On 23 October, the Fifth Committee met officially to discuss procurement reform while on 25 and 26 October, informal consultations were held on the subject. Furthermore, on 23 October the report of the International Civil Service Commission was presented and on 26 October, informal consultations were held regarding a draft resolution on the Joint Inspection Unit. Please find below a summary of the issues presented and discussed.

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PROCUREMENT REFORM

OCTOBER 25, 2006

INFORMAL CONSULTATIONS ON PROCUREMENT REFORM

Background
Following the findings of the Office of Internal Oversight Services (OIOS) and the Volcker Commission on impropriety and corruption, the Secretary-General approved, in September 2005, a review of the control environment within the Procurement Service to be conducted by one of the firms already contracted with the United Nations Development Programme (UNDP). After a competitive process, Deloitte Consulting was selected on the basis of a panel’s recommendation to the Chief Procurement Officer (Deloitte’s bid was for approximately $500,000). Deloitte began its review on 4 October 2005 and completed its work by 30 November 2005. The Assessment of Internal Controls in the United Nations Secretariat Procurement Operations was submitted to the Secretary-General on 1 December 2005. In March 2006, the Secretary General (SG) presented his report Investing in the United Nations: for a stronger Organization worldwide [A/60/692]. In June, the SG presented a follow-up to this report, A/60/846, of which Addendum five deals with procurement reform. This addendum apparently responds to procurement reform in resolution A/59/288 as well as A/60/260.

Documents

• The Assessment of Internal Controls in the UN Secretariat Procurement Operations
• Addendum five of Investing in the UN: for a stronger Organization worldwide: detailed report A/60/846/Add.5

Summary
The meeting was chaired by Klaus de Rijk, the Netherlands.

Jayantilal Karia, Director of Accounts Division was asked to make a brief and succinct presentation on procurement reform. Karia’s presentation was aided by slides detailing the main themes for Procurement Reform; the actions already implemented; ongoing Activities with regard to increasing transparency and integrity; vendor management; peacekeeping procurement, human resource management; and efficiency enhancement. His presentation also included a request to the GA for conversion of GTA (General Temporary Assistance) funds for 17 posts for the Procurement Division and 9 posts for the other offices and the approval for additional funding of $1,756,650 to fully support the reform measures described in addendum 5 of A/60/846.

Main Remarks and Questions from Member States:

- There is reason for optimism, a sense of emerging consensus (Pakistan, Japan)
- What decisions can be made right now (United States), before the end of 2006 (Japan)
- Let’s proceed with the reports in front of us; we are looking for the Chair’s proposal to start a constructive discussion (Finland, on behalf of the EU; India, on behalf of G77; Russian Federation; Japan)
- What about the adopted resolution on UN procurement reform (A/59/288) – what reports did the Secretariat provide in this regard? (Russian Federation)
- What reports will be prepared for the resumed session? when will they be presented (Russian Federation, United States)?
- One comprehensive review might be better – less compartmentalization, to reduce risk of having to start parts of the exercise over again (Singapore; India on behalf of G77 and China)
- About the requested additional funds and conversion of GTA funds for 17 posts – how have the funds allocated been used thus far? (Finland) Are the 17 requested posts the only cardinal case to be dealt with right now? (Singapore)

Reportedly, the reports that will be issued for the resumed session include the OIOS reports on ‘Best Value for Money’ and ‘Conflict of Interest’, a report on ICT (Information and Communication Technologies), i.e. ERP (Enterprise Resource Planning,) and a report from the Secretariat on ‘Delegation of Authority.’

Karia explained that it was hard to hire long-term staff because only short-time contract can be offered to applicants. He added that he did not think the outstanding reports would have an impact on current decisions to be made.

Karia reportedly explained that A/60/846, of which Addendum five deals with procurement reform was based on the later resolution A/RES/60/260 as well as A/RES/59/288.

OCTOBER 26, 2006

INFORMAL CONSULTATIONS ON PROCUREMENT REFORM

Further informal consultations on Procurement Reform were held on Thursday afternoon.

Paul Buades (Chief of Procurement Service) and Jayantilal Karia (Director of Accounts Division) answered some of the questions posed by Member States which had remained unanswered at the previous meeting and gave two presentations to Member States on “Current Procurement Approval Procedures & Status of Governance Review‿ and “Evaluation by Best Value for Money Methodology‿.

In response to a question posed by Finland, Karia explained that of the $760,000 GTA funding, a portion of it had been used to advertise a number of positions. GTA funding was also used for training exercises on internal controls offered to procurement personnel and to organize business seminars in developing countries - 10 to 18 of such seminars are planned for 2007.

Karia insisted that procurement is now facing important challenges. The reason why they are asking for 17 additional posts has to do with the need to make sure that the staff is able to cope with the increasing workload. This is a matter of capacity. Procurement increased from 1 billion to 1.8 billion this year, not including peacekeeping. The staff is overstretched and now that the preliminary work has been concluded the division needs to start with the stage of execution. Buades added that it is important to mitigate the risk to overload the personnel. The ability of the Procurement Division to provide quality work will be endangered without the additional posts.

The Russian Federation reportedly asked to receive a separate report to answer to A/RES/59/288 with references to what has, and what has not been achieved.

Following the presentation given on Status of Governance Review, Member States raised a few key questions.

Singapore reportedly raised the issue of delegation on authority. How is accountability resolved when responsibility is delegated? Concern was also expressed in regards to the issue of delegation of authority, one of the most important questions related to procurement, which will be discussed at a later stage at the resumed session. The delegate of Singapore also asked about the difference between control environment and delegation of authority and whether or not they overlap.

The Secretariat replied that there are two key elements regarding procurement authority and responsibility. An officer can delegate responsibility but procurement authority is never delegated and one remains accountable together with the person directly responsible, vis à vis the organization. In terms of delegation of authority and control environment, the latter is a much bigger issue that entails a lot of different mechanisms of which delegation of authority is only one element.

Pakistan reportedly expressed concern over the fact that, as underlined by the OIOS report and other external evaluations, there is a substantial lack of internal controls. In the absence of fundamental parameters, how much credibility can there be in this process? How do you ensure that the system is not hollow?

The Secretariat further explained that assignment of contracts is considered by the local committee of contracts, and when the contract is above 200,000 dollars, it has to be approved by the Headquarters Committee on Contracts (HCC). Nevertheless, each contract goes through the screening of the Procurement Division where all the documents and information regarding the contract are verified and only after careful verification is the contract submitted to HCC where the award is provided. Unfortunately, because of the current lack of resources, priorities need to be established and this is influencing the quality of work in the procurement division. When post-facto it is realized that something did not go according to the procedure, the highest level of authority has to take responsibility and is held accountable.

Israel wondered whether there were arrangements in place to prevent the eventuality that contracts are broken down locally so that even if the total value goes beyond 200 thousand dollars these would not be referred to HQ.

India wondered if there are mechanisms in place to expedite requirements from the field and whether rules and regulations regarding the field were being reviewed.

The Secretariat assured Member States that there is a system of checks and balances in place. Small contracts add up so that when they reach the roof of 200 thousand dollars they have to be verified by HCC. The system is not infallible and there have been some cases of wrongdoing. In response to India’s concern, there is also a mechanism in place for expedited approval of requirements from the field which can be obtained in a few days. As for review of rules and regulations in the field, clearly procedures need to be changed and a working group has been set up to this end.

OCTOBER 23, 2006

UNITED NATIONS GENERAL ASSEMBLY: FIFTH COMMITTEE
Procurement Reform

UNDPI report on meeting 23 October

Center's summary of written statements made available at the meeting

New Zealand spoke on behalf of CANZ (Australia, Canada, and New Zealand). They called for the procurement outcomes to be improved and believe that procurement reform is a “key part of the wider process of management reform.‿ New Zealand also stated that procurement processes now in place have not been able to keep up with the evolving needs of managers in the field and have created unnecessary risks and costs, reducing the effectiveness of the UN’s efforts, damaging the UN’s credibility, and undermining support for its operations. They believe that the UN procurement process should “1) support effective and efficient implementation of UN mandates, 2) provide realistic guidance and, where necessary, flexibility, 3) set high standards of transparency, fairness and well defined clear authority and accountability, and 4) provide for disciplined internal controls.‿ New Zealand welcomed updates on the implementation of specific measures including: “1) the establishment of an independent bid protest system, 2) details on the required professional qualifications for procurement staff, including certification, 3) progress of the working group established to examine the issue of possible weaknesses in the control environment related, but not limited, to the split of responsibilities between the Departments of Management and Peacekeeping Operations, and 4) the outcomes of the review of the financial threshold of the proposed procurement requirements that should be vetted by the Headquarters Committee on Contracts.‿

South Africa spoke on behalf of the G77 and China, and welcomed “the creation of the Ethics Office, the whistleblower protection policy and the suggested programs for ethics training of procurement staff.‿ They also endorsed the supplier code of conduct, and called for “an early resolution of the conflict between ethics guidelines and staff rules, and the issuance of these guidelines for procurement staff at the earliest in all languages.‿ South Africa believes that “simple, transparent, implementable, and rule-based procurement processes‿ are essential to an efficient and effective procurement system, and also stressed that “accountability should not be applied selectively,‿ but believe that there must be close coordination between the Department of Management and DPKO. They also called for increased procurement from developing countries and countries with economies in transition, and urge “the Secretariat to explore additional ways to promote procurement‿ from these countries. Finally South Africa stated that, “better outreach in developing countries and economies in transition would enable the UN to considerably increase the number of possible vendors, which would result in increased competition and lower prices.‿

Vietnam aligned itself with the statement made by South Africa on behalf of the G-77 and China. They urged for a more concerted effort by the Secretariat to further streamline and simplify all related procedures, and to enhance transparency and raise efficiency of the entire process. Vietnam called for “concrete measures by the Secretariat to reduce the operational workload for businesses from developing countries.‿ They also noted “with concern that the share of developing countries and economies in transition in the total value of procurement by the Organization has remained almost unchanged since 2001 at just over 40%.‿ Vietnam also asked that the Secretariat ensure fair opportunities for vendors from developing countries, as well as set aside more resources for capacity building projects in developing countries.

Guyana spoke on behalf of the Rio Group, and associated itself with the statement made by the G77 and China. They stated that they “[consider] it necessary to continually improve the procurement system in tandem with the growing complexity and the size of the operations undertaken by the UN.‿

Finland spoke on behalf of the EU, and stated that “given the need to enhance transparency and accountability‿ they supported the measures to strengthen internal controls. They also welcomed the measures being taken to segregate duties and processes in order to avoid conflicts of interest and increase transparency and accountability. Finland also stated that it “believes permanent resources should be committed, where appropriate, in support of the objectives of procurement reform.‿

The United States stated that it believes procurement reform must be a priority of management. They also believe it to be unacceptable that many field procurement positions remain vacant and that “it is apparent that those performing field procurement functions lack sufficient training to adequately perform their tasks,‿ which is unacceptable as well. The U.S. believes that “the Secretariat must take more proactive actions immediately, particularly to improve oversight and strengthen internal controls and establish clear lines of authority for headquarters and field personnel involved in procurement operations.‿ They concluded that “without real procurement reform, the UN will lose a key opportunity to increase the confidence that member states have in its procurement activities.‿

INTERNATIONAL CIVIL SERVICE COMMISSION

OCTOBER 25-26, 2006

UNITED NATIONS GENERAL ASSEMBLY: FIFTH COMMITTEE
Agenda Item 125: United Nations Common System

Documents

• Report from the International Civil Service Commission
• UNDPI summary of meeting, 25 October
• UNDPI summary of meeting, 26 October

Center's summary of written statements made available at the meeting

Finland spoke on behalf of the EU and stated that in their view, “the International Civil Service Commission (ICSC) and its secretariat should be the centre of knowledge and expertise, guiding multilateral organizations inside and outside of the UN system on Human Resource Management issues.‿ They also intend to build upon the previous work and will strive to resolve as many issues as possible before the end of the main session.

South Africa spoke on behalf of the G77 and China and welcomed the improvements made to the report of the Commission and stated that it appreciated the inclusion of the summary of recommendations of the ICSC that were previously offered to the General Assembly for action. They called for further deliberation and elaboration of the proposals concerning the review of the pay and benefits system, the mobility and hardship allowances, and hazard pay. To this end, they stressed the process of modernizing and simplifying allowances to enhance efficiency and transparency. South Africa favors an increase in education grants because it believes in providing access to quality education. Furthermore, they believe that staff conditions in the field should be considered in tandem with reform of the human resources management system. Finally, South Africa stated that they believe there has been insufficient progress made by the UN system in achieving gender balance and that a greater effort should include the recruitment of women from developing countries.

Guyana spoke on behalf of the Rio Group and stated that a decision must be made regarding the system of allowances so that the proposals by the ICSC made in last year’s report could be implemented beginning in 2007. They also commented that, regarding “the issue of contractual arrangements and harmonization of conditions of service, the Rio Group sees the need to ensure adequate follow up of these issues, and discuss them also in the context of the proposals for the reform of the human resources management system.‿ Furthermore, Guyana called upon the General Assembly to reaffirm the Noblemaire principle “in order to make the Organization more attractive to the most outstanding and competent officers worldwide.‿

The United States stated that it continues to be disappointed about the lack of consensus on Common System resolution. They also urged the General Assembly to end the “unnecessary and embarrassing stalemate.‿ Furthermore, the U.S. emphasized the need to “establish indicators to evaluate the results of the pilot study,‿ and welcomes the “close scrutiny of the Commission to ensure that organizations stay within the approved parameters of the study.‿

Canada stated that benefits needed further review in regard to reform issues concerning benefit and allowances, and welcomed the establishment of a working group to oversee field service conditions. They also stated that they believed insufficient progress has been made with regards to the representation of women in the Professional and higher categories. Furthermore, Canada stated that recommendations of the panel on the qualification, tenure, and selection process of the UCSC should be actioned by this Committee.

India was sympathetic to the review of hazard pay, particularly concerning those located in high risk areas. Also, on the issue of gender balance, they believe there should be an urgent implementation of relevant resolutions to achieve the set targets and that there should be a focus on the recruitment of high quality female candidates from developing countries.

Bangladesh stated that career management is a key variable to ensure broad acceptance of the project by the staff, and that annual updates of the Commission on the pilot study should provide an indication of the goals that are being achieved. They also stated that they believed hazard pay is favorable when staff are working in dangerous locations and exposed to life-threatening diseases. Bangladesh was disappointed by unsatisfactory progress made in the field of female representation especially at the high senior levels and supports the recommendations of the ICSC as stated in paragraph 112 and believed that an element of accountability would be beneficial as well. Furthermore, they stated that issues regarding children’s and secondary department’s allowances should be done in a comprehensive manner to ensure fair and accurate methodology. They also called for considerations to be made regarding recommendations to increase base/floor pay by 4.57 percent on a now gain no loss basis and to introduce new arrangements for the mobility and hardship scheme with the adjustment of base/floor pay. Finally, Bangladesh stated that they believed there was a need for reforming the field service category in UN peace operations.

Japan stated that they hoped “that the Working Group and ICSC at its next session will analyze the nature of the work being carried out by the international staff in each Common System participating organization, study salaries and recruitment systems, and carry out a similar study for non-international staff in these areas to enable [them] to make a comparison,‿ so as to take full advantage of the Commission’s “skills and wisdom.‿ Furthermore, Japan expects that future reviews and the outcome of the work of the Commission will be valuable and cost-effective so as to improve the productivity and reliability of the Common System.

JOINT INSPECTION UNIT

OCTOBER 26, 2006

INFORMAL CONSULTATIONS ON JOINT INSPECTION UNIT

The meeting was held in order to do a first reading of the draft resolution on the Joint Inspection Unit (JIU) dated 26 October 2006 which incorporates changes requested by Sweden. The Chair of the meeting expressed the hope that preliminary agreement could be reached on some parts of the resolution.

Next week, a full session will be organized on the JIU allowing for questions and answers with the UN’s Chief Legal Counsel and the Chairperson of the JIU. Date and time to be determined.

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Contributors: Lydia Swart, Irene Martinetti, Julia Hurley and Berivan Tamsen

In case of errors or omissions, please contact .