, which were to prevent the risk of corruption, to ensure transparency and to provide value for money.

Brian Ambler, Partner

CaseFlash 26 March 2013
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