NSW public sector agencies must ensure they check along the supply line to make sure they are not receiving goods and services from overseas operators involved in modern slavery or human rights abuses, a new guide says.

The state’s corruption watchdog has released a procurement guide to help state agencies identify dodgy suppliers, eliminate corruption risks and comply with regulatory requirements.

Supplier due diligence: a guide for NSW public sector agencies provides a blueprint for the conduct of due diligence checks on potential suppliers.

It examines what due diligence is, why, when and how it should be performed, and by whom.

The guide advises that checks may need to occur further along the supply chain into countries where abuses may be occurring.

“In addition to human rights and modern slavery abuses, agencies should also be aware of other forms of exploitation such as underpayment of staff and subcontractors, false claims about use of small or local businesses, Indigenous or disability workforce,” it says.

It also looks at corruption and fraud risks and what to do when a supplier fails to deliver, and how to spot red flags.

NSW public sector agencies spend billions of dollars on the procurement of goods and services each year, so it helps to have some reliable information about the people and organisations that supply those goods and services, the ICAC says.

Chief Commissioner, Peter Hall QC, said due diligence must be at the forefront of the procurement process.

“The ICAC has conducted many investigations concerning procurement which have shown that poor due diligence has contributed to corrupt conduct,” he said.

“By getting it right from the start, through conducting appropriate checks, public sector agencies can help prevent their organisations from being subject to corrupt behaviour.”

The guide is also useful for potential suppliers, Commissioner Hall says.

“It can help them understand the information they might need to provide should they wish to be engaged by government agencies, and to build a reputation as being competent, ethical and reliable.”

The guide, which also contains case studies and resources, breaks down five categories of checks for agencies to consider:

• Is the supplier genuine?
• Is the supplier capable and reliable?
• Is the supplier of good repute?
• Is the supplier financially viable?
• Does it have the required licences, status and authorities?

Although the guide is for the NSW public sector, and is recommended for other jurisdictions as well.

The ICAC says it can be adapted for recruitment, grant allocation and sponsorship arrangements.