In December 1999, IBM-GSA was one of three tenderers for the IToutsourcing contract for the Departments of Health, Aged Care andthe Health Insurance Commission (the Health Group), along with CSCand EDS. During the tender process, IBM-GSA was supplied withcomputer disks containing critical information relating to finalpricing of their rival tenderers. IBM-GSA subsequently revised itstender after the due deadline and the minister announced they werethe successful bidder. At the time, the Office of Asset Sales andInformation Technology Outsourcing (OASITO) described givingIBM-GSA details of their rival’s bids as an ‘inadvertent error’.The minister dismissed the Opposition's call for an immediate haltto the tender process. Three years later, the minister, nowretired, admitted that the $350 million tender should have beencancelled. He told the Audit Office in September 2002: “When thedisc containing all three bids was delivered to IBM GSA in error myreaction on being informed directly by OASITO was to cancel thetender. I could not see that a tender process with integrity couldcontinue. At the conclusion of the tender I was both disappointedand annoyed at the limited role of the Probity Auditor and theabsence of a separate report on the issue.” Not only did the tendercontinue, with IBM-GSA being awarded the contract, but theminister's claim that the Probity Auditor’s role was limited wascontradicted by evidence provided by OASITO to a Senate Estimateshearing on 8 February 2000. OASITO representatives told SenateEstimates that the management of the tender: “…was conducted inaccordance with the advice from both the probity auditor and ourlegal advisers engaged for the initiative. All parties concurred atthe time that the process could continue unchanged [OASITO] briefedthe probity auditor in person [who] immediately came back to uswith a proposed course of action…We engaged the probity auditor toparticipate in all of our discussions to make sure that he fullywitnessed the nature of the discussions…and he was happy that wehad delivered the messages in accordance with his proposed courseof action.”

Q1. What are the ethical issues and implications?

Q2. What can be done about it?

Q3. What are the options?

Q4. Which option is best - and why?