Budget Committee Approves Text Allowing Six Countries to Continue Voting During Current General Assembly Session, Despite Budget Arrears

6 October 2010
GA/AB/3957

Budget Committee Approves Text Allowing Six Countries to Continue Voting During Current General Assembly Session, Despite Budget Arrears

6 October 2010
General Assembly
GA/AB/3957
Department of Public Information • News and Media Division • New York

Sixty-fifth General Assembly

Fifth Committee

3rd Meeting (AM)

Budget Committee Approves Text Allowing Six Countries to Continue Voting During

Current General Assembly Session, Despite Budget Arrears

 

Also Takes Up Two Reports by Joint Inspection Unit:  ‘Off-shoring’ in UN

System Organizations; and the ‘Environmental Profile’ of the Organizations

The Fifth Committee (Administrative and Budgetary) today adopted by consensus a resolution that lets six Member States — the Central African Republic, Comoros, Guinea-Bissau, Liberia, Sao Tome and Principe, and Somalia — keep voting during this year’s sixty-fifth General Assembly session, even though they have fallen behind in their annual payments to the Organization’s budget.

In its session’s first resolution, the Committee agreed that the six Member States’ failure to pay the full minimum amount, necessary to avoid the application of Article 19 of the United Nations Charter, was beyond each country’s control.  The resolution urged all Member States requesting an exemption under Article 19 to submit as much supportive information as possible before the deadline set in resolution 54/237 C.

Article 19 of the Charter states that a Member State in arrears of its financial contributions cannot vote in the Assembly if the amount of its arrears equals or exceeds the amount of contributions due from it for the preceding two years.  An exception is allowed if the Members State can show that conditions beyond its control contributed to this inability to pay.

After adoption of the resolution, the Committee then turned to the Organization’s use of offshore facilities, the environmental profile of the Organization and procurement policies, as part of Agenda Item 128, a Review of the efficiency of the administrative and financial functioning of the United Nations.

Cihan Terzi, an inspector of the Joint Inspection Unit, said the Unit’s report on offshoring included 18 recommendations and had created a benchmarking framework that the United Nations system could follow when considering whether to place their administrative services offshore.  He said the Unit’s review of several organizations’ use of offshore services indicated unforeseen costs, such as additional training, coordination and travel.

The report reviewed the use of offshore services by the Office of the United Nations High Commissioner for Refugees (UNHCR), the Food and Agriculture Organization (FAO), the World Health Organization (WHO), and the World Food Programme (WFP).  Some officials interviewed had even raised doubts about whether the process actually reduced costs, Mr. Terzi said.

Another Unit report, presented by Unit Inspector Tadanori Inomata, focused on the environmental profile of the organizations within the United Nations system.  Mr. Inomata noted that, regarding the report’s Recommendation 10, which concerned the establishment of common practices for sustainable procurement, the Chief Executives Board for Coordination had cautioned that implementing the recommendation was subject to the outcome of the Assembly’s debate in the current session.  He said the Unit had confirmed that the Assembly already had given the United Nations system a clear mandate, with its decision 54/449 of 22 December 1999, to introduce sustainable practices in each organization’s own operations, particularly through their procurement policies.  It also encouraged the use of environmentally sound products and services.

Speaking on behalf of the Group of 77 and China, the representative of Yemen said the Group was very concerned to see that the Unit report included several initiatives on sustainable procurement that were being undertaken by the Secretariat, in direct breach of Assembly resolution 62/269.  The Group recalled that the Assembly had not considered for approval the concept of sustainable procurement, and urged the Secretariat to avoid any initiatives that would pre-empt decisions of the Assembly in this regard.  The Group reiterated that the reform agenda was determined by Member States, not by the Secretariat.

The Group also stressed that goods and services procured by the Organization had to be in compliance with established procurement procedures, based on international competitive bidding and the widest possible geographical base for the sourcing of procurement vendors.

The representative of the Russian Federation said he was “bewildered” that, despite the lack of an Assembly decision, the United Nations Procurement Division had began functioning under a regionalization plan, with a regional office and a whole new field support strategy.

Also participating in the discussion on the review of the Organization’s efficiency was the representative of Japan.  The representative of Yemen, speaking on behalf of the Group of 77 and China, also commented on the adoption of the resolution.

The Committee will meet again to discuss programme planning and the pattern of conferences at 10 a.m. Thursday, 7 October.

Background

The Committee had before it a note by the Secretary-General (document A/65/63) transmitting the report of the Joint Inspection Unit, entitled Offshoring in United Nations system organizations:  offshore service centres (JIU/REP/2009/6).

The Joint Inspection Unit report aimed to assess the offshore policies, practices and experiences in the United Nations system and identify best practices and lessons learned.  It reviews offshore facilities that provide administrative and financial services now in place in several organizations and offers recommendations that guide policies and practices for operating these centres, as well as for planning and managing the offshore process.  The report shows that offshore outsourcing is limited and concentrated primarily in the area of information and communications technology (ICT).  The report uses a case study approach to outline the key factors for successfully implementing offshore facilities.

The report contains 18 recommendations, with three of the recommendations addressed to governing bodies.  Recommendation 1 urges governing bodies of United Nations system organizations to ask their executive heads to first develop an offshoring policy that envelopes a cost-benefit analysis for all sourcing options and is aligned with the organization’s medium- to long-term strategy.  That policy should then be subject to review and approval by the governing bodies and all inter-agency opportunities should be explored exhaustively beforehand, the report recommends.  Recommendation 7 urges the international character of the organization to be maintained when staffing offshore service centres; and in Recommendation 15, the Unit urges governing bodies to exercise their oversight role.

Thirteen recommendations are addressed to the executive heads of the organizations and two recommendations are addressed to the Chief Executives Board for Coordination (CEB).  The recommendations establish a benchmarking framework for United Nations system organizations considering offshore administrative services.

Also before the Committee was a note by the Secretary-General (document A/65/63/Add.1) presenting his comments and the comments of the United Nations System Chief Executive Board of Coordination on the Joint Inspection Unit report on offshoring.

This report contains the views of United Nations system organizations on the recommendations provided in the report.  These views were consolidated, based on inputs provided by member organizations of the CEB, who welcomed the report and agreed that using offshoring facilities could produce economic advantages with economies of scale and relatively low-cost staffing.  Agencies generally agree with the recommendations, especially those calling for a complete analysis of the benefits and drawbacks of an offshore facility, as well as the need for the agencies to share experiences.

In response to Recommendation 1 of the report, the organizations generally agreed with the concept of developing an offshoring policy.  But, they cautioned that general offshoring policies risked becoming too general to be useful for the respective governing bodies with the variety of factors to be considered, such as location, cost of living, and the availability of required infrastructure and human resources.

The Committee also had before it a report of the Joint Inspection Unit on an Environmental profile of the United Nations system of organizations (JIU/REP/2010/1) which assesses the environmental policies and practices of the United Nations system on its sustainable use of resources in support of the Secretary-General’s mandate to use energy more efficiently and eliminate wasteful practices at United Nations Headquarters and offices around the globe.

The report contains twelve recommendations, with three addressed to the General Assembly, four to the Secretary-General, and five to the executive heads within the United Nations system.  Recommendations address, among others, the reduction of CO2 emissions; sustainable procurement; water and waste management; environmental management systems; energy savings and use of new sources of energy; and carbon offsets.

The report states that viable means and initiatives exist within the system, but they are being developed in a piecemeal manner.  In other words, the system lacks a formal and systematic framework for implementation.  But, coordination within the system on the climate neutral initiative has produced a system-wide accounting framework for CO2 emissions and a network of environmental managers which could further such a framework.

Recommendations 2, 3 and 11 call for the Assembly to monitor and support the efforts of the Secretary-General, as Chairman of the United Nations System Chief Executive Board (CEB), to develop and implement in-house sustainable policies and increase accountability in that regard.  He says the General Assembly should periodically review the application of these policies; request the Secretary-General to regularly report to it on the climate neutral initiative, in particular carbon offsetting, including administrative, budget, management and financing; and further request the Secretary-General to promote views and lessons learned through a peer-review process among members of the Environment Management Group.

Recommendations 1, 5 and 7 of the report call on the Secretary-General, as

Chairman of the CEB, to:  compile and streamline existing instruments and guidelines on in-house environmental management; launch an internal carbon offsetting mechanism to save brokerage and other costs from the purchase of certified emission reductions; and issue a statement on defining a time-bound common framework for in-house environmental strategies in compliance with all multilateral environmental agreements.  To further the impact of the above recommendations, Recommendation 12 calls for the Secretary-General to inform the United Nations community and the public, with the support of the Department of Public Information, of the results achieved.

Finally, the measures would require specific actions to ensure compliance by executive heads.  In that vein, recommendation 4 proposes using existing multilateral environmental agreements guidelines to facilitate reducing CO2 emissions and carbon offsets of organizations for air travel, including monitoring and reporting.  Recommendations 6, 8 and 10 suggest the use of voluntary annexes to host country agreements and sustainable procurement using local supply chains to promote the greening of United Nations offices, in line with host country practices. Recommendation 9 calls on executive heads to identify norms and standards based on best practices within the system and to inform and make responsible staff members vis-à-vis these norms to ensure their implementation.

A note by the Secretary-General (A/65/346/Add.1) transmits his comments and those of the CEB, that United Nations system entities generally agree with the recommendations made in the environmental profile report, with the following notable exceptions:  recommendations on sustainable procurement cannot be implemented until Member States have addressed this issue; emphasis on carbon offsets minimized the importance of reducing carbon emissions; the “time-bound framework” mentioned had to take into account the mandate and the availability of financial and human resources of organizations within the system.

Action on draft resolution

The Committee then approved the draft resolution on the scale of assessments for the apportionment of the expenses of the United Nations:  request under Article 19 of the Charter (A/C.5/65/L2), concerning an exemption for the Central African Republic, the Comoros, Guinea Bissau, Liberia, Sao Tome and Principe and Somalia.

WALEED AL-SHAHARI (Yemen), speaking on behalf of the Group of 77 and China, expressed the Group’s gratitude for the unanimous consent to allow the six concerned Member States the right to vote until the end of the sixty-fifth session.

Concerning multi-year payment plans, he reiterated that those plans should remain voluntary in nature and should take into account the financial situation of the concerned Member State.  They should not be used to exert financial pressure on Member States and should “definitely” not be used as a factor in the consideration of exemption under Article 19 of the Charter.

He noted that the Group distanced itself from the “unfortunate remarks” made by one of the groups present that “singled out and rebuked” a Member State in regards to the multi-year payment plans.  He called on the said group “to refrain from utterances that infringe on the sovereignty of Member States”.

Introduction of Reports

CIHAN TERZI, an Inspector of the Joint Inspection Unit, introduced the Unit’s report entitled “Offshoring in United Nations system organizations”, contained in document A/65/63.

He said the report’s objective was to provide an evaluation of offshoring policies, practices and experiences in the United Nations system and identify best practices and lessons learned.  The report found that the main objective of offshoring was cost-saving.  He noted that there could be other options for producing savings, such as streamlining processes, reducing duplications, restructuring business functions, outsourcing, insourcing and telecommuting.  Optimal decision-making required that all these options be analysed.

During the offshoring process, the management of human resources was particularly challenging for both the organization and staff members.  The review found that there were a high percentage of National Professional Officers employed in offshore service centres, for example, and the agency was concerned that the service centres for the World Health Organization (WHO) and the Office of the United Nations High Commissioner for Refugees (UNHCR) did not comply with the criteria for such employment, as proposed by the International Civil Service Commission (ICSC) and enacted by General Assembly resolution 49/223.  National Professional Officers, for example, were employed to perform core administrative support services.

A review of host country agreements for offshore centres showed significant differences, particularly in terms of the provisions of diplomatic privileges, such as employment of the spouses of international professional staff and tax exemptions.  The planning and management of the transition of services to new centres was an important factor in risk management.  The report showed that a gradual transition provided better risk management and a relatively smooth transition of services to new locations.  He emphasized that a system-wide offshoring approach, including the creation of inter-agency shared service centres, would yield greater savings.  The review also showed that there were unforeseen cost elements in offshoring, such as the need for additional training, coordination and travel.  Some interviews with officials raised doubts about the realization of any cost savings.

“We would like to stress that in the absence of monitoring of and reporting on the accomplishments of offshoring objectives, the benefits of offshoring remain in question”, he added.  The Unit’s report included 18 recommendations and had established a benchmarking framework for United Nations system organizations which were considering offshoring their administrative services.  The Unit believed that an endorsement by the Committee would send a strong signal to all United Nations organizations to have a more disciplined, planned, rational and integrated approach to the offshoring decision.

TADANORI INOMATA, an Inspector for the Joint Inspection Unit, introduced the report entitled “Environmental profile of the United Nations system organizations” contained in (A/65/346).  He said the report covered the lessons learned and good practices developed through greening initiatives that targeted such areas as the reduction of CO2 emissions, sustainable procurement, building management, water and waste management, reduction of contaminants and environmental management systems.

He said there were several major findings highlighted in the report.  Development of environmental policies and practices were undertaken in a piecemeal manner, due to the lack of a formal framework and managerial leadership at the senior level.  Also, many secretariats were uncertain if and how they should apply Multilateral Environmental Agreements.  It was also found that viable means already existed within the system that could further the greening initiative, resulting in energy savings of 35 to 50 per cent and cost savings for United Nations premises, notably those in New York, Vienna and Nairobi.  Further, the climate neutrality initiative had produced a system-wide accounting framework for CO2 emissions, as well as a network of environmental managers that could advance the adoption of broad in-house environmental management policies.

The report contains 12 recommendations, 3 of which are addressed to the General Assembly, he said.  Notably, the Assembly should periodically review the application of environmental management principles; the Assembly should provide clear administrative and budgetary guidelines for achieving United Nations climate neutrality through a more cost-effective internal carbon offsetting mechanism; and it should formulate action to promote a peer-review process among the Organizations in the Environment Management Group. 

He concluded by stating that the Joint Inspection Unit had confirmed that the General Assembly had already given a clear mandate to United Nations system organizations through its decision 54/449 of 22 December 1999 to introduce sustainable practices in their own operations, in particular through their procurement policies.

KENNETH HERMAN, of the United Nations System Chief Executives Board for Coordination (CEB), introduced the notes of the Secretary-General containing his comments and those of CEB members in response to two Joint Inspection Unit reports on offshoring in United Nations system organizations and the environmental profile of United Nations system organizations.

Concerning the first report, on offshoring, he noted that, in general, agencies agreed with the recommendations, but had expressed concerns regarding some of the details.  Recommendation 6, for example, required voluntary separation packages for staff.  Agencies responded, he noted, by stressing the need to first explore alternative work opportunities.  Also, he said it was unclear to agencies what it meant to “offshore” when many of them already used regional centres that served the administrative requirements of their country offices.  Further, many of those regional centres were located in “lower-cost” areas of the world.  

Concerning the second report on the environmental profile, agencies welcomed its analysis and supported many of its recommendations.  One issue did arise, though, regarding recommendations to procure carbon offsets as a mechanism for addressing CO2 emissions.  Agencies, he stated, felt that at this stage any climate neutral initiative should focus on emissions reduction and very little on offsets.

Statements

WALEED AL-SHAHARI (Yemen), speaking on behalf of the Group of 77 and China, said procurement reform had become a very important issue for the United Nations as the Organization grew in size and became more complex.  The Group had been actively involved in the issue and made proposals to increase the efficiency, transparency and cost-effectiveness of the United Nations procurement system.  It had also stressed the importance of the Secretary-General’s strengthened accountability to Member States for the full implementation of all legislative mandates on procurement.

During this session, the Committee would continue the important discussion on procurement reform that had been initiated during the main part of the sixty-fourth Assembly session.  The Group reiterated its position that increasing procurement opportunities for vendors from developing countries was an integral and fundamental part of United Nations procurement reform.  “Equal, fair and non-discriminatory access had to be given to companies from developing countries,” he said.

The Group also stressed that goods and services procured by the Organization had to be in compliance with the established procedures for procurement, based on international competitive bidding and the widest possible geographical base for the sourcing of procurement vendors.  The Group was deeply concerned when it saw that the Joint Inspection Unit report had a number of initiatives on sustainable procurement that were being undertaken by the Secretariat, in direct breach of Assembly resolution 62/269.  The Group recalled that the Assembly had not considered for approval the concept of sustainable procurement, and urged the Secretariat to avoid any initiatives that would pre-empt decisions of the Assembly, in that regard.  The Group reiterated that the reform agenda was determined by Member States, not by the Secretariat.

Mr. PROKHOROV ( Russian Federation) said his country attached great importance to procurement and its reform, aiming to eliminate the possibility of fraud and abuse of authority.  He noted that the volume of procurement transactions had increased from $3.2 billion in 2008 to $3.5 billion in 2009, leading to an overburdening of staff in applying existing rules and procedures. But, the increase in burden was no justification to not respond to the appeal of Member States.

The reform of procurement systems had been followed since the beginning of the 1990s, he noted. Member States had since adopted more than 10 resolutions reflecting all the problems at this stage of the reform.  The key to success was the unswerving attention to the decisions of Member States.  The report presented last year was not a cause for optimism, particularly in the absence of a Fifth Committee resolution last year.  He was “bewildered” that, despite the lack of a General Assembly decision, the United Nations Procurement Division began functioning as part of a regionalization plan, with a regional office and a whole new field support strategy.

He hoped that during informal discussions there would be more detailed information regarding the regional procurement office and the added value of opening it, as his delegation continued to see a lack of transparency in the context of “the principle of best value for the money”.  His main concern was that the selective application of the aforementioned methodology could lead to subjectivity in selecting vendors and overpriced goods and services procured.  He stressed the need for deconstructed, depoliticized discussions — “not just slogans” — and a consensus-based approach.  Otherwise, he said, there could be major obstacles to reform.

MASATOSHI SUGIURA ( Japan) thanked the Secretariat officials for their presentations.  He noted that the Committee had deferred the procurement issue to this session. The issue of the Organization’s environmental profile was a good one and deserved attention by the Member States, and the findings in the Joint Inspection Unit’s report on the issue had produced good results.  He looked forward to informal consultations on this issue.

Secretariat Response

Mr. TERZI responded to the comments of the CEB members on Recommendation 6 of the offshoring report, in which the Joint Inspection Unit indicated the need for the organizations to seek funding from governing bodies for voluntary separation packages for staff impacted by the move to an offshore service centre.  He said the Unit agreed with the agencies profiled in the report that the priority was to keep people in the organization, but, if a remedy was not found, then a generous package should be provided.  Money was needed to provide incentives and salary packages.

Mr. INOMATA said the greening of government institutions and international organizations was a topic generating more attention within the Organization.  Also, the Assembly had created the mandate to adhere to the principles of sustainable procurement.  Procurement had to take place at each location where the United Nations had system offices, and there was a concern for abiding by local rules and regulations.

In other business, the Committee Chairperson noted that 15 October was the deadline for the submission of candidates for the 5 November elections for appointments to fill vacancies in subsidiary organs and other appointments.  That would fall under Agenda Item 116.

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