FIFTH COMMITTEE TAKES UP METHOD OF PAYMENT TO STATES FOR PEACEKEEPING EQUIPMENT

GA/AB/3444
14 May 2001

FIFTH COMMITTEE TAKES UP METHOD OF PAYMENT TO STATES FOR PEACEKEEPING EQUIPMENT

14/05/2001
Press Release
GA/AB/3444


Resumed Fifty-fifth General Assembly

Fifth Committee

62nd Meeting (AM)


FIFTH COMMITTEE TAKES UP METHOD OF PAYMENT TO STATES

FOR PEACEKEEPING EQUIPMENT


The post-Phase V Working Group on contingent-owned equipment "had closed the circle" by developing a comprehensive model for determining the amount the United Nations must pay for the use of equipment troops brought with them to peacekeeping missions, the Fifth Committee (Administrative and Budgetary) was told this morning, as it took up that Group’s report.


The Working Group, which was mandated to review and update the standards and reimbursement rates for major equipment and logistics support categories, had been able to find simple solutions to complicated questions.  The Chairman of the Working Group, Lieutenant Colonel Claus Uhrup Pedersen (Denmark), explained as he introduced the report.  The goal had been to create a simpler model, based on standard definitions of performances and capacities, and related standard reimbursement rates. 


The post-Phase V Working Group recommended that reviews of rates should be carried out triennially, and should be based on indices for national price or cost development in each category of major equipment and self-sustainment services, as reported by Member States.  In the end, the Group agreed upon a statistical decision-supporting model, based on the use of standard deviation as the tool.  The model was generic, and could be used in future reviews of rates. 


Unfortunately, it had been unable to achieve consensus on methods to calculate standard reimbursement rates to troop-contributing countries, he explained.  However, that subject was not within the Group’s normal field of responsibility and -- while that question had been before the Secretariat and the Fifth Committee since 1996 -- the Working Group had only been given days to consider the matter.  It was a political issue which could not be solved by specialists before further guidance was given, he concluded.


A review of reform procedures for determining reimbursement for contingent-owned equipment was first authorized by the General Assembly in 1994, as the existing mechanism for reimbursing Member States had become overly cumbersome, both to the Organization and to contributing countries.  The Assembly asked the Secretary-General to set comprehensive standards for each category of equipment and to establish rates of reimbursement.  The work proceeded in five phases.  Following the Assembly’s endorsement of the recommendations on the reform procedures in 1996, a Working Group of the final phase (phase V) was convened in 2000 to conduct a periodic review of the standards adopted in previous phases.


The post-Phase V Working Group had been tasked to consider methodology for calculating rates of reimbursement for troop contributors, the representative of Norway said.  The question of what was liable for compensation was still not settled and the Assembly had yet to provide clear guidelines on the rate or on the conduct and content of a survey of troop contributors.  A comprehensive review of the matter was needed.  She agreed with the Advisory Committee on Administrative and Budgetary Questions (ACABQ) that such a review should be undertaken by a group of qualified individuals who would propose an adequate reimbursement methodology.


Also expressing concern, the representative of Sweden, speaking on behalf of the European Union, said that before any change of the current rate could be considered, broad agreement should be reached which reflected, among other things, the idea that peacekeeping required Member States to provide adequately trained and equipped troops.  The rate of reimbursement should cover necessary additional costs incurred by troop contributors and should be set at a level which was fair to all troop-contributing countries.  The best way to achieve that objective was to ensure that rates were sound, transparent and accurately reflective of the true costs incurred by troop contributors.


Speaking on behalf of the Rio Group, the representative of Chile stressed the urgency of the need for a transparent and equitable reimbursement system.  The Rio Group supported the recommendation that rates be increased as a special temporary measure.  At a time when developing countries were the main contributors of troops to peacekeeping operations, delay in reimbursements imposed a heavy burden on those countries and could affect the extent of their participation.


As the number of missions increased and their mandates became more complex, the methodology was bound to become more complex as well, the representative of India said.  What must also be borne in mind was that the developing countries contributing troops were not opposed to a standard methodology for troop- contributing costs.  However, the data presented to the Secretariat by those countries on equipment and materials could not be ignored when rates for reimbursement were set.  That had not been the case during the post-Phase V process. 


A statement was also made this morning by the representative of Uruguay.  Introducing the Secretary-General’s report was the Assistant Secretary-General of the Office of Logistics, Management and Mine Action Service, Department of Peacekeeping Operations, Michael Sheehan.


The Committee will continue its work at 10 a.m., tomorrow.


Background


This morning, the Fifth Committee (Administrative and Budgetary) was scheduled to begin consideration of procedures for determining reimbursement to Member States for contingent-owned equipment provided for peacekeeping missions.  A review of such procedures was authorized by the General Assembly in 1994, as the existing mechanism had become overly cumbersome, both to the Organization and the contributing countries.  In its resolution 49/233, the Assembly requested the Secretary-General to proceed with the project in order to set comprehensive standards for each category of equipment and establish rates of reimbursement.  The work proceeded in five phases.


During Phase I, items of contingent-owned equipment were divided into groups of major and minor equipment.  Experts participating in Phase II identified standards for classifying such equipment and consumables, for which reimbursement would be authorized; adopted a wet/dry concept for lease agreements; and considered a monthly dollar reimbursement rate linked to troop strength to cover self-sustainment costs.  Under Phase III of the project, financial experts reviewed the rates for reimbursement and made recommendations for comprehensive standards for authorizing reimbursements. 


In 1996, the Assembly endorsed recommendation on the reform of the procedures for reimbursement, and a year later, by its resolution 51/218, decided to convene a Phase IV Working Group to submit a report on the first full year of the implementation of the reformed procedures.  In January 2000, a Phase V Working Group was convened in order to conduct a periodic review of the standards adopted during the second and third phases of work and develop a methodology to ensure consistent application of future reviews.  This year, the Fifth Committee is going to consider the results of work of the post-Phase V Working Group, which was convened in January this year.


The first document the Committee planned to consider on this subject was

a letter from the Chairman of post-Phase V Working Group, by which he transmits the report of the Group (document A/C.5/55/39).  According to this report, the Group was to determine an appropriate average index to be applied to existing rates and to consider the methodology for review of the troop-cost rates.  The recommendations contained in the report supplement and or/supersede those contained in previous reports.  The Working Group addressed the issues in four major categories, namely:  major equipment, self-sustainment, troop costs and medical support services.


The Group recommended that proposed rates for major equipment, calculated using the phase-V methodology, within a maximum of 25 per cent standard deviation, should be applied to dry-lease rates and maintenance rates.  It also suggested that those rates should be incorporated in the 2001/2002 peacekeeping budget.  The new calculated rates were weighed with recent United Nations expenditures, and the results of those calculations were shown as an “impact percentage” in the budget of the Organization.  The Group states that such standard deviation calculations should be used in future triennial reviews of major equipment rates, using available data.  The report also contains an updated list of major equipment, which the Group proposes for future reference.  At this time, the Working Group does not recommend applying any new categories based on data provided for special cases. 


When one country provides equipment to be used by another country, the Group stresses that adequate training is needed to ensure proper use of such items, for example armoured personnel carriers.  It also recommends treating such equipment with due diligence and responsibility.  Any damage should be investigated and processed in accordance with United Nations rules and regulations.  In connection with its recommendations, the Group proposes several amendments to the Contingent-owned Equipment Manual, 2001 edition, concerning such matters as letter-of-assist procedures; climate and environmental changes en route to the point of embarkation; loading procedures and contingents’ responsibilities. 


Recommendations were also made regarding the methodology for calculating the standard rate, and several proposals were presented.  Among the recommendations on the review of policies on medical support services are suggestions regarding the definition of high- and normal-risk missions for reimbursement purposes, new methodology for collection and interpretation of medical data, and suggested changes to the medical aspects of the Contingent-owned Equipment Manual.


The Committee also had before it a report of the Secretary-General on reform of the procedures for determining reimbursement to Member States for contingent-owned equipment (document A/55/815).  It explains that the Assembly requested the Secretary-General to seek data from Member States by the end of October 2000 and to determine whether data received was sufficient to convene the meeting of the post-Phase V Working Group in January or February 2001.  In that regard, the Secretariat requested Member States to submit data on major equipment, self-sustainment, painting and repainting costs of major equipment, the monthly maintenance rate for major medical equipment and pre-deployment immunization/post-repatriation medical examination costs.  The Secretary-General concluded that sufficient data was received to hold the post-Phase V Working Group meeting.


The mandate of the post-Phase V Working Group, which met from 15 to 26 January, was to review and update the standards and reimbursement rates of major equipment and self-sustainment categories developed by the Phase II and III working groups.  Made up of technical, financial and medical experts, the Working Group validated the methodology and agreed on revised reimbursement rates for major equipment and self-sustainment.  It also agreed on rates for some special cases and new categories of major equipment, for generic reimbursement for painting and repainting of major equipment and new rates for level II medical services provided by level III medical facilities.


The Working Group adopted principles regarding liability for damage to major equipment used by one country and owned by another, a policy on the reimbursement of inland transportation claims, and a modular approach to reimbursement of medical facilities.  The Working Group reviewed self-sustainment categories and standards and the provision of level I medical support, medical aspects contained in the Contingent-owned Equipment Manual, and the provision of blood and blood products.


The post-phase V Working Group conducted the first review of the reimbursement rates since the contingent-owned equipment procedures were reformed in 1996, the report says.  While the Working Group defined high- and normal-risk missions for medical reimbursement purposes, it could not arrive at a consensus on some issues, such as the review of the policy on vaccination costs and pre- and post-deployment examination. 


According to the report, the post-Phase V Working Group achieved considerable progress.  A simple, transparent and equitable reimbursement system was paramount for the efficient working of peacekeeping operations.  A solid base now exists from which future contingent-owned equipment policy issues can be considered.  The Secretary-General agrees with the recommendations of the Working Group and recommends their approval by the Assembly.


The Committee also had before it the related report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) (document A/55/887).  The report notes that, although the post-Phase V Working Group defined high- and normal-risk missions for medical reimbursement purposes, it could not agree on the policy on vaccination costs and pre- and post-deployment examination.   The ACABQ inquired about the total estimated cost of vaccination and examination which amounts to some $241 per contingent member.  The figure was based on data provided by Member States and took into account an averaging methodology whereby the highest and lowest 25 per cent of the figures were excluded from the survey.  The ACABQ requests the Secretariat to consider including data from United Nations organizations, such as the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF), in future surveys.   


The Advisory Committee notes the recommendation that revised reimbursement rates for major equipment and self-sustainment be incorporated in 2001-2002 peacekeeping budgets.  Should the Assembly approve the Working Group's recommendations, related financial requirements would be reflected either in proposed budget submissions for 2001-2002 for those operations that have yet to be considered, or in performance reports for approved peacekeeping budgets.  The report illustrates the impact of the Working Group's recommendations on two peacekeeping operations.  If applied, the total monthly reimbursement at post-Phase V rates for major equipment would be increased by some 6.54 per cent for the United Nations Mission in Ethiopia and Eritrea (UNMEE), and 7.65 per cent for the United Nations Mission in Sierra Leone (UNAMSIL). 


The report also states that delays in the signing of memoranda of understanding by troop-contributing countries hamper the effectiveness of measures to improve the working of peacekeeping operations.  It stresses the need to minimize delays in signing memoranda of understanding and recommends that the Assembly approve the recommendations of the post-Phase V Working Group as outlined in the Secretary-General's report.


Concerning troop costs, the report says that standard rates of reimbursement of $500 per month for pay and allowances for troops serving in two peacekeeping missions were agreed by the Assembly in 1974, along with a standard rate for a supplementary payment of $150 for a limited number of specialists.  Rates were reviewed in 1977, 1980, 1985, 1987 and 1991.  Rates were increased in 1977 to $680 and $200, respectively, in 1980 to $950 and $280, and in 1991 to $988 and $291.  In 1975, the Assembly also agreed to a reimbursement rate of $65 per soldier for personal equipment and clothing and $5 for ammunition.  That has remained unchanged.  Three points were considered in the initial study:  troop serving side-by-side should be reimbursed on the same basis for identical services; no Member State should profit from its participation in an operation and some governments would not be fully reimbursed on the basis of any standard cost-reimbursement formula, but should be reimbursed at least the amount that was actually paid to their troops as overseas allowance. 


Pending a review of the methodology of reimbursement for troop costs, the ACABQ recommends that the Assembly consider, as an ad hoc arrangement, increasing the standard monthly rates of reimbursement by 4 to 6 per cent.  Recourse to a group of qualified individuals who would study and make proposals on the methodology should be considered.  Should an increase be approved by the Assembly for the financial period 2001-2002, additional requirements should be reflected either in proposed budget submissions for the period 2001-2002 for operations not yet considered by the Assembly or in the performance reports for already approved peacekeeping budgets.


Introduction of Reports and Statements


Introducing the report of the post-Phase V Working Group, Lieutenant Colonel CLAUS UHRUP PEDERSEN (Denmark), the Chairman of that Group, said the Working Group consisted of experts from Member States and experts from the Secretariat, working together as a team.  During the different phases, the Working Group had been able to find simple solutions to complicated questions.  It had been the Group’s goal to create a simpler model, based on standard definitions of performances and capacities and related standard reimbursement rates. 


The Working Group had three main objectives, he said.  The first was to create a generic model for updating rates and thereafter to update the actual rates approved by the Assembly in 1996.  The post-Phase V Working Group recommended that review of rates should be carried out triennially, and should be based on indices for national price or cost development in each category of major equipment and self-sustainment services reported by Member States.  In the end, the Group agreed upon a statistical decision-supporting model, based on the use of standard deviation as the tool.  The model was generic, and could be used in future reviews of rates. 


By the development of the model for reviewing rates, the Working Group had closed the circle, he continued.  It had developed a comprehensive model that included the means of updating the model itself and associated rates.  A static model had been transformed into a dynamic model, which should prevent the system from being outdated in a couple of years.  The Group’s second objective was to review and update the existing standards and to seek new fields where standards could be applied.  It had recommended a number of minor adjustments to definitions of categories.  On the basis of a number of special cases, it had recommended some new standard categories.  Adjustments and clarification were necessary to keep the model in good shape.  The most outstanding improvement was the creation of standards and rates for painting and repainting.  That would eliminate an administrative burden both for the Secretariat and troop contributors. 


The third objective was to consider the methodology underlying the calculations of standard rates for reimbursement of troop costs, including ways to produce timely and more representative data, he said.  That subject was out of the Working Group’s normal field of responsibility and was raised less than a month before the Group’s session.  If that had been the ultimate test, then the Group had failed as it had not been able to arrive at a clear recommendation based on consensus.  No one could say, however, that the Group had not made a serious attempt to solve the problem.  In his opinion, the Fifth Committee had been too optimistic.  That question had been discussed by the Secretariat and the Committee since 1996.  The Working Group had only been given 10 days.  It was a political issue which could not be solved by specialists before further guidance was given.

MICHAEL SHEEHAN, Assistant Secretary-General of the office of Logistics, Management and Mine Action Service, Department of Peacekeeping Operations, next introduced the report on procedures for determining reimbursement to Member States for contingent-owned equipment (document A/55/815).  In 1994, he said, the Assembly established a project plan and time line for the reform of the methodology and reimbursement of troop contributors for contingent-owned equipment.  That project had been aimed at standardizing equipment for which reimbursement would be authorized and identifying appropriate rates.  He gave a brief overview of the various Working Group reviews of this important issue from 1998 through to the deliberations included in the present report.  He added that extensive discussions had been held by Member States on the current methodology underlying the reimbursement to troop contributors for troop costs.  He looked forward to guidance from the Assembly on the two options that emerged from those discussions.


He went on to say that the post-Phase V Working Group, which met from 15 to 26 January, was to review and update the standards and reimbursement rates of major equipment and self-sustainment categories developed by the phase II and III working groups.  Made up of technical, financial and medical experts, the Working Group validated the methodology and agreed on revised reimbursement rates for major equipment and self-sustainment.  The Phase V Working Group had also tasked the post-Phase V Working Group to review some issues related to medical support, particularly regarding the identification of medically high-risk areas, pre-deployment immunization costs and costs incurred for necessary post-repatriation treatment of peacekeeping personnel.


The Group recommended an increase in rates, limiting the standard deviation to a maximum of 25 per cent.  The Group further agreed that the same rates review formula be applied to self-sustainment.  With regard to medical services, the modular approach to medical facilities -- which involved the identification of major and minor medical -– was recommended to the Assembly.  The Group also extensively discussed the policy on vaccination and pre- and post-deployment medical costs.  While some Member States agreed on policies and new rates, there were some reservations regarding guidelines.  The Secretariat was of the view that reimbursing such costs would have a substantial impact on peacekeeping budgets. Currently, vaccinations on the advice of the United Nations were a national responsibility.  The Group also recommended, based on humanitarian principles, that all Level I medical facilities had the responsibility to provide medical care to all members of a United Nations mission in an emergency.  


The Chairman of the Fifth Committee, GERT ROSENTHAL (Guatemala), said that the Committee should take note of the related report of the ACABQ (document A/55/887), which had been introduced last week when Conrad S.M. Mselle, the Chairman of that body, made his general presentation of ACABQ reports. 


PIERRE SCHORI (Sweden), speaking on behalf of the European Union, said the Union believed that it was essential that rates of reimbursements were set at a level which was fair to all troop-contributing countries.  The best way to achieve that objective was by ensuring that those rates were sound, transparent and accurately reflective of the true costs incurred by troop contributors.  Further, the Union saw it as vital to ensure that the troops deployed were fully capable of delivering the services for which they were needed, for the benefit of the respective mission and the security of its staff.  In that regard, he welcomed the outlined measures for pre- and post-deployment inspection, for which necessary resources should be provided.  Consideration should also be given to other ways to ensure that peacekeeping operations were conducted effectively.


The Union was concerned that the Assembly had not yet given clear guidance on a methodology for reimbursements of troop costs, he continued.  It had also given no indication on content and conduct of surveys of troop contributors, or measures on how an equitable rate of reimbursement should be calculated.  Instead, reimbursement rates had been set on a wholly ad hoc basis.  The Union agreed with the ACABQ that a comprehensive review of the issue, conducted by qualified individuals, was still needed.  Indeed, before any change of the current rate could be considered, broad agreement should be reached which reflected, among other things, the idea that peacekeeping required Member States to provide adequately trained and equipped troops, and the rate of reimbursement should cover necessary additional costs incurred by troop contributors. 


He said that calculation of a standard rate should be based on survey data representative of the costs incurred by at least 60 per cent of countries which had contributed troops over the last three years.  The rate should equitably reflect the varying actual additional costs of troop contributors, in particular any allowances and medical or vaccination costs.  Reimbursement should also be subject to confirmed delivery of specified services by adequately trained and prepared personnel.  The Union agreed on the need for effective procedures to ascertain the capacity of troop contributors to meet the requirements for wet-lease and self-sustainment provisions of the contingent-owned equipment arrangements.  Agreed standards should be set out in the Contingent-owned Equipment Manual.  There should also be a review of the practical aspects of the wet-lease arrangements.


ALVARO JARA (Chile), speaking on behalf of the Rio Group, said that the Rio Group had actively participated in the post-Phase V Working Group session in January.  He was pleased that the Working Group had reached consensus on revised rates of reimbursement for major equipment, self-sustainment, painting and repainting costs of major equipment and new rates for medical services.  He regretted, however, the failure to achieve consensus on the methodology for the calculations of standard rates of reimbursement to troop-contributing States.  The establishment of a suitable calculation methodology for that purpose was essential.  He supported the consideration of employing a group of qualified individuals who would study and make proposals on the calculation methodology and the elements on which it was based.  He also supported the recommendation that the rates be increased as a special temporary measure. 


On the question of medical services, the Rio Group welcomed both the review and the methodology used for the review.  He regretted the absence of a recommendation on the cost of pre- and post-deployment immunization and medical examination.  The Working Group should continue its efforts to develop a concrete formula that adequately reflected the aspirations of the troop-contributing countries.  The United Nations should reimburse the costs of pre- and post-deployment immunization and medical examination.  He recognized the urgency of the need for a transparent and equitable reimbursement system.  At a time when developing countries were the main contributors of troops, delay in reimbursements imposed a heavy burden which could affect future participation.     


FELIPE H. PAOLILLO (Uruguay) said that his country attached special importance to peacekeeping operations and had assumed a serious commitment to contribute to them.  The commitment was, however, affected by a problem of reimbursement, which threatened the capacity not only of his country to participate in peacekeeping missions but that of all developing countries.  Developing countries provided the largest number of troops.  The delay in payment of reimbursements harmed troop-contributing countries, in particular the developing countries.  He was concerned by the continuing debt of the Organization regarding Uruguay’s participation in the United Nations peacekeeping operation in Cambodia, which concluded some eight years ago.  What would be the procedure for payment of the debt when the account had been closed?  Uruguay felt that its degree of commitment had not been reciprocated by the Organization. 


He was grateful for the Working Group’s report and agreed with the need to raise the reimbursement rates, which had not been updated in about 10 years, undermining developing countries' ability to participate on equal terms.  He agreed that the standard monthly rates of reimbursement should be adjusted by

4 to 6 per cent as an ad hoc measure until the establishment of a group of qualified individuals to deal with the matter.


He said that the subject of medical services had been discussed for several years.  He was concerned, however, that although there had been a correct analysis of the problem on policy review and pre- and post-deployment, there was no specific reference to that subject in the final recommendations.  Uruguay agreed with the idea of creating a reimbursement rate to cover vaccination costs.  That additional burden was often aggravated by high risk factors in the field.  In some cases, troops confronted illnesses that did not exist in their countries and treatments were not readily available.  Such factors should be taken into account.


ANNE MERCHANT(Norway) shared the view of the Secretary-General on the need to put in place a simple, transparent and equitable reimbursement system, in order to ensure the effective implementation of peacekeeping operations.  She noted that, as a result of the efforts of the post-Phase V Working Group, agreement had been reached on a number of recommendations, including new rates for major equipment and a methodology for periodic review of both major equipment and self-sustainment.  It was important that clear guidelines were developed in order to ensure timely reimbursement to troop-contributing countries.  In order to ensure agreed guidelines were followed, she stressed the need for adequate training in contingent-owned equipment management of both civilian and military mission personnel.


She went on to say that, thus far, only wet-lease solutions had been introduced for new and existing missions.  To that end, she noted that the dry lease option and the United Nations support option could be utilized more frequently.  Norway also shared the concern of the ACABQ about continuing delays in the signing of memoranda of understanding with the Organization.  She agreed that there was a need for all concerned to cooperate with the United Nations with a view to minimizing such delays.  She said that the post-Phase V Working Group had been tasked with considering the methodology for calculating rates of reimbursement for troop contributors, and the question of what was liable for compensation was still not settled.  She was further concerned that the Assembly had yet to provide clear guidelines on the rate, or on the conduct and content of the survey of troop contributors.  What was needed was a comprehensive review of

the matter, undertaken by a group of qualified individuals, who would study and make proposals on adequate reimbursement methodology.


RAMESH CHANDRA (India)said that after reviewing the report of the post-

Phase V Working Group and the relevant ACABQ report, he had noted that the Group had been successful in validating the methodology and rates for self-sustainment, including painting and medical services.  India noted that the Secretariat had recommended those suggestions for approval without reservation.  As for vaccination costs, however, he wondered why the Secretariat had made a recommendation since the post-Phase V review did not differ from what had normally been done.  He hoped that issue could be clarified during informal consultations.


He said that it was important to note that delays that hampered the signing of memoranda of understanding were attributable as much to the Secretariat as they were to the troop-contributing countries themselves.  On the need for a transparent and equitable reimbursement system, he said Member States should keep in mind that as the number of missions increased and their mandates became more complex, the methodology was bound to become more complex as well.  All the developing countries contributing troops today were not opposed to a standard methodology for troop-contributing costs.  But what was critical was that the data presented to the Secretariat by those countries on equipment and materials was not ignored when rates for reimbursement were set.  That had not been the case during the post-Phase V process.  He hoped that in the future it would not happen. 


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