Budget Committee Takes Up United Nations Procurement, with Top Official Describing Spike in Volume during Surge in Peacekeeping

28 October 2009
GA/AB/3924

Budget Committee Takes Up United Nations Procurement, with Top Official Describing Spike in Volume during Surge in Peacekeeping

28 October 2009
General Assembly
GA/AB/3924
Department of Public Information • News and Media Division • New York

Sixty-fourth General Assembly

Fifth Committee

9th Meeting (AM)

Budget Committee Takes Up United Nations Procurement, with Top Official

Describing Spike in Volume during Surge in Peacekeeping

 

Several Speakers Say Not Enough Information in Report on Reform Results,

Note Procurement Spike Not Accompanied by Rise in Developing Country Vendors

Taking up issues of procurement reform this morning, members of the Fifth Committee (Administrative and Budgetary) expressed concern at the lack of progress in that area and the lack of specifics on reform results in the Secretary-General’s report.

The representative of the Russian Federation said that the Assembly had focused on the reform of procurement since the early 1990s and had adopted over a dozen resolutions referring to virtually all the issues under consideration today.  The report before the Committee hardly inspired optimism, he said, noting that the Organization was still at the stage of talking about the retraining of staff and editing the Procurement Manual.  The success of reform would depend primarily on strict implementation by the Secretariat of the decisions that had been adopted by Member States, he said.  Along with several other delegates, he agreed with the Advisory Committee on Administrative and Budgetary Questions (ACABQ) that not enough information had been provided on the actual results of reform.

That reform had taken place during an unprecedented surge in peacekeeping operations that had resulted in a 66 per cent increase in the volume of United Nations procurement, from $1.9 billion in 2007 to $3.2 billion in 2008, said Warren Sach, Assistant Secretary-General for Central Support Services, as he introduced the Secretary-General’s report.

The representative of Angola, speaking on behalf of the African Group, said that the increase in the participation of vendors from developing countries and those with economies in transition was not commensurate with that increase in procurement volume.  “We insist that procurement activities be extended to all Member States in a transparent and open way”, in order to achieve an equitable, fair, non-discriminatory system, Mexico’s representative said, speaking on behalf of the Rio Group.  Both speakers agreed that promoting opportunities for vendors from those countries was integral to procurement reform.

To create an optimal procurement process for peacekeeping operations, while maintaining adequate control mechanisms, the Secretary-General had proposed, among other things, the establishment of a regional procurement office in Entebbe.  The missions covered by the proposed office were among the largest in the field.  The office would provide technical and commercial evaluations of requisitions from missions or shared services.  Following approval, contract award and negotiations would also take place within that office.

Angola’s representative said that such an office would strengthen the governance structure for peacekeeping operations and improve timely response to peacekeeping mission requirements for the four field missions in East Africa.

Anthony Banbury, Assistant Secretary-General for Field Support, added that the changing needs of missions in the region required flexibility, which current procurement timelines made difficult.  In addition to greatly enhancing response times, the regional procurement office would benefit the development of more regional vendors.

The delegate from the Russian Federation said that the report focused too much on the proposal to establish a regional office, to the detriment of a review of accountability and coordination mechanisms in the field.

The representative of Canada, speaking also on behalf of Australia and New Zealand, said that, as the Organization continued to reform its procurement activities, those efforts must be guided by the four main principles of procurement, including best value for the money; fairness, integrity and transparency; effective international competition; and the interest of the Organization.

Also speaking today were representatives of the Sudan (on behalf of the “Group of 77” developing countries and China), Sweden (on behalf of the European Union), Pakistan, India and Zambia.

Reports were also introduced by the Chairman of the ACABQ and the Under-Secretary-General for Internal Oversight Services.

The Committee is next scheduled to meet at 10 a.m., 29 October, to take up the proposed programme budget for the biennium 2010-2011.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to consider procurement within the United Nations system.

According to the Secretary-General’s Comprehensive report on United Nations procurement activities (document A/64/284), procurement operations have evolved over the past three years by adopting industry best practices in the delivery of services to clients at Headquarters and in the field.  Substantive reform has been achieved in strengthening the oversight, management and range of vendors; mastering internal controls; compliance with relevant rules and regulations; and improved performance of personnel through intensive training, ethics enhancements and improved information technology practices.  In addition, foundations have been laid for a robust strategic procurement function and the forthcoming enterprise resources planning system.  The Secretariat has embarked on initiatives to further promote the reform agenda, especially as regards the participation of vendors from developing countries and economies in transition.

In order to mitigate and manage inherent risks, whether from the activities undertaken by the procurement staff or emanating from factors external to the United Nations, a modern procurement function must develop three critical pillars:  information technology support, expert staff, and a policy and training framework, the report states.

The addenda to the report outline in detail the proposed governance structure of the Secretariat procurement function (A/64/284/Add.1) and the concept of sustainable procurement (A/64/284/Add.2).

The Secretary-General proposes an updated procurement governance arrangement between the Department of Management and the Department of Field Support.  That would create an optimal procurement process for peacekeeping operations, while maintaining adequate control mechanisms.  The proposal is accompanied by an action plan for its implementation, including time frames for the short and medium terms.

The first part of the plan -- to be completed by the end of 2009 -- envisions a technical assessment and work of planning teams, which had been initiated in February 2009.  As an initial step to improve coordination, it is proposed to “co-locate” the Department of Management Procurement Division and its Department of Field Support logistics clients.  Also envisioned are short-term staff exchanges between Headquarters and field missions, to be initiated during the third quarter of 2009.

To be initiated in mid-2010, the medium-term plan envisions the establishment of a regional procurement office in Entebbe to conduct regional procurement for missions within the region.  This part of the action plan is to be completed by the end of 2011.  Under the new approach, the regional office would provide technical and commercial evaluations of requisitions from missions or shared services, which would require redeployment of relevant experts from Headquarters and missions.  After the approval, contract award and negotiations would also take place within the office.

The report also advocates the concept of sustainable procurement -- that is, “responsible” procurement that is consistent with today’s best practices and United Nations principles and rules.  Looking beyond the initial purchase price and short-term costs, sustainable procurement considers such issues as environmental, social and economic consequences of design; manufacture and production methods; logistics; service delivery; maintenance; reuse; recycling; disposal; and suppliers’ capabilities.

As proposed in the document, sustainable procurement should be applied through incremental steps, at a pace determined by the degree of maturity of the supply market, the development of policies, staff training, and the Organization’s degree of readiness to achieve sustainability.  The Supplier Code of Conduct, the Financial Regulations and Rules, the existing labour clauses in the General Conditions of Contract, the Global Compact, and the existing work of the High-level Committee on Management Procurement Network and the Environment Management Group form a backbone on which sustainable procurement may be developed.

It is also essential to maintain an open line of communication between the procurement staff, requisitioners and suppliers; and to inform all stakeholders of the Secretariat about the revised acquisition strategy.  To ensure success, the Organization’s procurement function must develop three critical pillars:  information technology support, expert staff, and a policy and training framework.  To guarantee success, both procurement staff and suppliers should receive training on the concept and expectations of the United Nations.

A related report on the audit of procurement management in the Secretariat (document A/64/369) by the Office of Internal Oversight Services (OIOS) states that “a more clearly defined governance structure, a comprehensive strategy, and reliable management information systems are needed for the effective management and oversight of United Nations procurement”, which increased from $2.1 billion in 2006 to $3.3 billion in 2008, primarily due to the increase in the number and size of field missions.

The audit found that the lack of a proper strategy, involving the collaboration of the Procurement Division and the Department of Field Support, among others, led to frequent situations where contract decisions were not, or could not, be fully explained, and contract awards were expedited or approved on an ex post facto basis without valid justification.  It also limited the Organization’s ability to properly use various contract types to leverage economies of scale and to improve delivery of goods and services.  Procurement actions appeared to be ad hoc and at times ineffective and not in the best interests of the United Nations.

While noting progress in the procurement reform, particularly in training staff and updating the Procurement Manual, the OIOS points to the need to implement certain critical reforms, including the procurement governance structure, the bid protest system, the Enterprise Resource Planning (ERP), and ethics guidelines.  For example, the governance structure for procurement by field missions is still unclear, according to the report, which leads to inadequate monitoring of field procurement.  Another finding of the audit relates to the need to review the delegation of authority to the Procurement Division for under-$5 million short-term air and ship charter contracts, which are exempt from review by the Headquarters Committee on Contracts.

The OIOS also provided recommendations on the need to develop an effective information and communications technology (ICT) infrastructure and address various control weaknesses, such as limited validation controls and unreliable date fields, which could expose the Organization to vulnerabilities of unreliable data.  According to the report, Procure Plus, the procurement application system, currently does not contain automated controls to enable the Division to monitor, query and analyse data in a systematic manner to identify potential risks and cases of non-compliance with United Nations Regulations and Rules.

Introduction of Reports

WARREN SACH, Assistant Secretary-General for Central Support Services, introduced the Secretary-General’s comprehensive reports on United Nations procurement activities.  The Secretariat’s procurement reform activities had focused on three major themes:  strengthening internal control; optimizing the acquisition process; and enhancing strategic management over United Nations procurement activities, he said.  Implementation of the procurement reform programme, with new initiatives, had taken place during an unprecedented surge in peacekeeping operations, which resulted in a significant increase of procurement value from $1.9 billion in 2007 to $3.2 billion in 2008, representing an increase of 66 per cent.

On vendor management, the Secretariat had launched a pilot project to manage contract award challenges by vendors.  The Award Review Board would provide unsuccessful bidders with an independent mechanism to file challenges and request review of award decisions by internal and external subject matter experts.  The process would provide vendors with an avenue external to the Procurement Division and would provide the Division with opportunities to improve process and procedures, while enhancing credibility and confidence in the Organization’s procurement process.

The Secretariat had also strengthened its capacity for vendor due diligence review to mitigate risks from vendors that had unethical and/or questionable behaviours.  A pilot programme established a Senior Vendor Committee, under the auspices of the Director of the Ethics Office, to provide independent advice to the Under-Secretary-General for Management on administrative decisions against United Nations registered vendors in cases of allegations of fraud, corruption or unethical behaviour.

Further, he said, the Division had revitalized its business seminar programme for vendors from developing countries and countries with economies in transition, in an effort to improve procurement opportunities for vendors from those countries.  The new procedures would facilitate small and medium-sized vendors from those countries to register with the United Nations Secretariat via the Organization’s Global Marketplace as potential suppliers.

On internal controls, he said, among other things, that time had been required over the last three years to put in place a Field Support Strategy and a Shared Service Centre Model to enable the development of a Regional Procurement Office Concept.  That Office fell within the provisions of General Assembly resolution 60/266, section IX, on Regional Cooperation, and resolution 61/276, section XX, on Regional Coordination, in which the Assembly emphasized the importance of enhancing regional and inter-mission cooperation with a view to achieving greater synergies in using the Organization’s resources.

He reiterated the Secretariat’s commitment to the general procurement principles of fairness, integrity, transparency and effective international competition, as part of sustainable procurement.

SUSAN MCLURG, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced a related report of the Committee.  Procurement volume for Headquarters and peacekeeping missions had increased from $1.3 billion in 2004 to $3.2 billion in 2008, she said.  Factoring in offices away from Headquarters, the tribunals and the regional commissions, the Organization’s total procurement volume in 2008 exceeded $3.36 billion.  Procurement was big business for the United Nations and must be carried out in the most professional and efficient manner, with proper oversight and control, she said.

The Secretary-General’s report did not provide evidence documenting how past procurement reforms had improved procurement function, nor did it provide a basis for assessing the adequacy of the internal control regime, although the Advisory Committee had previously highlighted the need for data and other evidence to substantiate statements on progress achieved, including on the mechanisms that had been put in place to monitor progress, she said.  The report presented this year did not adequately address those issues.

She noted that there were no workload indicators in place to substantiate the report’s claim for more staff resources in connection with an increased volume of work to support peacekeeping operations.  The next report of the Secretary-General should include a quantitative analysis that could help the Procurement Division monitor its workload and the efficiency of its procurement actions by providing a basis for comparing one period to another.

On the Secretary-General’s proposals to co-locate the Procurement Division and its Department of Field Support clients and the creation of a regional procurement office in Entebbe, the ACABQ emphasized that a proposal concerning the regional procurement office should be more fully elaborated and presented to the General Assembly when it would consider the new field support strategy, which was to be submitted at the second part of the resumed sixty-fourth session.  Such an initiative should be based on a thorough review of the whole procurement process, so that it effectively addressed gaps and bottlenecks, and that a cost/benefit analysis be undertaken.

On the pilot Independent Award Review Board, the Committee expected the Secretary-General to clarify its terms of reference and authority and to provide statistics on the cases it reviewed.  Further, the Advisory Committee recognized the importance of well-defined and properly implemented delegation of authority to those involved in the procurement process, particularly in the field missions, to speed up the procurement process.  That delegation of authority should be monitored on a regular basis and offices should be equipped to evaluate and manage associated risks.  The Secretary-General should include adequate information on experience gained in the implementation of the increased financial thresholds of delegated procurement authority in his next report, she said.

INGA-BRITT AHLENIUS, Under-Secretary-General for Internal Oversight Services, then introduced that Office’s audit of procurement management in the Secretariat.  Noting that not all activities that were deemed as procurement reform could be considered real reform, she said it was important to distinguish between real procurement reform and other improvements that were part of management’s regular responsibilities for maintaining efficient daily operations.  She referenced several of the reports’ 25 recommendations and noted that some relating to information and communications technology had not been accepted by management.

Statements

MAGID YOUSIF YAHYA (Sudan), speaking on behalf of the “Group of 77” developing countries and China, said that, during previous negotiations, the Group had made proposals aimed at increasing the efficiency, transparency and cost-effectiveness of United Nations procurement, stressing the importance of the accountability of the Secretary-General to Member States for full implementation of legislative mandates on procurement.  The Group had supported training in ethics and integrity for staff, including at senior levels.  Procurement reform had become a very important issue in the United Nations, in view of the growing complexity and size of operations undertaken by the Organization.

In connection with the Secretary-General’s reports before the Committee, he concurred with the ACABQ that the documents did not provide a basis for assessing the improvements in the procurement function.  He also reiterated that increasing procurement opportunities for vendors from developing countries was an integral part of the procurement reform.  Equal, fair and non-discriminatory access must be given to companies from developing countries.  No reform would be complete or effective without a significant increase in procurement from developing countries’ vendors.  He supported the use of business conferences and seminars to effectively generate awareness about the opportunities and the procedural requirements for participation.  The Group believed, nonetheless, that additional initiatives must be developed as part of a comprehensive strategy to improve geographical vendor representation.

He went on to encourage the Secretary-General’s initiative to provide a supplier financing option to alleviate finance-related difficulties that might hinder the participation of vendors from developing countries and economies in transition.  Appropriate action should be taken to change the perception among vendors in developing countries that they would not be competitive for bids using the best value for money.  He regretted that the Secretary-General’s report did not include the specifics of the weighted techniques used by the Procurement Division for evaluation of proposals, as requested in resolution 62/269.

Noting an unprecedented surge in procurement related to peacekeeping, he said the Group understood that the Secretariat had been trying to find alternatives to deal with the increase in the volume and complexity of procurement processes.  In that regard, he noted with interest the proposal to establish a regional procurement office at Entebbe, on a pilot basis, with effect from July 2010.  The Group would like to receive further information regarding the relationship of that proposal and the support strategy that was being developed by the Department of Field Support.  The Secretary-General should present a comprehensive report that took fully into account the procurement needs at Headquarters, in the field offices, regional commissions and tribunals.

Procurement of goods and services by the United Nations should be in compliance with established procedures, based on international competitive bidding and the widest possible geographical base of procurement, he said.  He also stressed the need for the procurement system to be transparent, open, impartial and cost-effective.  The Secretariat should take into account experiences from the past when making decisions on procurement, in particular with regard to missions in the start-up phase.  The Secretary-General’s report did not address adequately the operational requirements for those missions.  Further clarification on that issue should be provided to the Assembly.

He added that the report on sustainable procurement did not address the concerns that the Assembly had expressed in resolution 62/269.  It failed to provide sufficient information for an informed decision on the matter, in particular on its impact on the diversification of the origin of vendors and international competition, including for developing countries and economies in transition.  The Assembly had not considered that concept for approval, and he urged the Secretariat to avoid any initiatives that would pre-empt a decision of the General Assembly.

MARIA HAKANSSON ( Sweden), speaking on behalf of the European Union and associated States, said that the Union had always been supportive of the Organization’s management reform, of which procurement was an integral part.  Due to the steep increase in procurement in recent years, the strategic function of procurement posed new risks and technical challenges.  For that reason, the Organization’s procurement policy must be transparent, efficient and contain the requisite internal controls, in the context of the four general principles governing procurement at the United Nations.

Continuing, she stressed that reforming procurement was a very challenging task.  She appreciated the work the Secretariat had done so far in implementing the reform requirements.  Nevertheless, there was still room for further improvements.  Given the volume of United Nations procurement and its worldwide presence, it was important to practise sustainable procurement to raise awareness of the significance of sustainability and “best fit” solutions.  The Union encouraged the Secretariat to take steps to integrate the concept of sustainable procurement into United Nations procurement practices.  The Union also took note of the Secretariat’s intention to launch a pilot project for a regional procurement office in the field and would seek further clarifications on next steps in informal consultations.  The Union would also follow up on the recommendations and observations of the ACABQ and seek further information in informals on steps taken by the Secretariat with regard to the recommendations submitted by the OIOS.  Keeping in mind that integral parts of the reform process were associated with the new field support strategy, the Union looked forward to continuing the discussion when the final report on that matter was submitted to the Assembly.

PHILIPPE LAFORTUNE (Canada), also speaking on behalf of Australia and New Zealand, said that, in less than four years, the Organization’s procurement volume had almost tripled, from $1.3 billion in 2004 to $3.2 billion in 2008.  With that increase, Member States must ensure that the Organization had appropriate controls and oversight mechanisms in place to enable the procurement function to operate as effectively and efficiently as possible.  He noted the efforts by the Secretariat to improve United Nations procurement and acknowledged the hard work done.  As the Organization continued reforming its procurement activities, those efforts must be guided by the four main principles of procurement, including best value for the money; fairness, integrity and transparency; effective international competition; and the interest of the Organization.

Turning to the Secretary-General’s report before the Committee, he noted that the document had failed to provide specific data on the performance of the procurement system.  He agreed with the ACABQ that information was required on how well the system was performing.  Similarly, he was concerned over the OIOS observation that, currently, it was not possible to reliably quantify the procurement process cycle times.  The lack of performance indicators needed to be urgently addressed.  Moreover, during the sixtieth session, the Assembly had requested strong internal controls for procurement.  In the context of a comprehensive report on procurement, the delegations he represented would have welcomed an assessment of the adequacy of controls currently in place.

Turning to governance, he said that, as the question of enhancing the flexibility and effectiveness of support to peacekeeping was a priority, he was eager to consider practical measures that would meet that critical strategic objective.  To optimize the functionality of procurement, he noted the Secretariat’s interest in establishing a regional office, with staff from the Procurement Division co-locating with staff from the Department of Field Support.  While he saw merit in both concepts -- “co-location” and “shared services centre” -- he would welcome additional information in that regard in informals.  The analysis requested by the ACABQ should be conducted.  The regional office concept should be better considered in the context of the new support strategy proposal expected in spring.  He also noted that those concepts were aimed at addressing governance concerns identified by the OIOS, and he looked forward to discussing that issue further, in informals.  The OIOS had also identified the need to develop a comprehensive strategy on procurement, and he looked forward to the discussion, in informals, on how the Secretariat intended to further develop such a strategy.  He also recognized the importance of sustainable procurement and looked forward to obtaining further information on the proposed “phased approach” recommended by the Secretariat.

CARLOS RUIZ MASSIEU (Mexico), speaking on behalf of the Rio Group, reiterated the need to implement the procurement reform aimed at strengthening the internal control mechanisms, adopting a strategic approach to procurement functions and -- particularly important to his region -- promoting opportunities for vendors from developing countries and countries with economies in transition.  The report should have presented productivity gains in procurement in a clearer manner, in order to reflect the progress and the results achieved.  Moreover, the Group would have preferred that the total value of procurement in the Secretariat, which had stood at some $160.4 million in 2008, had been presented in more detail, in order to have a more precise idea of the totality of procurement volume by offices away from Headquarters, tribunals and regional commissions.  On the other hand, the Group was concerned over the way the report addressed the delegation of authority, since it did not explain the review mechanism, in that regard, and the accountability of procurement staff in mentioned offices, as well as in tribunals and regional commissions.  The Group had always insisted that monitoring the delegation of authority and accountability had a strong linkage.

Also of great importance to the Group was the fact that 73 out of 377 approved posts remained vacant, he continued, asking about the reasons for that, as well as the efforts to reverse that trend.  Taking note of the proposal to establish a regional procurement office, he also asked for additional information regarding the relation between that proposal and the strategy of field support, to be presented to the Assembly next year.  It was very important that the Organization’s procurement system offered real possibilities for vendors from developing countries.  The Group was concerned that the OIOS had not found a documented strategy for improving geographical vendor representation linked to specific commodities, or regions where the United Nations operated.  He would like to receive an explanation, in that regard.  On the other hand, the Group found merit in the supplier financing by banks as an option that was currently under consideration by the Secretariat.

“We insist that procurement activities be extended to all Member States in a transparent and open way”, in order to achieve an equitable, fair, non-discriminatory system, he said.  The Group wanted to receive information on the participation of its region in the bidding processes in the region, including operational activities in the United Nations system (technical cooperation, humanitarian aid and peacekeeping).  In that sense, he welcomed the continuation of business seminars to register national companies as vendors.

Regarding sustainable procurement, he said that the Group regretted the fact that the report did not contain enough information to make a well-founded decision on the matter, particularly on its possible repercussions for the diversification of the vendor origin and international competition, particularly in developing countries and economies in transition.  The Group recalled that the General Assembly had not yet approved that concept and urged the Secretariat to refrain from making proposals that prejudged the Assembly’s decisions.

ELSA PATAKA (Angola) speaking on behalf of the African Group, aligned herself with the statement of the Group of 77 and China, and said further that procurement reform had become a very important issue, in view of the growing complexity and size of operations undertaken by the Organization.  She stressed that strengthened accountability was a prerequisite for the full implementation of legislative mandates on procurement.

Noting the increase in procurement volume both at Headquarters and in peacekeeping missions, from $1.3 billion in 2004 to $3.1 billion in 2008, she emphasized that there had not been a comparable increase in the participation of vendors from developing countries and those with economies in transition.  Increasing procurement opportunities for those vendors was integral to procurement reform.  Further efforts were required to ensure equal, fair and non-discriminatory access to companies from developing countries and economies, she said.

She welcomed the proposal to establish a regional procurement office at Entebbe, on a pilot basis, with effect from July 2010, and urged the Secretary-General to ensure timely implementation of that initiative.  Such an office would strengthen the governance structure for peacekeeping operations and improve timely response to peacekeeping mission requirements for the four field missions in East Africa.  The Group further welcomed the Secretary-General’s proposal on proactive supplier financing to aid vendor participation from developing countries and those with economies in transition.

She concurred with ACABQ’s views on sustainable procurement and said that it should be implemented cautiously, in a manner consistent with best practices in today’s market and with the United Nations procurement principles of best value for money, fairness, integrity and transparency, and effective international competition.

MUHAMMAD IRFAN SOOMRO ( Pakistan) aligned himself with the statement of the Group of 77 and China, and noted the increase in peacekeeping-related procurement, which represented 85 per cent of the Organization’s global procurement.  Reforms should be addressed comprehensively to ensure the efficiency, cost-effectiveness, transparency and competitiveness of the procurement process.  Measures currently under consideration should illustrate how they complemented the ongoing reform process; the objectives of the internal control regime, oversight and accountability; and the implementation of corresponding legislative mandates.  Further, deliberations were needed on why progress had been slow, including on the fundamental issue of 400 pending procurement cases.

He concurred with the ACABQ that the reports presented did not clearly indicate productivity gains in procurement functions and lacked sufficient data to substantiate the progress achieved.  Lack of procedural clarity, insufficient training and cumbersome processes impeded the efficiency and speed of procurement, he said, and the lack of a comprehensive procurement strategy and inadequate monitoring of field procurement led to irregularities and prevented economies of scale.  He agreed with the OIOS views that the terms of reference and reporting lines among the relevant entities should be clearly defined.  Further, the Procurement Division should develop key performance indicators against which its performance could be measured.

A high degree of accountability was fundamental to the efficient and effective functioning of the procurement system.  It was important that there be mechanisms to strengthen effective monitoring, oversight and accountability of staff at all levels, including senior management, at both Headquarters and in the field.  He trusted that the establishment of the proposed regional procurement office and other measures under consideration would be based on a thorough review of the whole procurement process, with the aim of optimizing procurement functions, and transparent and non-discriminatory application of best value for money and the strengthening of internal controls and oversight.

He welcomed measures to increase procurement opportunities for vendors from developing countries and countries with economies in transition, and was optimistic that they would increase opportunities for small and medium-sized vendors from those countries.  He urged the Secretariat to explore other measures to that end.  The perception of small enterprises that bid and performance bonds were an added financial burden that limited their ability to participate needed to be adequately addressed, while safeguarding the interests of the Organization.  Further, the concept of sustainable procurement should not become a new conditionality to the participation of vendors from developing countries and countries with economies in transition.

ALI ANWAR ANSARI ( India) supported the position of the Group of 77 and said that, with procurement volume growing from $1.3 billion in 2004 to $3.2 billion in 2008, the need for greater vigilance was ever-more pressing.  He was concerned over the Advisory Committee’s observation that the Secretary-General’s report did not provide a basis for assessing improvements in the procurement function, or the adequacy of the internal control regime.  Moreover, it did not provide data and other evidence to substantiate the statements on the progress achieved so far in procurement reform.

The Secretary-General’s report hinted of greater staff requirement for the procurement function, in view of increasing workload, he continued.  However, there was no linear correlation between the increases in volume of procurement and additional staff resources.  Member States had to be convinced of the need for additional staff on the basis of a quantitative analysis of benefits that had accrued from various reforms and resources provided since 2006.  Given the exponential increase in field operation demands, it was important to have a well-defined and properly implemented delegation of authority, with strict accountability for procurement in the field.  In view of the dynamic nature of field operations, the adverse impact of sluggish procurement could be very high.  In that regard, while understanding the need for a more decentralized procurement function, he concurred with the ACABQ on the need for information on the experience gained in the implementation of increased financial thresholds of delegated procurement authority.  He also wanted to know the status of the review of United Nations rules and procedures to support immediate operational peacekeeping requirements, as promised by the Secretary-General during the sixtieth session.

He said that his delegation looked forward to positive deliberations on the proposed regional office, along with the new field support strategy, to be submitted to the Assembly in the second resumed part of the sixty-fourth session.  Regarding the new structures, such as the pilot project establishing the Independent Award Review Board and the Senior Vendor Review Committee, he looked forward to the next report on the experiences gained in the trial period.  The ACABQ had also requested additional information on the implementation of the best value for money principle, the lead agency concept, subcontracting and staff training.  He expected the future report on procurement to address all those issues in a comprehensive manner.

In conclusion, he commended the efforts of the Procurement Division in promoting opportunities for vendors from developing countries and countries with economies in transition.  He encouraged the Secretariat to keep up the good work in that regard.  On sustainable procurement, he agreed with those who called for its cautious implementation, if approved by the Assembly.  Sustainable procurement should be implemented in a manner that guaranteed fairness, integrity and transparency and was consistent with the best practices in today’s market.  It should in no way become a restrictive practice that hindered the participation of developing countries in procurement.  Clear guidelines and transparent procedures should be established as a precondition to its implementation, so that a good intention did not get derailed by suspicion and poor implementation.

VLADIMIR PROKHOROV ( Russian Federation) said that his delegation attached great importance to the reform of procurement at the United Nations, fully in accordance with relevant General Assembly resolutions.  Welcoming the work on the Procurement Division’s website and the United Nations Global Marketplace, he said that his delegation had specific proposals on how to improve them even more, which it would offer in informal consultations.  He also noted an increase in the volume of procurement, which had led to certain overload of staff and imposed an overload on the system for applying existing rules and procedures.

The Assembly had focused on the reform of procurement since early 1990s and had adopted over a dozen resolutions referring to virtually all the issues under consideration today, he continued.  In his opinion, the success of the reform would depend primarily on strict implementation by the Secretariat of the decisions adopted by Member States.  In that sense, the report before the Committee hardly inspired optimism.  He shared the ACABQ and OIOS concerns that, in terms of reform initiatives, the Organization was still at the stage of talking about retraining of staff and editing the Procurement Manual.  He agreed with the ACABQ that not enough information had been provided on actual results of the reform, specifically, the outcome of new training and investments in computer technology.  In informals, he also hoped to receive information on the delegation of authority.

The governance report focused too much on the proposal to establish a regional office, to the detriment of a review of accountability and coordination mechanisms in the field, he said.  The costs of the proposed new centre also gave rise to questions, particularly as it was part of the new strategy that had not yet been approved by the Assembly.  He also commented on the lack of transparency in the presentation of the best value for money principle to Member States.  Its practical application had not been presented.  His main concern, in that regard, related to the possibility of a selective application of that methodology, which could lead to greater subjectivity in the selection of vendors and heightened contract costs.

He was grateful to the Secretariat for the proposal on the specific definition of the conflict of interest concept.  However, despite numerous demands of the Assembly, which were presented in five resolutions, Member States still had not received any proposals on including in the financial rules and regulations of the provisions that would prevent the conflict of interest in procurement, particularly as far as finding work after the United Nations was concerned.

In the context of increasing possibilities for vendors from developing countries and economies in transition, special attention should be given to regulating the work of subcontractors, bidding by joint ventures and sustainable procurement.  Those sensitive aspects required careful consideration on the basis of a consensus approach.  Otherwise, instead of helping, they might be hindering participation of developing countries and countries with economies in transition.

MUYAMBO SIPANGULE ( Zambia) emphasized the complexity of United Nations procurement, which called for the observance of the highest tenets of good international business practices and governance.  In view of the current global economic and financial crisis, there was an even greater need for ensuring that value for money was strongly embraced by the United Nations in its procurement practices.  His delegation supported the ongoing procurement reforms and the progress that had been made since 1995.  However, although the reforms had been going on for many years, their full implementation had not yet been fully attained.  An efficient, effective and transparent procurement system would contribute positively to the quick implementation of programmes and ensure optimal utilization of resources.  He urged the Procurement Division to work towards completing the ongoing activities that would lead to full implementation of the reforms, as mandated by the Assembly.

Continuing, he noted the growth in the volume of procurement since 2004 and welcomed the increase in the procurement for both Headquarters and peacekeeping operations from vendors from developing countries and economies in transition.  However, his delegation would like to encourage the Procurement Division to have a documented procurement strategy in place for improving geographical vendor representation, linked to specific commodities or regions where the United Nations operated.  He was concerned over the remaining challenges that might be preventing participation of vendors from developing countries, such as his own, and countries with economies in transition.  He welcomed various measures that the Procurement Division had put in place to improve the participation of those vendors and looked forward to full implementation of those measures.

He also stressed the cardinal role of planning in procurement at the United Nations, saying that early identification of procurement activities in any given year facilitated timely and cost-effective acquisition of goods and services.  In that connection, he emphasized the need for timely preparation of departmental acquisition plans to facilitate comprehensive consolidation of various requirements for the United Nations activities.  Zambia also wanted to emphasize the need for quick and full implementation of Assembly resolutions on procurement and welcomed ongoing activities relating to the ERP system.

Mr. SACH, in response to comments from delegations, said that, on the lack of information in the reports to assess actual progress, the same process had been used for preparing reports at the past several sessions.  He agreed that there was not much hard data in the report, but said that the Secretariat would be guided by Member States in the future on the matter.  However, “the proof was in the eating”, in that there had been improvements on the ground.  Further, the 66 per cent increase in procurements “spoke volumes” in terms of what had been achieved.  Of course, there was always room for improvement and reform would be ongoing.

Regarding other comments, he said that information flow was key to procurement and looked forward to new stronger controls in that area once ERP would be implemented.  He then noted that clear guidance to procurement officers worldwide was now available online.  On post-employment restrictions, while rules and regulations had not been revised, a new restrictive policy had been introduced with regard to staff leaving to go to work for vendors.

On the OIOS report, he noted that a number of recommendations had not been accepted by management, which was a serious matter.  Recommendations were accepted in the spirit of full compliance.  When they had not been accepted, written reasons had been provided.   In many cases, those reasons were practical.  About nine recommendations related to ICT in relation to the new ERP, he said.  If those results had been achievable without ERP, they would have been.  The OIOS and management were moving in the same direction, he said.  Management found the OIOS recommendations extremely helpful.

On procurement from developing countries and those with economies in transition, he said that there had been a systematic and absolute increase in excess of 45 per cent and, in some cases, by as much as 60 per cent.  He was aware that more needed to be done and noted that a simplified process currently in the works would make it easier for those vendors to register.  The more vendors, the more diversified the supplies, the better the value for Member States, he said.  He noted that caution was being used in going forward with sustainable procurement, to ensure equal opportunities for all countries.  Sustainability could benefit all Member States.

On the regional procurement office proposal, he said that there was a misunderstanding as to whether there was a mandate to proceed.  General Assembly resolutions 60/266 and 61/276 welcomed increased regional collaboration.  The regional procurement office would help provide timely assistance to missions on the ground and with procurement from developing countries.  It was key to keeping up with demand of peacekeeping missions in the region, which included the United Nations Mission in the Sudan (UNMIS), the African Union-United Nations Hybrid Operation in Darfur (UNAMID), the United Nations Organization Mission in the Democratic Republic of the Congo (MONUC), and the United Nations Mission in the Central African Republic and Chad (MINURCAT).  The need was urgent, as evidenced by the 66 per cent growth between 2007 and 2008.  He strongly urged sympathetic consideration of the matter.

ANTHONY BANBURY, Assistant Secretary-General for Field Support, said that the context of peacekeeping procurement had changed due to the dramatic increase in procurement volume, and that changes were necessary.  From the point of view of the requisitioner, he strongly believed in the value of the regional procurement office in Entebbe.  The changing needs of the missions in the region required flexibility, which current procurement timelines made difficult.  The regional procurement office would greatly enhance response times and the development of more vendors in the region.

Further, it was very important for the regional procurement office to be functional at the start of the fiscal year for peacekeeping, as all the missions had acquisition plans, and if the regional procurement office was not up and running at 1 July, a whole year would be lost, he continued.  He said it would add tremendous value if the Assembly would adopt the proposed support strategy, which would create greater synergies between the Department of Management and that of the Department of Field Support, but that, even without such a strategy, the regional procurement office would be of exceptional value.  He encouraged support for the regional procurement office either way.

* *** *

For information media • not an official record
For information media. Not an official record.