In December 1999, IBM-GSA was one of three tenderers for the IT outsourcing contract for the Departments of Health, Aged Care and the Health Insurance Commission (the Health Group), along with CSC and EDS. During the tender process, IBM-GSA was supplied with computer disks containing critical information relating to final pricing of their rival tenderers. IBM-GSA subsequently revised its tender after the due deadline and the minister announced they were the successful bidder.

At the time, the Office of Asset Sales and Information Technology Outsourcing (OASITO) described giving IBM-GSA details of their rivals bids as an inadvertent error. The minister dismissed the Opposition's call for an immediate halt to the tender process. Three years later, the minister, now retired, admitted that the $350 million tender should have been cancelled. He told the Audit Office in September 2002:

When the disc containing all three bids was delivered to IBM GSA in error my reaction on being informed directly by OASITO was to cancel the tender. I could not see that a tender process with integrity could continue. At the conclusion of the tender I was both disappointed and annoyed at the limited role of the Probity Auditor and the absence of a separate report on the issue.

Not only did the tender continue, with IBM-GSA being awarded the contract, but the minister's claim that the Probity Auditors role was limited was contradicted by evidence provided by OASITO to a Senate Estimates hearing on 8 February 2000. OASITO representatives told Senate Estimates that the management of the tender:

was conducted in accordance with the advice from both the probity auditor and our legal advisers engaged for the initiative. All parties concurred at the time that the process could continue unchanged [OASITO] briefed the probity auditor in person [who] immediately came back to us with a proposed course of actionWe engaged the probity auditor to participate in all of our discussions to make sure that he fully witnessed the nature of the discussionsand he was happy that we had delivered the messages in accordance with his proposed course of action.

Your answer should include

Q1. What's going on? (2 marks)

Q2. What are the facts? (2 marks)

Q3. What are the issues (non-ethical)? (2 marks)

Q4. Who is affected? (2 marks)

Q5. What are the ethical issues and implications? (3 marks)

Q6. What can be done about it? (3 marks)

Q7. What are the options? (3 marks)

Q8. Which option is best - and why?