Procurement Activities, After-Service Health Insurance Also Discussed
Delegates urged greater application of results-based management and United Nations policies to crack down on fraud and corruption, as the Fifth Committee (Administrative and Budgetary) today examined progress in establishing an accountability system in the United Nations Secretariat.
Ecuador’s representative, speaking on behalf of the “Group of 77” developing countries and China, welcomed efforts to develop a definition of what constituted fraud and sought details on the newly formed policy on protection against retaliation for reporting misconduct. But she was concerned by the low rate of implementing the recommendations for improving fraud-related policies and practices by the Joint Inspection Unit and the Office of Internal Oversight Services — the main audit bodies of the Organization’s resources and staff.
Switzerland’s representative, also speaking for Liechtenstein, said it had been six years since the General Assembly adopted a resolution on results-based management, yet there was little advancement and no information on the subject in the Secretary-General’s progress report. “It is high time for the Organization to direct its focus on the delivery of results rather than outputs,” she said, encouraging the Secretariat to intensity efforts in that regard.
The European Union’s representative agreed, adding that the accountability framework’s credibility rested on the Organization’s ability to operationalize and enforce measures for staff and officials who had not adequately exercised their responsibilities. Practical measures should be introduced, he said, calling for a “cultural shift” within the Organization to address many of the issues.
Echoing other speakers, the representative of the United States said Member States must ensure the newly adopted anti-fraud and anti-corruption framework was implemented.
Yukio Takasu, Under-Secretary-General for Management, in introducing the Secretary-General’s sixth progress report on the accountability system in the United Nations Secretariat, described critical components that had been strengthened over the past year, including how Umoja and the International Public Sector Accounting Standards (IPSAS) were providing greater visibility into the Organization’s transactions and how such information could strengthen management and accountability. Introducing related reports were Babou Sene, Vice Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ); Kenneth Herman, Senior Adviser on Information Management Policy Coordination of the secretariat of the United Nations System Chief Executives Board for Coordination; and Gopinathan Achamkulangare, Inspector with the Joint Inspection Unit.
Turning to the review of procurement activities in the Secretariat, delegates said steps must be taken to adopt new technologies and increase transparency. Speakers highlighted encouraging examples of using Umoja’s real-time information to consolidate processes, including through the pilot project at the United Nations Office in Nairobi, with the United Nations Environment Programme (UNEP) and UN-Habitat.
The European Union’s delegate said the Umoja roll-out offered many benefits and she looked forward to discussing how the extension II could further enhance practices and increase visibility and transparency.
Pakistan’s representative said lessons learned and results achieved should be shared with the General Assembly before replicating the pilot project at other United Nations offices.
Chad’s representative, speaking for the African Group, expressing concern that some vendors may not be able to access the proposed e-tendering pilot project due to technological challenges, asked for an updated report on how such obstacles would be addressed.
Stephen Cutts, Assistant Secretary-General for Central Support Services, introduced the Secretary-General’s report, which showed that procurement volume across the United Nations system continued to rise, totalling $3.1 billion in 2015 and an estimated $3.2 billion in 2016.
Mr. Achamkulangare and Mr. Herman introduced the corresponding reports of their respective offices.
On the agenda item on managing after-service health insurance, speakers debated the pay-as-you-go approach and welcomed suggestions on how to reduce costs. The latest Secretary-General’s report, introduced by Bettina Tucci Bartsiotas, Assistant Secretary-General and Controller, showed that disbursements for after-service health insurance for entities falling within the direct scope of the General Assembly were expected to increase from $218 million in the current biennium to $353 million in 2024-2025. Mr. Sene introduced the Advisory Committee’s related report.
Ecuador’s delegate, speaking for the Group of 77, reiterated the importance of the welfare of United Nations staff and requested detailed information on the benefits of the coexistence of the current pay-as-you-go approach and the proposed funding of the after-service health insurance.
The European Union’s representative welcomed proposals for further measures to reduce costs in relation to health insurance plans. Funding options must be accompanied by concrete proposals for cost containment and possible reduction of the total amount of liabilities. All options must also include present and future after-service health insurance beneficiaries.
A representative of the Federation of Associations of Former International Civil Servants also spoke today.
The Committee will meet again on Friday, 10 March, at 10 a.m. to discuss the 2016-2017 programme budget as it relates to standards of air travel, the Panel of Experts on the Democratic People’s Republic of Korea and the intergovernmental negotiations of the global compact for migration.
Review of Efficiency: Accountability System in United Nations Secretariat
YUKIO TAKASU, Under-Secretary-General for Management, introduced the Secretary-General’s sixth progress report on the accountability system in the United Nations Secretariat (document A/71/729), which described critical components of the system that have been strengthened over the past year, including enterprise risk management; the Anti-Fraud and Anti-Corruption Framework; and a statement on internal control. The report also explained how Umoja and the International Public Sector Accounting Standards (IPSAS) were providing greater visibility into the Organization’s transactions and how such information could strengthen management and accountability.
The United Nations continued to make steady progress on Enterprise Risk Management implementation in six critical areas, among them organizational transformation and strategic planning, he continued. The Department of Peacekeeping Operations (DPKO) and Department of Field Support had completed the first phase of implementation in three missions and the Global Service Centre had initiated risk treatment plans. The Secretariat had also recently developed a practical guide for managers including tools and templates outlining how they could implement based on common methodology.
The Secretariat’s Anti-Fraud and Anti-Corruption Framework, issued last September, reiterated the Organization’s zero-tolerance approach to fraudulent acts and had been communicated through a number of channels including iSeek, he said. The High-Level Committee on Management had set up a task force to establish a definition for the United Nations system of what constituted fraud and suspected or presumptuous fraud. The new policy on protection against retaliation for reporting misconduct was finalized in January after completing staff-management consultation. The Office of Programme Planning, Budget and Accounts had also set up an Assurance and Monitoring Unit in its Accounts Division intended to give reasonable assurance over the reliability of data in financial statements.
The support of mission directors and chiefs, as the main fiduciaries of peacekeeping operations and special political missions, continued to be required to submit letters stating that they properly exercised their authority, he said. The Secretary-General attached great importance to prevention and response to all forms of misconduct, in particular sexual exploitation and abuse. Umoja had significantly increased visibility of financial, human resources and procurement information. It had also consolidated sources of operational information concerning human resources and a global commercial suppliers’ database. The Secretariat had two performance evaluation systems. The compacts for heads and deputy heads of missions were expanded last year to include an objective on gender mainstreaming and strengthened language on conduct and discipline.
BABOU SENE, of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced its related report (document A/71/820), saying that advances had been made, yet practical measures should be introduced to ensure that the different elements led to lasting progress in ensuring improved institutional and personal accountability. He welcomed progress in the adoption of an anti-fraud and anti-corruption framework and a revised whistle-blower policy, but noted with concern that the Secretary-General’s report contained no information on the implementation of results-based management and few details on the impact of Umoja on institutional and personal accountability.
He said the Advisory Committee recommended that additional efforts be made to strengthen the senior managers’ compacts by making them more concrete with measurable and time-bound performance targets. The current ratings distribution for personnel appraisals might not accurately reflect the Organization’s performance and the Advisory Committee expected more specific measures that would achieve results. Regarding persistent gaps in institutional and personal accountability, the Advisory Committee was not convinced that the Secretary-General’s report should not be issued biennially at the current juncture. Still, elements within the human resources framework should be considered in the context of, or at the same time as, the Secretary-General’s proposal on the evolving human resources management framework, which would be submitted at the seventy-third session for the General Assembly’s consideration.
GOPINATHAN ACHAMKULANGARE, Inspector of the Joint Inspection Unit, introduced the Unit’s report titled “Fraud prevention, detection and response in the United Nations system organization” (document JIU/REP/2016/4), which included 16 recommendations to improve policies and practices dealing with fraud. It stated that compared with fraud statics reported by the private sector, the level of fraud reported by the United Nations system was unusually low. As such, underreporting in the United Nations system could be significant and endemic. United Nations organizations must do more to understand the threat of fraud and improve ways to tackle fraudulent activities and malfeasance. The Unit advocated making use of existing approaches more effectively to tackle fraud rather than a “one-size-fits-all” approach or the installation of entirely new structures that may have serious financial implications. The Unit had developed a Fraud Management Framework comprising eight pillars that addressed prevention, detection and response to fraud in the United Nations system.
He highlighted the report’s findings and recommendations, including that a clear understanding of fraud and presumptive fraud was essential and that tone at the top and a strong anti-fraud culture were fundamental. A comprehensive anti-fraud policy and governance structure with clear allocation of responsibilities and accountability was also needed. A trained anti-fraud workforce was the best ally in fighting fraud, he emphasized, adding that fraud risk assessments helped systematically identify where and how fraud may occur. Strengthening due diligence of staff and third parties, automated controls and monitoring of high-risk programmes and projects were decisive in strengthening anti-fraud measures. In addition, comprehensive whistle-blower policies and robust anti-retaliation protection were key to an effective anti-fraud programme. The report found that most staff suspecting fraud would not come forward if they did not feel protected from retaliation and reprisal.
It was also essential to strengthen the investigation processes, he continued, adding that without the effective enforcement of a sanctions regime, there could not be an effective anti-fraud programme. Such a regime must include disciplinary measures for internal staff and debarment for external parties. The review also found that basic information on fraud was either absent or fragmented in all organizations reviews. There was little, if any, information on the performance of anti-fraud activities based on specific performance indicators, fraud losses and recovery of assets. Mechanisms and procedures for enhancing cooperation and coordination among the United Nations system organizations must be strengthened. Areas for improved collaboration included information-sharing on vendors, sharing of trained material, joint and parallel investigations, and harmonized sanctioning of staff and third parties.
KENNETH HERMAN, Senior Adviser on Information Management Policy Coordination, secretariat of the United Nations System Chief Executives Board for Coordination, introduced a related note by the Secretary-General (document A/71/731/Add.1) transmitting his comments and those of the United Nations System Chief Executives Board for Coordination on the Unit’s report on fraud prevention, detection and response. Organizations of the United Nations system welcomed the Unit’s report, recognizing the significant risk posed by fraud, as a valuable contribution to efforts to increase transparency and strengthen anti-fraud measures. They acknowledged the responsibility of all personnel to apply anti-fraud measures, support the pursuit of all fraud allegations, agree with the importance of whistle-blower protection and note the importance of supporting oversight offices. Organizations also noted a need to recognize the impact some recommendations would have on resources required for implementation. Still, they generally welcomed the Unit’s 16 recommendations and supported the harmonization of common definitions, while providing some suggestions on implementation strategies. Overall, the United Nations system found the report to be useful and clearly described the challenges.
AMÉRICA LOURDES PEREIRA SOTOMAYOR (Ecuador), speaking on behalf of the “Group of 77” developing countries and China, said accountability was a priority for Member States. As such, she remained concerned at the low implementation rate of recommendations, the lack of reference to the Board of Auditor’s findings and a declining implementation rate of Office of Internal Oversight Services (OIOS) recommendations. Expressing interest in learning more about challenges in that regard, she urged the Secretary-General to redouble related efforts. Agreeing with the Advisory Committee in underlining the significant roles of external and internal oversight mechanisms, she said the Group of 77 and China also welcomed the development of a single set of definitions of what constituted fraud and the establishment of a central intake mechanism alongside a new framework. She also welcomed the finalization of a new whistle-blower policy and looked forward to learning more about the Secretary-General’s efforts to develop a single tracking system to cover all forms of misconduct.
ABDALLAH BACHAR BONG (Chad), speaking on behalf of the African Group, welcomed progress in strengthening the accountability framework and underscored the benefits to the Secretariat of various recommendations of oversight bodies. Taking note of the role of Umoja in increasing the availability of financial information for managing common support services, he encouraged the Secretary-General to further improve accountability. The African Group would examine how the accountability and monitoring framework would help managers and how the Central Support Services could strengthen accountability using the same system. He commended the initiative to vet military and police contingent personnel as a measure to ensure that those that had previously been found to have committed misconduct did not serve again in the United Nations.
ALEXANDRA BAUMANN (Switzerland), also speaking for Liechtenstein, welcomed steps the Secretary-General had taken. Yet, the progress report, which was essentially a tool to ensure accountability by the Secretariat towards Member States, remained silent on results-based management, she said, sharing the Advisory Committee’s view. Since the General Assembly had adopted a related resolution in 2001, little progress had been made. “It is high time for the Organization to direct its focus on the delivery of results rather than outputs,” she said, encouraging the Secretariat to intensity efforts in that regard.
JAN DE PRETER, European Union, welcomed progress, but shared the Advisory Committee’s concerns that additional practical measures should be introduced. The accountability framework’s credibility rested on the Organization’s ability to operationalize and enforce measures for staff and officials who had not adequately exercised their responsibilities. The effective use of resources must be central to any accountability system and there was a need for a “cultural shift” within the Organization to address many of the issues. Welcoming the anti-fraud and anti-corruption framework, he looked forward to receiving regular updates on its implementation. He also welcomed the assertion that the Secretariat-wide enterprise risk management framework had proven its added value, looking forward to receiving more concrete information on it. Holding senior managers accountable for the delivery of results, not just outputs, clearly remained a work in progress. More needed to be done to promote a culture of accountability, he said, expressing disappointment that the latest report had failed, yet again, to respond to specific requests. Some elements of the report needed to be further developed, such as the framework for the Organization’s human resources management.
MAURA CONNELLY (United States) said that the accountability framework, if implemented consistently and comprehensively, could strengthen the Organization’s ability to manage risks and better align authority with responsibility. The framework must include an enterprise risk management approach, anti-fraud and anti-corruption framework and results-based management. Member States must ensure that the anti-fraud and anti-corruption framework was effectively implemented. The application of the updated protection against retaliation policy was another important accountability tool. Regarding enterprise risk management, she commended the completion of phase one of the framework across peacekeeping missions. However, she agreed with the Advisory Committee that additional efforts were needed. Turning to results-based management, she said even though Member States had, in 2016, requested a detailed plan, the current report’s lack of information on progress was a serious omission. In that vein, she asked the Department of Management to address the omission.
Mr. TAKASU, responding to the delegates, said the Secretariat was committed to accountability. Member States and the Secretariat were now more focused on input. The “culture change” was needed, he said, noting that there was a weakness in personal rather than in organizational accountability. All initiatives cited with regard to personal accountability had been examined and players had been identified. In that area, progress could be seen, as measures had been taken to tackle remaining challenges. He accepted criticism on the results-based management, adding that annual reporting methods could address that issue. Everyone knew that results-based management had been approved by the General Assembly and action had been taken to implement it. “All the pieces are there,” he said, noting that a process had already begun on budget activities surrounding Umoja. He hoped the Secretariat could provide further information during the resumed session. Major obstacles on implementing the recommendations included challenges faced at hardship duty stations.
STEPHEN CUTTS, Assistant Secretary-General for Central Support Services, introduced the Secretary-General’s report on procurement activities in the United Nations Secretariat (document A/71/681), which requested that the General Assembly take note of developments in various areas, including the impact of Umoja on the procurement process, different solicitation methodologies in the acquisition of aviation services, and an assessment of the pilot project for electronic tendering. Furthermore, the report provided an update on the development of the Award Review Board and the Vendor Review Committee, detailed the intensified efforts to promote procurement from developing countries and countries with economies in transition, and provided an update on regional procurement activities.
Procurement across the United Nations system had increased in recent years, he said, noting that the procurement volume of the Secretariat, comprising around 18 to 19 per cent of the system, was just under $3 billion in 2013, $3.2 billion in 2014 and $3.1 billion in 2015. First estimates indicated a procurement volume of about $3.2 billion for 2016. The Central Support Services would work closely with the Department of Field Support to ensure that the supply chain management strategy met the Department’s needs and satisfied the operational requirements of the entire Secretariat. The Organization’s interests would be better served by harmonized and aligned procurement functions. One step towards that end had been the governance adjustments for procurement activities at the United Nations Office at Nairobi, whereby all procurement and financial transactions of the United Nations Environment Programme (UNEP), the United Nations Human Settlements Programme (UN-Habitat), and the Office for the Coordination of Humanitarian Affairs through UMOJA would be channelled through Umoja.
Furthermore, the Procurement Division had initiated an e-tendering pilot project in 2014 with a number of requests for quotation solicitations, he said. Procurement offices in Geneva and Brindisi as well as some units in New York had been using the e-tendering solution, he said, emphasizing that extensive outreach to and surveys of the vendor community had revealed a positive reception of the new system. The report also noted that the 2030 Agenda for Sustainable Development promoted sustainable public procurement practices, in accordance with national policies and priorities. In that context, the Secretariat was reviewing efforts to reduce its negative environmental impact, including through the use of more energy-efficient infrastructure and transport, increased use of renewable energy, and improved waste management systems. In addition, the Secretariat would submit to the General Assembly during its seventy-first session an action plan with a view to ensuring the United Nations did not negatively impact the climate.
BABOU SENE of ACABQ said he looked forward to receiving the outcome of the ongoing review conducted by the Office of Central Support Services in the governance framework, organizational structure and distribution of procurement offices worldwide. Any proposal by the Secretary-General should seek to maximize efficient gains and operational effectiveness while taking into account the specificities of individual offices and their procurement needs. The Advisory Committee also expected that any procurement service delivery proposals were fully coordinated with other initiatives such as the supply chain management system. Regarding regional service delivery, he stressed the need for further explanations on the imbalance of resources referred to in the Secretary-General’s report, as well as the feasibility of the replication of the pilot at the United Nations Office at Geneva and the United Nations Office at Vienna.
On the advantages and disadvantages of the solicitation methodology for procurement of long-term aviation services, he said that the information provided in the report was of a preliminary nature only. The Advisory Committee trusted that the Secretary-General would provide further details to the General Assembly at the time of the report’s consideration. It had recommended to the Procurement Division to be involved in the launching and planning of all new missions in order to maximize the efficiency and effectiveness of the procurement process and optimize the use of resources. In addition, the Secretary-General should provide further information on any standing or finalized administrative measures for procurement and details on the circumstances. The Advisory Committee also welcomed a number of initiatives such as the development of a joint shipping cell with the World Food Programme (WFP) and the inclusion of procurement in the design of the Young Professionals Programme.
Mr. ACHAMKULANGARE, introducing the Joint Inspection Unit’s report on contract management and administration in the United Nations system (document JIU/REP/2014/9), said its aim was to analyse the methods and practices of the United Nations system organizations to manage contracts for goods and services after the contracts had been awarded. The Unit had developed a contract management process assessment model to assess the processes of managing contracts during the post-ward phase. The review had found that contract-management practices were deficient in a number of areas. The similarity of those efficiencies across the United Nations system, combined with the magnitude and volume of procurement, had demonstrated that concerted efforts were necessary to address that systematic challenge. Having identified the shortcomings, the report had made 12 recommendations.
The review findings highlighted that in many cases, policies and procedures in the post-award phase were absent, he said. Contract management structures, roles and responsibilities were not well-defined to ensure accountability and efficiency. The professionalization of contract management and the creation of such units required senior management’s attention. Training was neglected in most organizations, which led to inadequate contract management skills among staff. While plans were available to address the risks of the pre-award procurement phase, no examples had been found of systematic risk assessment at the start of the post-award phase. Among other things, monitoring contract performance was needed to minimize the risk of poor contractor performance, and to prevent undelivered services and excessive payment for the value of the services. The Unit was pleased to note, however, efforts under way to create vendor review frameworks, which would allow organizations to record and share contractor performance.
Mr. HERMAN introduced a note of the Secretary-General (document A/70/676/Add.1), transmitting his comments and those of the United Nations System Chief Executives Board for Coordination’s members on the Unit’s report. Noting that effective management of contracts was a fundamental institutional practice, United Nations organizations expressed support for many of the recommendations as well as their intention to strengthen contract management policies and procedures by applying lessons learned that the report contained. At the same time, some organizations noted that, given the small scale of their procurement activities, some of the recommendations were not practical for implementation.
United Nations entities also noted the need to tailor implementation to their specific circumstances and that some of the recommendations would benefit from conducting cost-benefit assessments to ensure that any expenses related to implementation would result in benefits. For example, recommendation three, which called for a system of written notification, in some cases may go beyond what was necessary. Implementation of other recommendations could depend on the availability of resources.
Ms. PEREIRA (Ecuador), speaking on behalf of the Group of 77 and China, reiterated the significance of increased efficiency, transparency, and cost effectiveness and urged the Secretary-General to strengthen internal controls and oversight regimes, accountability over senior staff, and implementation of corresponding legislative mandates. Taking note of the ACABQ report, she said that any structural change in the procurement operations while implementing service delivery proposals must be fully coordinated within the supply chain management system. The Group of 77 and China also commended the Secretariat’s Procurement Division for its efforts to reach out to the widest possible audience. Transparency and efficiency within the United Nations procurement system could never be achieved without a significant increase in procurement by vendors from developing countries.
The Secretary-General must continue to explore ways to promote procurement from developing countries and countries with economies in transition at Headquarters and field offices, she said. Taking note of the recommendations of the Board of Auditors in document A/71/5 (Vol. 10), the Group expressed concern about the waivers and extensions granted to vendors. Such waivers went against the spirit of transparency and fair play of the United Nations system, she said, adding that the Group trusted the Secretary-General to address the weakness. Goods and services procured by the Organization must comply with established procedures, based on international competitive bidding. On the notion of e-tendering, the Group requested further details on lessons learned and results achieved. More analysis was also required on the content of and criteria for sustainable procurement.
Mr. BACHAR BONG (Chad), speaking on behalf of the African Group and associating himself with the Group of 77 and China, requested that the Secretary-General ensure that procurement reporting procedures were fully applied in a timely manner, while also improving procurement accountability at peacekeeping missions. On the notion of environmentally friendly and sustainable procurement, the Group recalled that the General Assembly had not yet approved the idea. The Group asked the Secretary-General to prepare a comprehensive report on the context of and criteria for such a concept including its possible impact on the diversification of the origin of vendors.
On the use of information technology to achieve efficiencies in the processing of solicitations, the Group was weary of technology challenges for vendors who may not be able to reach and access such systems. He requested an updated report on the e-tendering project proposal and how it intended to curb challenges. The Group also requested more information on the Secretariat’s proposal regarding the future of the Regional Procurement Office, especially as it now considered prospects of a global service-delivery model.
FIONA GRANT, European Union, welcomed progress in certain areas and encouraged the Secretariat to accelerate the publication of its requests for proposals for air transport services. Supporting the implementation of the Board of Auditors’ recommendations, she said the United Nations procurement processes should consider new technologies and innovations. The Umoja roll-out offered many benefits, she said, looking forward to discussing how the extension II could further enhance practices and increase visibility and transparency. She encouraged the Secretariat to pursue a more global approach and to enhance collaboration and cooperation between United Nations system entities. The pilot project at the United Nations Office in Nairobi and the WFP joint shipping cell offered encouraging examples, she said, underlining the importance that initiatives aligned with goals of the forthcoming global service delivery model.
She encouraged the Secretary-General to continue to ensure fair and transparent market access to United Nations tenders from all parts of the world, welcoming outreach initiatives to facilitate participation. Sustainable procurement was a close complement to promoting wide geographical market access, in line with the Paris Agreement on climate change and the 2030 Agenda, she said, adding that target 7 of Sustainable Development Goal 12 called for promoting public procurement practices that were sustainable. As such, the United Nations procurement activities should reflect a global sustainable development policy compatible with and supportive of the environment and human rights obligations.
NABEEL MUNIR (Pakistan) said efficiency could only be achieved with strong internal control and oversight regimes, robust accountability systems and the application of corresponding legislative mandates. Agreeing with the Advisory Committee’s recommendations on the usefulness of information technology in making the solicitation process efficient, he said such practices should not reduce bidding opportunities for Member States without those resources. Increasing opportunities for vendors from developing countries was a fundamental part of the system. Taking note of the Nairobi pilot project, he said lessons learned and results achieved should be shared with the General Assembly before replicating it at other United Nations offices. Turning to the Award Review Board, he asked the Secretary-General to update the Assembly on the expansion of the Board’s coverage, reasons for rejecting solicitations and how they were processed. The Assembly had not considered for approval a concept of environmentally-friendly and sustainable procurement. In that regard, he urged the Secretariat to avoid any initiatives that would pre-empt a decision by the Assembly, adding that the Secretary-General must refine the understanding of the concept and how it could be implemented while considered the abilities of developing countries.
Ms. CONNELLY (United States) recognized the Procurement Division’s efforts to use Umoja’s real-time information to consolidate processes, including through the Nairobi pilot project. Stressing the need to continuously improve practices to align with industry standards, she expressed disappointment at the slow progress in applying the solicitation methodology in long-term air charter services and encouraged the Department of Management and Department of Field Support to jointly address the capability gaps that had been outlined in the Advisory Committee’s report. Transparency and accountability in the procurement process was of utmost importance, she said, noting efforts in expanding the Award Review Board. Yet, there was a need to further strengthen certain areas. Moving forward, she encouraged the Secretary-General to strengthen internal controls and transparency as options to consolidate or restructure procurement service delivery in the context of the global service delivery model.
2016-2017 Budget: Managing After-Service Health Insurance
BETTINA TUCCI BARTSIOTAS, Assistant Secretary-General and Controller, introduced the Secretary-General’s report titled “Managing after-service health insurance” (document A/71/698). It provided an overview of health insurance covering officials and former officials, and their family members, across the United Nations system and contained eight recommendations, some in relation to efficiency gains and cost containment. The Secretary-General continued to be concerned about the financial pressure that the pay-as-you-go approach would place on future budgets. Disbursements for after-service health insurance for entities falling within the direct scope of the General Assembly were expected to increase from $218 million in the current biennium to $353 million in 2024-2025. While for a number of United Nations system agencies, the after-service health insurance liability exceeded net assets, full funding of the total liability was unrealistic. A more balance approach was needed, she stressed.
The accumulation of the reserve would be achieved through a payroll charge starting in the 2020-2021 biennium, she continued, adding that the payroll charge was currently assessed at 6.17 per cent of salary and would be adjusted to reflect the actual return on the investment. The Working Group on After-Service Health Insurance would continue to focus its efforts on collective negotiations with third-party administrators; where appropriate and beneficial, requiring that insured persons be enrolled for primary coverage under their national health insurance scheme. It would also continue to revisit plans and eligibility. The funding proposal was aimed at putting in place a mechanism that would ensure a prudent control of the escalating cost on future budgets. While all opportunities to increase efficiency and contain costs would be explored, a prudent financial reserve would reduce escalating pressures on future budgets.
Mr. SENE of ACABQ introduced its related report (document A/71/815). After reviewing the seven recommendations of the Secretary-General on the matter, the Advisory Committee would recommend endorsing recommendations A, B, C, E and G but would recommend against endorsing of recommendations D and F. Recommendation F was about proposed partial funding of after-service health insurance liability, namely, to fully fund newly constituted liability in relation to staff recruited from 1 January 2020, while maintaining the pay-as-you-go approach for existing liability.
The Advisory Committee recalled that the General Assembly had considered that the existing pay-as-you-go approach remained viable, he continued. The Assembly had also endorsed the Advisory Committee’s recommendation that the Organization continue with the pay-as-you-go approach at the present time. Furthermore, the Advisory Committee felt that the funding proposal was not presented in a comprehensive manner and lacked considerations of different scenarios and variables. Regarding access to national health insurance schemes of Member States and its potential impact on the health insurance plans, the Advisory Committee noted that information-gathering in that respect was ongoing.
LINDA SAPUTELLI, President, Federation of Associations of Former International Civil Servants, said her organization represented tens of thousands of retirees from the United Nations system. The Federation was pleased that the ACABQ recommended endorsement of five of the seven recommendations but disappointed that it did not support the other two. That exposed the Organization to the distinct risk that funds to meet unfunded after-service health insurance liabilities would not be available at the time when future insurance premiums became due. She expressed hope that the Advisory Committee’s reservations to “pay-as-you-go” might be overcome in due time. The Federation also reiterated its position that organizations still on a “pay-as-you-go” basis should move to a “pay-as-you-accrue” basis.
While the Advisory Committee recommended using the United Nations Joint Staff Pension Fund machinery to invest after-service health insurance assets, the Working Group and the United Nations Joint Staff Pension Board did not, she said. The Federation fully shared the position of the Working Group. It also took strong exception to the suggestion to reduce the contribution shared by the organizations as it would require an increased share from retirees for a benefit that was clearly intended to be deferred compensation already earned. To impose a higher share of contributions on retirees after the fact would be inherently unfair, she added, urging no action be taken on the suggestion to consider changing sharing ratios.
Ms. PEREIRA (Ecuador), speaking again for the Group of 77 and China, reiterated the importance of the welfare of United Nations staff. Regarding the Secretary-General’s recommendations, the Group requested detailed information, among others, on the benefits of the coexistence of the current pay-as-you-go approach and the proposed funding of the after-service health insurance. On the proposal to cease consideration of extending the mandate of the Pension Fund to the benefits of the after-service health insurance, the Group recalled that the General Assembly requested that the Secretary-General propose options for including in the mandate of the Fund the administration of such benefits. The Group sought more information on why that was no longer being explored.
Mr. DE PRETER, European Union, agreed with the Advisory Committee’s recommendations and saw no clear argument and no added value that would justify modifying the current stage. It welcomed most of the new approaches developed in the Secretary-General’s report inasmuch as they were also recommended by the Advisory Committee, including collective negotiations with third-party administrators, health-care providers and insurers. That would help further harmonize the principles guiding liability valuation and continue to promote inter-agency collaboration regarding the investment of funds earmarked for the coverage of after-service health insurance liabilities. The European Union also welcomed proposals for further measures to reduce costs in relation to health insurance plans. Funding options must be accompanied by concrete proposals for cost containment and possible reduction of the total amount of liabilities. All options must also include present and future after-service health insurance beneficiaries.