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We will be looking at key Acts and Regulations enforced by the United Kingdom (UK), European Union (EU), and the United States (US) - showing how embracing digital platforms can help businesses maintain compliance with legal requirements while reducing risks and ensuring responsible procurement practices.
Legal Risks in Procurement
The Bribery Act 2010 (UKBA)
- The UKBA was introduced to enhance UK law on bribery (domestic and foreign). By adopting a digital platform that increases transparency and auditability, companies can demonstrate "adequate procedures" in place to prevent bribery, reducing the risk of legal breaches.
The Modern Slavery Act 2015 (MSA)
- The MSA aims to eliminate slavery and human trafficking in the UK. Utilizing a digital platform that is auditable and traceable helps companies invest in transparency, legality, and propriety of their supply chain, thereby reducing the risk of legal breaches.
EU Regulation Public Contracts Directive 2014/24/EU (the 2014 Directive)
- Adopting a digital platform that complies with electronic auction requirements enhances the fairness and legality of procurement processes.
Foreign Corrupt Practices Act of 1977 (FCPA)
- Companies must be aware of the risk of liability for bribery committed lower down the supply chain and avoid being "willfully blind" of corrupt practices.
Impact of Email-Based Procurement vs. Using a Digital Platform
Increased Legal Risks in Email-Based Procurement
- Relying on emails and attachments for procurement operations significantly increases legal risks, such as potential breaches of the UKBA and FCPA. The use of multiple inboxes makes it difficult to ensure the integrity of procurement processes and hampers visibility into potential legal and ethical issues.
Advantages of a Single Digital Platform
- By consolidating communication streams between procurement business users and suppliers onto a single digital platform, companies can materially reduce the legal risks associated with traditional email-based procurement. A transparent, auditable, and reportable platform helps to comply with the requirements of the MSA and the 2014 Directive, ensuring compliance with legal and ethical standards.
Evolving Technology Market
- As technology evolves rapidly, businesses can no longer rely on emails and attachments to claim best practices in procurement operations. Digital platforms have emerged as a more effective solution, providing increased transparency, audibility, and risk management. Adopting digital platforms can help companies mitigate the legal risks associated with traditional email-based communication.
The Myth of Plausible Deniability
- Some businesses may perceive the lack of total visibility or transparency in their procurement departments' communication with suppliers as useful "plausible deniability" in case legal risks are encountered. However, adopting digital solutions demonstrates a company's commitment to ethical and responsible procurement practices and reduces the likelihood of legal and reputational damage.
Conclusion
By embracing digital transformation in procurement, businesses can mitigate the legal risks associated with traditional email-based communication, streamline their operations, and ensure compliance with legal and ethical standards.
A single, transparent and auditable digital platform offers numerous advantages over outdated email and attachment practices, enabling companies to protect their interests while demonstrating a commitment to responsible procurement practices.
