Press Releases

    GA/AB/3429
    19 March 2001

    CLEAR, SOUND PROCUREMENT CONTRACTS NEEDED
    TO AVOID FINANCIAL CLAIMS ON ORGANIZATION,
    BUDGET COMMITTEE TOLD

    NEW YORK, 16 March (UN Headquarters) -- As the Fifth Committee (Administrative and Budgetary) concluded its discussion on procurement-related arbitration this morning, speakers stressed the need for clear and sound procurement contracts to avoid related financial claims on the Organization.

    The representative of Syria said inefficiency in managing contracts was one of the main factors leading to arbitration. It was important to address that point, to study the formulas of contracts accurately, and to elaborate a clear-cut methodology regarding procurement contracts.

    Instead of vendors having to register separately with each United Nations programme, there should be a single window of procurement for the whole system, Israel’s representative said. He proposed that the Administrative Committee on Coordination (ACC) find a way to establish such a window. The General Assembly should request the Secretary-General and the ACC to deal with immediate reform needs of procurement in the United Nations.

    Toshiyuki Niwa, Assistant Secretary-General for Central Support Services; Felicitas Ona, of the Board of Auditors; Bruce C. Rashkow, Director of the General Legal Division of the Office of Legal Affairs; and Esther Stern, Director, Audit and Management Consulting Division, Office of Internal Oversight Services, responded to questions and comments from the floor.

    Statements were also made by the representatives of the United States and India.

    The Committee will continue its work at 10 a.m. Monday, 19 March, when it will take up the question of gratis personnel and begin its consideration of the financing of the United Nations Interim Force in Lebanon (UNIFIL) and the United Nations Mission in Ethiopia and Eritrea (UNMEE).

    Background

    Background information on the theme of today’s discussion in the Fifth Committee (Administrative and Budgetary) -- procurement-related arbitration -- can be found in Press Release GA/AB/3428 of 15 March.

    Statements

    THOMAS A. REPASCH (United States) reminded the Committee that yesterday he had asked for additional clarification regarding a large number of scales bought by the United Nations Children’s Fund (UNICEF) over a 10-year period.

    RON ADAM (Israel) said the cases described in the report on procurement-related arbitration were serious and should be dealt with accordingly by the General Assembly. However, he wanted to address the question of the procurement reform. The report before the Committee presented the findings of the Office of Internal Oversight Services concerning 55 procurement cases by the Procurement Division in 1999-2000. The document also showed that the Procurement Division had undergone a reform. There was one crucial issue, however. The report did not ask the right question, which should be how to simplify the procurement system.

    At present, each vendor wishing to do business with the United Nations had to register dozens of times, he continued. To conduct business with various programmes, they had to register separately for each one. A single window of procurement should be established for the whole system, including the United Nations Secretariat, peacekeeping operations, programmes and agencies. He proposed that the Administrative Committee on Coordination (ACC) should find a way to establish such a window. He realized that it was a difficult process, and each agency wanted to meet its own procurement needs, but it was also difficult for companies to do business with the United Nations.

    The General Assembly should request the Secretary-General and the ACC, through its Consultative Committee on Programmes and Operational Questions (CCPOQ) or through the establishment of an ad hoc committee on procurement within the ACC, to deal with immediate reform needs of procurement in the United Nations.

    RAMESH CHANDRA (India) wanted the Secretariat to respond to his questions posed yesterday, as well.

    FELICITAS ONA, member of the Board of Auditors, said that UNICEF had bought solar-powered stand-on scales, using vibration-type measuring apparatus, known as "Goodyear Sensor" for the purpose of monitoring a health and nutrition project for its growth-monitoring programme in the developing countries. The Board of Auditors was going to follow up on that question and report to the Committee after the audit.

    ABDOU AL-MOULA NAKKARI (Syria) said, concerning the Advisory Committee on Administrative and Budgetary Questions (ACABQ) committee report on the issue of procurement-related arbitration, that his delegation had noticed in paragraph 7 that it referred to the fact that inefficiency in managing contracts was one of the main factors leading to arbitration. It was important to address that point, to study the formulas of the contracts accurately and to elaborate a clear-cut methodology regarding procurement contracts. An accurate strategy regarding external assistance was needed so that the Organization did not have to pay extra money.

    He then asked for clarification on why so many contracts giving rise to procurement-related arbitration had been settled in New York. There were United Nations centres elsewhere, such as in Nairobi. Why shouldn’t those matters be resolved where the contracting was done?

    TOSHIYUKI NIWA, Assistant Secretary-General for Central Support Services, said that the issue Israel had raised was related to procurement reform issues and would be better addressed when that was being discussed. He did wish, however, to respond to the point. There was a United Nations common supplier database to put all vendors together, but it was not a satisfactory arrangement -- it was nothing more than an amalgamation of the existing databases. He also noted that the question was governed by existing rules regarding procurement. He stressed that efforts were under way to harmonize the process.

    ESTHER STERN, Director, Audit and Management Consulting Division, Office of Internal Oversight Services, responded to questions raised regarding the Oversight Office report. She said that on recommendation 1 in the Office’s report, the Oversight Office had recommended that the Procurement Division study the administrative implications of replacing the calendar year with a 12-month rolling period, before actual implementation. She understood the Procurement Division would determine what changes to the reality reporting system and other working procedures were required and report on its findings to the Office. On recommendation 4, regarding letters of assist, she said the Office’s recommendation was addressed to the Department of Peacekeeping Operations. The Field Administration and Logistics Division had accepted the recommendation and had said it would initiate concrete actions.

    On recommendation 6, regarding a market survey for air transportation, she said the question posed would be best taken up in the context of informal consultations. On recommendation 7, and a question regarding the use of the phrase "when appropriate", she said the point she wished to stress was that the Oversight Office would closely monitor in future whether management adequately justified exceptions to implementing recommendations from the relevant departments, and whether those exceptions were kept to a minimum.

    BRUCE C. RASHKOW, Director of the General Legal Division of the United Nations Office of Legal Affairs, responding to a question regarding the place of arbitration, said it was determined by the interests of the United Nations and the considerations of justice. Virtually all the contracts were concluded in New York to be implemented in the field. By the time of arbitration, the mission had been often concluded and the records returned to Headquarters. In those cases, it was more convenient to consider the cases in New York. However, arbitration had been proposed in Kenya and in Europe, when it was convenient. There was no set rule in that regard.

    Mr. ADAM (Israel) said that he understood that on Monday the question would be further considered in informal consultations. He requested that representatives of concerned organizations should be present to respond to questions.

    Mr. NAKKARI (Syria) said that more clarifications would be needed in informal consultations. He was also going to follow up on the need to improve the contracts so that the Organization would not have to resort to arbitration. He understood that New York should be the centre for arbitration in those cases when missions had been concluded. He had, however, referred to those cases when contracts were implemented in Geneva and other permanent centres. He did not see why those contracts had to be considered somewhere else.

    Mr. NIWA said that it was physically impossible for representatives of organizations located outside of New York to be present at the meeting on Monday. One concrete suggestion he could make, however, was to arrange a meeting with them during an inter-agency working group meeting, which was scheduled to take place in April.

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