United Nations
Procurement Internal Controls Are Weak Gao ID: GAO-06-577 April 25, 2006For more than a decade, experts have called on the United Nations (UN) Secretariat to correct serious deficiencies in its procurement process. Recent evidence of corruption and mismanagement in procurement suggests that millions of dollars contributed to the UN by the United States and other member states are at risk of fraud, waste and abuse. During the last decade, UN procurement has more than tripled to more than $1.6 billion in 2005, largely due to expanding UN peacekeeping operations. More than a third of that amount is procured by UN peacekeeping field missions. To review the UN's internal controls over procurement, GAO assessed key control elements, including (1) the overall control environment and (2) specific control activities aimed at providing reasonable assurance that staff are complying with directives.
Weak internal controls over UN headquarters and peacekeeping procurement operations expose UN resources to significant risk of waste, fraud, and abuse. The UN's overall control environment for procurement is weakened by the absence of (1) an effective organizational structure, (2) a commitment to a professional workforce, and (3) specific ethics guidance for procurement staff. GAO found that leadership responsibilities for UN procurement are highly diffused. While the UN Department of Management is responsible for UN procurement, field procurement staff are instead supervised by the UN Department of Peacekeeping Operations, which currently lacks the expertise and capacities needed to manage field procurement activities. Also, the UN has not demonstrated a commitment to maintaining a qualified, professional procurement workforce. It has not established training requirements or a procurement career path. In addition, the UN has yet to establish specific ethics guidance for procurement staff in response to long-standing mandates by the UN General Assembly, despite recent findings of unethical behavior. GAO also found weaknesses in key control activities. For example, the UN has not addressed workload and resource problems that are impeding the ability of a key committee to review high-value contracts. Also, the UN has yet to establish an independent process to review vendor complaints, despite long-standing recommendations that it do so. In addition, the UN has not updated its procurement manual since 2004. As a result of these and other weaknesses, many millions of dollars in U.S. and other member state contributions could be vulnerable to fraud, waste, and abuse.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-577, United Nations: Procurement Internal Controls Are Weak
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Report to Congressional Committees:
April 2006:
United Nations:
Procurement Internal Controls Are Weak:
GAO-06-577:
GAO Highlights:
Highlights of GAO-06-577, a report to congressional committees.
Why GAO Did This Study:
For more than a decade, experts have called on the United Nations (UN)
Secretariat to correct serious deficiencies in its procurement process.
Recent evidence of corruption and mismanagement in procurement suggests
that millions of dollars contributed to the UN by the United States and
other member states are at risk of fraud, waste and abuse. During the
last decade, UN procurement has more than tripled to more than $1.6
billion in 2005, largely due to expanding UN peacekeeping operations.
More than a third of that amount is procured by UN peacekeeping field
missions.
To review the UN‘s internal controls over procurement, GAO assessed key
control elements, including (1) the overall control environment and (2)
specific control activities aimed at providing reasonable assurance
that staff are complying with directives.
What GAO Found:
Weak internal controls over UN headquarters and peacekeeping
procurement operations expose UN resources to significant risk of
waste, fraud, and abuse. The UN‘s overall control environment for
procurement is weakened by the absence of (1) an effective
organizational structure, (2) a commitment to a professional workforce,
and (3) specific ethics guidance for procurement staff. GAO found that
leadership responsibilities for UN procurement are highly diffused.
While the UN Department of Management is responsible for UN
procurement, field procurement staff are instead supervised by the UN
Department of Peacekeeping Operations, which currently lacks the
expertise and capacities needed to manage field procurement activities.
Also, the UN has not demonstrated a commitment to maintaining a
qualified, professional procurement workforce. It has not established
training requirements or a procurement career path. In addition, the UN
has yet to establish specific ethics guidance for procurement staff in
response to long-standing mandates by the UN General Assembly, despite
recent findings of unethical behavior.
Diffusion of Leadership Responsibilities for UN Procurement:
[See PDF for Image]
[End of Figure]
GAO also found weaknesses in key control activities. For example, the
UN has not addressed workload and resource problems that are impeding
the ability of a key committee to review high-value contracts. Also,
the UN has yet to establish an independent process to review vendor
complaints, despite long-standing recommendations that it do so. In
addition, the UN has not updated its procurement manual since 2004. As
a result of these and other weaknesses, many millions of dollars in
U.S. and other member state contributions could be vulnerable to fraud,
waste, and abuse.
What GAO Recommends:
GAO recommends that the State Department work with member states to
encourage the UN to establish clear lines of authority, enhance
training, adopt ethics guidance, establish an independent bid protest
mechanism, and implement other steps to improve UN procurement. GAO
provided State and the UN with an opportunity to comment on a draft of
this report. State endorsed GAO‘s recommendations. The UN chose not to
provide comments.
For more information, contact Thomas Melito at (202) 512-9601 or
meltiot@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
The Control Environment over UN Procurement Is Weak:
The UN Has Weaknesses in Key Procurement Control Activities :
The UN Has Not Comprehensively Assessed Procurement Risks:
Fragmented Information Systems Impede UN Procurement:
Procurement Managers Lack Mechanisms to Monitor Procurement and Rely on
Oversight Entities:
The United States Has Recently Taken Steps to Support UN Procurement
Reform:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: UN Procurement Processes:
Appendix III: Comments from the Department of State:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Figures:
Figure 1: Major Commodities Purchased in 2004:
Figure 2: UN Peacekeeping Expenditures and Military Personnel, 1999-
2005:
Figure 3: UN Headquarters and Peacekeeping Procurement for 2004:
Figure 4: Supervisory Oversight and Delegation of Field Procurement
Authority:
Figure 5: Peacekeeping and Other Missions Administered by the
Department of Peacekeeping Operations:
Figure 6: Procurement Process in the Field:
Figure 7: Procurement Process in UN Headquarters for Contracts Greater
Than $200,000:
Abbreviations:
JIU: Joint Inspection Unit:
OIOS: Office of Internal Oversight Services:
UN: United Nations:
Letter:
April 25, 2006:
The Honorable Norm Coleman:
Chairman:
The Honorable Carl Levin:
Ranking Minority Member:
Permanent Subcommittee on Investigations:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Henry J. Hyde:
Chairman:
The Honorable Tom Lantos:
Ranking Minority Member:
Committee on International Relations:
House of Representatives:
The United Nations (UN) Secretariat procured more than $1.6 billion in
goods and services in 2005, primarily to support a peacekeeping program
that has more than tripled in size since 1999.[Footnote 1] For more
than a decade, experts have called on the UN to correct serious
deficiencies in its procurement process. However, audits and
investigations continue to uncover evidence of corruption and
mismanagement in the UN's procurement activities. For example, in 2005,
a former UN procurement officer pled guilty to charges of accepting
money from vendors seeking contracts. In 2006, the UN placed eight
officials on administrative leave pending the outcome of an ongoing
investigation involving procurement activities. Four of the officials
were in the Department of Management, which is responsible for all UN
procurement functions--including establishing procurement policies
through its UN Procurement Service and approving high-value contracts.
The remaining four staff were from the Department of Peacekeeping
Operations. Procurement staff in field peacekeeping missions procure
goods and services amounting to more than one-third of all UN
procurement.
UN procurement occurs in a highly decentralized organizational
structure, widely dispersed geographic setting, and conflict
situations. These conditions underscore the need for effective internal
controls to help provide reasonable assurance against fraud, waste,
mismanagement, and abuse. Internal controls serve as the first line of
defense in safeguarding assets and preventing fraud. The United States
is the largest financial contributor to the UN and has a strong
interest in helping to ensure that the UN exercises sound internal
controls over its resources. In addition, the United States, through
the Department of State, takes measures to advance reform of UN
management processes.
In this report, we assess the UN's procurement process according to the
five key standards for internal control.[Footnote 2] First, we assessed
the control environment over procurement by examining the
organizational structure for managing procurement, elements required
for a professional procurement workforce, and ethics guidance for
procurement staff. Second, we assessed several UN control activities,
including its process for reviewing contracts; mechanisms for
considering vendor protests; processes for updating the procurement
manual; and procedures for maintaining vendor rosters. Third, we
determined the extent to which the UN examines the risks regarding its
procurement activities. Fourth, we reviewed the UN's measures for
recording procurement information and communicating it to management.
Fifth, we examined the UN's mechanisms for monitoring management
oversight of procurement activity and closing audit recommendations. In
addition, we examined the U.S. government's efforts to support reform
of UN procurement.
To assess internal controls in the UN procurement process, we used a
framework that is widely accepted in the international audit community
and has been adopted by leading accountability organizations, including
the International Organization of Supreme Audit Institutions, the U.S.
Office of Management and Budget, and GAO.[Footnote 3] We also reviewed
reports issued by the UN's internal oversight unit, the Office of
Internal Oversight Services; and by its external auditors, the Board of
Auditors and the Joint Inspection Unit. We also analyzed reports
prepared for the UN in 2005 by consulting firms[Footnote 4] and
reviewed documents and data provided by the UN Procurement Service and
the Department of Peacekeeping Operations (Peacekeeping Department) and
by the U.S. Department of State. We interviewed UN and Department of
State officials in New York and conducted structured interviews with
the principal procurement officers at each of 19 missions.[Footnote 5]
To determine the implementation rate of the internal oversight unit's
recommendations, we discussed the data collection procedures with
relevant officials and performed basic reliability checks. We
determined that the recommendations data used were sufficiently
reliable for the purposes of this report.
We performed our work from April 2005 through March 2006 in accordance
with generally accepted government auditing standards. Appendix I
provides detailed information on our scope and methodology.
Results in Brief:
UN resources are unnecessarily vulnerable to mismanagement, fraud,
waste, and abuse because the UN (1) lacks an effective organizational
structure for managing procurement; (2) has not demonstrated a
commitment to maintaining a professional, trained procurement
workforce; and (3) has failed to adopt the full range of ethics
guidance for procurement officials. First, the UN has not established a
single organizational entity or mechanism capable of comprehensively
managing procurement. This condition may have hampered efforts to
correct long-standing procurement weaknesses. Second, the UN has not
demonstrated a commitment to improving the professionalism of its
procurement staff in the form of training, a career development path,
or other key human capital practices critical to attracting,
developing, and retaining a qualified professional workforce. For
example, the UN has not established training requirements for its
procurement staff. We also found that 16 of 19 field procurement chiefs
did not possess a professional certification of their procurement
qualifications. Because significant control weaknesses have led the UN
to rely disproportionately on the actions of its staff to safeguard its
resources, the UN's commitment to providing a professional, trained
procurement workforce is particularly critical. Third, the UN has
failed to adopt a full range of ethics guidance for procurement
officials despite directives from the General Assembly in 1998 and
2005. Since the control environment provides the structure and climate
for the quality of internal controls of an organization, failure to
address these weaknesses undermines other UN efforts for taking
corrective action to improve its procurement process.
We also found weaknesses in key procurement control activities that are
intended to provide reasonable assurance that management's directives
are followed. These activities include processes for (1) reviewing high-
value procurement contracts; (2) considering vendor protests; (3)
updating the procurement manual; and (4) maintaining qualified vendor
rosters.
* We found that, although UN procurement tripled over the past 7 years,
the size of the UN's principal contract review committee and its
support staff remained relatively stable. In 2005, the Headquarters
Committee on Contracts reviewed contracts valued at $3 billion
(including long-term contracts) and committee members stated that they
do not have resources to keep pace with the current workload. In
addition, UN auditors have concluded that the committee cannot properly
review contract proposals. Without an effective contract review
process, the UN cannot provide reasonable assurance that high-dollar
value contracts are undertaken in accordance with the Financial
Regulations and Rules of the UN.
* The UN has not established an independent process to consider vendor
protests despite a 1994 recommendation by a high-level panel of
international procurement experts to do so as soon as possible. Without
such a process, the UN may not be able to provide reasonable assurance
of the fair treatment of vendors. In addition, senior UN management may
not be alerted to procurement staff's failure to comply with
procurement regulations.
* The UN has not updated its procurement manual since 2004 to reflect
current UN procurement policy. For example, the manual does not reflect
a June 2005 delegation of procurement authority that allows
peacekeeping missions to purchase up to $1 million in certain goods or
services without obtaining the prior approval of the Department of
Management and the Headquarters Committee on Contracts. All 19
Peacekeeping Department field procurement officials informed us that
they have access to the manual at their mission, and all are somewhat
to very familiar with it. In a highly decentralized organization with
geographically dispersed field missions, it is essential that staff
have access to the most current procurement policy so that they can be
informed of and consistently comply with UN regulations.
* The UN does not consistently implement its process for helping to
ensure that it is conducting business with qualified vendors. As a
result, the UN may be vulnerable to favoring certain vendors and
awarding contracts to vendors that are unqualified. For example,
according to UN auditors, one vendor appears to have been awarded
approximately $36 million in contracts without completing the vendor
registration process.
The UN lacks a risk assessment framework for identifying and managing
the procurement activities that are most vulnerable to mismanagement,
fraud, waste, and abuse. UN procurement officials and auditors have
identified significant risks associated with headquarters and
peacekeeping procurement operations, such as start-up peacekeeping
missions that operate under tight time frames in logistically complex
environments. Without a comprehensive risk assessment framework, the UN
is at risk of not allocating proper attention to start-up missions or
other procurement activities prone to fraud, waste, and abuse.
We found that the UN lacks an integrated information management system,
which adversely affects its ability to oversee field and headquarters
procurement operations. We also found that the Peacekeeping Department
has established only limited reporting requirements for field missions.
A wider range of management reports, if used, would serve to alert
management of procurement actions requiring additional monitoring. For
example, a report of cumulative awards to vendors would help management
identify possible instances of inadequate competition and bid rigging
by vendors. Without such reporting tools or a full-time manager to
review them, the likelihood that procurement mismanagement, fraud, and
abuse go undetected is increased.
UN procurement officials lack internal mechanisms for monitoring
procurement activity in headquarters and the field. For example, we
found that chief procurement officers in the field did not have a
systematic, standardized approach for determining whether procurement
under their supervision is consistent with UN regulations. Instead, to
monitor procurement activity, officials rely heavily on the UN
oversight entities' periodic audits. Although these entities have
identified numerous weaknesses in the procurement process, the UN has
not always implemented their recommendations to correct the weaknesses.
In many cases, the oversight entities have found similar problems in
different field missions and issued similar recommendations. Yet, UN
management does not review the audit reports in a methodical manner to
determine whether changes to policy or processes are warranted to
address systemic problems. In addition, the UN does not have a
mechanism that provides reasonable assurance that corrective actions,
once taken, are institutionalized. Without effective management
oversight of procurement activity, the UN is unable to identify and
correct existing control weaknesses that could lead to mismanagement,
fraud, waste, and abuse.
The United States has recently taken steps to advocate procurement
reform as one element of overall UN management reform. The most visible
of these steps was a U.S.-chaired Security Council review of the
Peacekeeping Department's procurement problems in February 2006.
However, the position of Ambassador for UN Management and Reform at the
U.S. Mission to the UN in New York was vacant for more than 1 year.
This position was recently filled in March 2006. U.S. Mission officials
stated that this vacancy limited the mission's ability to influence
procurement reform.
We are recommending that the Secretary of State and the Permanent
Representative of the United States to the UN work with other member
states to encourage the UN Secretary-General to take several steps to
address these problems, including establishing clear and effective
lines of authority and responsibility between headquarters and the
field over UN procurement; establishing a comprehensive training
program and formal career path for procurement staff; providing the
Headquarters Committee on Contracts with an adequate structure and
manageable workload; and establishing an independent bid protest
process. We also are recommending that the Secretary of State report to
the Congress annually regarding UN progress in reforming its
procurement process.
The Department of State provided written comments on a draft of this
report, which are reproduced in appendix III. The department stated
that it welcomed our report and endorsed its recommendations. The UN
did not provide us with written comments. State and UN officials
provided us with a number of technical suggestions and clarifications
that we have addressed as appropriate.
Background:
UN Secretariat procurement has tripled over the past decade, as
peacekeeping operations have grown. The UN procures a variety of goods
and services, including freight services, motor vehicle parts, and
telecommunications equipment. UN procurement is conducted by the
Department of Management and the Department of Peacekeeping Operations
through its field missions. Internal controls can be used to manage an
organization and to identify areas of weaknesses and strengths in the
procurement process.
The UN Procures Many Goods and Services:
In 2004, the UN spent a total of $1.31 billion on procurement, with
$276 million being devoted to air transportation services
alone.[Footnote 6] The UN procures a variety of goods and services,
including air transportation, freight forwarding and delivery, motor
vehicle parts and transportation equipment, and telecommunications
equipment and services, as shown in figure 1.
Figure 1: Major Commodities Purchased in 2004:
[See PDF for image]
[End of figure]
Procurement Primarily Involves Two Departments:
The Department of Management is responsible for procurement in the UN
Secretariat. The department's Procurement Service develops policies and
procedures for headquarters and field procurement based on the UN
Financial Regulations and Rules.[Footnote 7] The Procurement Service
also oversees training for all staff involved in procurement. In
addition, it also provides advisory support for field purchases within
the authority of field missions. The Procurement Service also
negotiates, prepares, and administers contracts for goods and services
for UN headquarters and certain large contracts (such as air
transportation services or multi-year systems contracts) for
peacekeeping missions. The UN's procurement process at headquarters
involves several steps (see fig. 7, app. II).
The UN's field procurement process involves the Peacekeeping Department
and includes additional steps (see fig. 6, app. II). Each field mission
is required to establish a Local Committee on Contracts to review and
recommend contract awards for approval by the chief administrative
officer of the mission. The Local Committee on Contracts is composed of
four members from the mission: a legal advisor, and the respective
chiefs of the mission's finance, general services, and transport
sections. Field missions may not award contracts worth more than
$75,000 without approval by the chief administrative officer of the
mission based on the advice of the Local Committee on Contracts. In
addition, field missions may not award contracts worth more than
$200,000 without approval first by the mission's chief administrative
officer based on the advice of the Local Committee on Contracts and
then by the Department of Management based on the advice of the
Headquarters Committee on Contracts.[Footnote 8] The Headquarters
Committee on Contracts evaluates the proposed contracts and advises the
Department of Management as to whether the contracts are in accordance
with UN Financial Regulations and Rules and other UN policies.
The Procurement Service employs about 70 individuals to procure items
for the UN's headquarters operations, peacekeeping missions,
international criminal tribunals, regional commissions, and upon
request, other UN agencies and subsidiary organs. The Peacekeeping
Department employs about 270 field procurement staff at its field
missions.[Footnote 9] The members of the Headquarters Committee on
Contracts are drawn from the UN Office of Central Support Services;
Office of Programme Planning, Budget and Accounts; Office of Legal
Affairs; and the Department of Economic and Social Affairs. The
committee relies on support staff to assist it in coordinating its
activities and drafting minutes detailing the results of its meetings.
UN Procurement Tripled Due to Growth in Peacekeeping Operations:
UN procurement has more than tripled over the past decade as UN
peacekeeping operations have grown. UN procurement grew from $430
million in 1997 to $1.6 billion in 2005. This increase has been due
primarily to a rapid increase in UN peacekeeping operations. Eight of
the UN's 15 current peacekeeping missions were established in 1999 or
later. Peacekeeping expenditures more than tripled between 1999 and
2005, as shown in figure 2. In addition, the number of military
personnel in peacekeeping missions has increased fivefold, from about
14,000 in 1999 to about 73,000 as of February 2006. Although
peacekeeping missions were originally conceived as short term in
nature, many missions are long-standing and have continued for more
than 5 years.
Figure 2: UN Peacekeeping Expenditures and Military Personnel, 1999-
2005:
[See PDF for image]
Note: Military personnel includes civilian police, troops, and
observers. It does not include UN civilian personnel.
[End of figure]
As shown in figure 3, 85 percent of UN procurement in 2004 was
conducted in support of peacekeeping operations. Peacekeeping field
missions alone procured 35 percent of all UN procurement in 2004.
Figure 3: UN Headquarters and Peacekeeping Procurement for 2004:
[See PDF for image]
[End of figure]
Internal Control Framework Useful for Assessing Procurement Process:
Internal control is an integral part of managing an organization and
can be used to identify areas of weaknesses and strengths in the UN's
procurement process. Internal control guidance provides a framework for
establishing and maintaining internal control and for identifying and
addressing major performance and management challenges and areas at
greatest risk of fraud, waste, abuse, and mismanagement. Internal
control comprises the plans, methods, and procedures used to meet
missions, goals, and objectives. There are five interrelated components
of internal control: (1) control environment, (2) control activities,
(3) risk assessment, (4) information and communications, and (5)
monitoring.
The Control Environment over UN Procurement Is Weak:
UN funds are unnecessarily vulnerable to fraud, waste, and abuse
because the UN lacks an effective organizational structure for managing
procurement, has not demonstrated a commitment to improving its
professional procurement workforce, and has failed to adopt specific
ethics guidance for procurement officials. These conditions have
weakened the UN control environment for procurement.
The UN Lacks an Effective Organizational Structure for Managing
Procurement:
The UN has not established a single organizational entity or mechanism
capable of comprehensively managing procurement. As a result, it is
unclear which department is accountable for addressing problems in the
UN's field procurement process. While the Department of Management is
ultimately responsible for all UN procurement, neither it nor the UN
Procurement Service has the organizational authority to supervise
peacekeeping field procurement staff to provide reasonable assurance
that they comply with UN regulations (see fig. 4).[Footnote 10]
Procurement field staff, including the chief procurement officers,
instead report to the Peacekeeping Department at headquarters through
each mission's chief administrative officer. Although the Department of
Management has delegated authority for procurement of goods and
services to the Peacekeeping Department's Office of Mission Support at
headquarters, we found that the Peacekeeping Department lacks the
expertise, procedures, and capabilities needed to provide reasonable
assurance that its field procurement staff are complying with UN
regulations in executing this authority. The UN's Office of Internal
Oversight Services (OIOS) has concluded that neither department has
taken reasonable care to safeguard UN assets.
Figure 4: Supervisory Oversight and Delegation of Field Procurement
Authority:
[See PDF for image]
[End of figure]
The UN previously considered giving the Peacekeeping Department the
headquarters positions it needs to oversee field procurement
activities. In 2000, a UN panel[Footnote 11] recommended that the
Department of Management transfer procurement positions to the
Peacekeeping Department's headquarters.[Footnote 12] The Department of
Management subsequently drafted a delegation of procurement authority
that would have required the Peacekeeping Department to provide trained
procurement staff at each peacekeeping mission with procurement
authority and to establish headquarters systems to administer and
monitor field procurement activities. However, the Department of
Management's delegation of authority did not provide for a transfer of
procurement staff to the Peacekeeping Department. According to UN
officials, the Peacekeeping Department rejected the proposed delegation
of authority because (1) the department lacked resources to oversee
field procurement activities, (2) the proposed delegation did not
include a transfer of procurement staff to the Peacekeeping Department,
and (3) the proposed delegation was more restrictive than previous
delegations to the missions themselves.
In 2005, the Department of Management delegated procurement authority
to the headquarters of the Peacekeeping Department. Although the
headquarters of the Peacekeeping Department accepted the delegation, it
did so without the resources needed to oversee the execution of the
delegation by its field procurement activities. The Peacekeeping
Department is seeking to hire an individual to manage its field
procurement activities. The individual's responsibilities would include
supervising field procurement activities, developing centralized
procurement reporting procedures, monitoring field procurement trends,
implementing improved management control tools, and working with the
Department of Management to review existing procurement rules and
regulations. Given the scope of these responsibilities, it is unclear
how one individual would be able to fulfill the responsibilities of the
proposed position. As of March 2006, Peacekeeping Department
headquarters officials were interviewing candidates for this position.
While the Peacekeeping Department field procurement staff may seek
guidance on UN procurement policies from the Procurement Service, we
found that they do so infrequently. Of the 19 field procurement chiefs
or acting chiefs that we spoke with, 12 stated that they contacted
Procurement Service staff as often as once a month or once a quarter.
Four others stated that they contacted the Procurement Service once or
twice a year, and three others stated that they had never contacted the
Procurement Service for guidance during the past year.
The lack of more frequent contact between the Procurement Service and
Peacekeeping Department field staff is significant because field staff
face the challenge of complying with the procurement policies
established by the Procurement Service while securing needed goods and
services under often difficult conditions to meet peacekeeping
deadlines. The Peacekeeping Department has characterized its
operational needs as being too great and its human resource demands as
too intense for the UN's existing procurement regulations and
procedures. While most field officials that we spoke with reported that
the Procurement Service had been at least somewhat helpful to them,
several stated that they do not believe the Procurement Service
understands the difficult field conditions in which they work.
The UN Lacks a Commitment to Improving Its Professional Procurement
Workforce:
The UN has not demonstrated a commitment to improving its professional
procurement staff in the form of training, a career development path,
and other key human capital practices critical to attracting,
developing, and retaining a qualified professional workforce. Due to
significant control weaknesses in the UN's procurement process, the UN
has relied disproportionately on the actions of its staff to safeguard
its resources. Given this reliance on staff and their substantial
fiduciary responsibilities, management's commitment to maintaining a
competent, ethical procurement workforce is a particularly critical
element of the UN's internal control environment.
Recent studies indicate that Procurement Service staff and peacekeeping
procurement staff lack knowledge of UN procurement policies. For
example, a November 2005 consultant report stated that Procurement
Service staff did not appear to have a clear understanding of
procurement policies and procedures, resulting in inconsistent
application of procurement policies.[Footnote 13] In addition, OIOS
found that field procurement staff in one of the largest peacekeeping
missions lack sufficient knowledge of basic procurement policies and
procedures. OIOS also found that, in another mission, requisitioning
units that lacked procurement authority had directly purchased $9
million in goods and services during the start-up phase, violating the
principle of segregation of duties between requisitioners and
procurement staff.[Footnote 14] Moreover, most procurement staff lack
professional certifications attesting to their procurement education,
training, and experience. We found that 16 of 19 field procurement
chiefs did not possess any professional certification of their
procurement qualifications. A June 2005 consultant survey also found
that only 3 of 41 Procurement Service officers and assistants had been
certified by a recognized procurement certification body.
The UN has not established requirements for headquarters and
peacekeeping staff to obtain continuous training, resulting in
inconsistent levels of training across the procurement workforce. Most
field procurement chiefs stated that the training they had received
from the UN was at least generally useful to their procurement roles,
but 11 of 19 field procurement chiefs stated that they had received no
procurement training over the last year. While most field procurement
chiefs stated that their staff are adequately trained, all of them said
that their staff would benefit from additional training, citing areas
such as contract drafting and management, negotiation, business
writing, and bid evaluation. Recently, a UN interagency group developed
common certification standards for procurement staff in all UN
agencies.[Footnote 15] However, the decision for a UN agency to
participate in the certification program is voluntary. Each UN agency
would be responsible for developing its own training materials to
prepare staff for certification. As of January 2006, Procurement
Service officials had not yet determined whether this common UN
procurement certification would be a requirement for existing staff or
for hiring new staff.
Furthermore, UN officials acknowledged that the UN has not committed
sufficient resources to a comprehensive training and certification
program for its procurement staff. UN officials stated that Procurement
Service training resources are insufficient to deliver adequate
training. The Procurement Service's annual training budget was $20,000
for approximately 70 staff as of March 2006. Similarly, 11 of 19
peacekeeping chief procurement officers stated that their training
opportunities and resources are inadequate. Some indicated that a
single field individual's attendance at an annual conference of chief
procurement officers consumed the mission's annual allotment for
procurement training. Peacekeeping Department officials noted that the
lack of resources to train field procurement officers is symptomatic of
the general lack of professional development funding for all
peacekeeping mission personnel.
The UN has not established a career path for professional advancement
for Procurement Service and peacekeeping procurement staff.[Footnote
16] Career paths, if well designed by management, can actively
encourage and support staff to undertake progressive training and work
experiences in order to prepare them for increased levels of
responsibility. A procurement career path also would serve to recognize
procurement as a specialized profession in the UN. A November 2005
consultant report recommended that the Secretariat establish and define
career paths for Procurement Service management and staff. In field
missions, most procurement chiefs told us that the absence of a career
path is detrimental to the professional caliber of procurement staff.
In addition, 14 of 19 field procurement officials told us that they do
not have professional development plans for all of their staff. UN
auditors also have expressed concern that UN managers do not give
proper care to helping ensure the qualifications and integrity of
procurement staff.
Difficult staffing conditions and practices in both the Procurement
Service and peacekeeping missions continue to expose the UN to
significant risks. The Procurement Service reported that it lacks the
staffing resources to implement recommended controls such as team-based
rather than individual procurement, peer review of major bidding, and
periodic rotation of staff. Peacekeeping staff said that staff turnover
at the Procurement Service has also hurt the continuity of their
operations. In the field, the Peacekeeping Department faces challenges
in deploying qualified, experienced staff to missions, especially
during the critical start-up phase. For example, OIOS noted that a
staff member involved in leaking confidential information to a UN
supplier had been appointed to a post on a short-term temporary duty
assignment and was later competitively selected for the post.
The Peacekeeping Department has had difficulties in retaining high-
quality procurement staff for sustained periods in peacekeeping
missions. For example, a peacekeeping official informed us that about
23 percent of procurement staff positions in peacekeeping missions were
vacant as of December 2005. Peacekeeping officials informed us that a
chronic lack of field procurement staff has helped to undermine
existing control mechanisms. The peacekeeping procurement workforce is
adversely affected by considerable staff turnover, especially in
peacekeeping missions where UN staff must operate in demanding,
unpredictable, and dangerous conditions. The current conditions of
service in peacekeeping missions are not competitive with those of
other UN entities or similar organizations, according to UN officials.
For example, peacekeeping officials stated that peacekeeping mission
staff are not able to have their families at their duty station and
that the benefits and short-term nature of employment contracts for
peacekeeping mission staff are disadvantageous compared with those at
UN headquarters and other UN funds and programs. In March 2006, the
Secretary-General issued proposals to revise the UN's human resource
policies to address the unfavorable conditions of service in
peacekeeping missions. However, the UN has not provided specific facts
regarding the substance and time frames for these revisions, and they
would require the action and support of member states of the General
Assembly to implement.
The UN Has Not Fully Established Ethics Guidance for Procurement
Personnel:
The UN has failed to adopt the full range of ethics guidance for
procurement officials despite repeated directives from the General
Assembly in 1998 and 2005. Such guidance would include a declaration of
ethics responsibilities for procurement staff and a code of conduct for
vendors. Ethical principles are key elements of an internal control
environment, and management plays an important role in providing
guidance for proper behavior. Because of the fiduciary responsibilities
held by procurement staff, the lack of specific ethics guidance
increases the risk of fraud, waste and abuse. Earlier in 2005, a former
UN procurement officer pled guilty to charges of accepting money from
vendors seeking contracts.
The UN has been considering the development of specific ethics policies
for procurement officers for almost a decade. For example, on September
8, 1998, the General Assembly asked the Secretary-General to prepare
additional ethics guidance for procurement officers "as a matter of
priority."[Footnote 17] In 2002, the Secretary-General acknowledged
that separate procurement ethics guidance should be developed "pursuant
to the request of the General Assembly."[Footnote 18] In 2005, the
General Assembly again asked the Secretary-General to issue ethical
guidelines for those involved in the procurement process and called for
"the early adoption of a code of conduct for vendors and a declaration
of ethical responsibilities for all staff involved in the procurement
process."[Footnote 19]
Despite other efforts to bolster ethics policies at the UN,[Footnote
20] the UN has yet to fully enact new ethics guidance for procurement
officials. As we reported in October 2005,[Footnote 21] the Procurement
Service has drafted such guidance. It would include a declaration of
ethics responsibilities for procurement staff and embody a code of
conduct for vendors.[Footnote 22] It would also outline current rules
and regulations relating to procurement staff and address ethics
standards for procurement staff on conflict of interest and acceptance
of gifts. In addition, the draft ethics guidance would outline UN
rules, regulations, and procedures for suppliers of goods and services
to the UN.
Since October 2005, the UN has made only limited progress toward
addressing the directives of the General Assembly. UN officials stated
that the UN has not established ethics guidance for procurement
personnel due to resource constraints and the need for extensive
consultations within the UN. In November 2005, a consultant review
concluded that the Procurement Service lacked an effective and well-
coordinated ethics program that makes ethics a fundamental element of
the Procurement Service culture, including a single recognized and well-
understood code of conduct governing ethics and integrity expectations
and requirements for UN procurement staff. The UN has subsequently
adopted new procedures that outline UN rules, regulations, and
procedures for suppliers of goods and services to the UN. The UN also
now requires all procurement officers to file financial disclosure
statements. However, most of the other draft regulations continue to be
reviewed within the UN. The UN has not set firm dates for their
adoption. Department of Management officials informed us in April 2006
that rules for governing the conduct of staff engaged in procurement
activities, including a declaration of ethical responsibilities, would
be promulgated "shortly."
The UN Has Weaknesses in Key Procurement Control Activities:
We found weaknesses in key procurement control activities that are
intended to provide reasonable assurance that management's directives
are followed. UN procurement control activities include processes for
(1) reviewing high-value procurement contracts, (2) considering vendor
protests, (3) updating the procurement manual, and (4) maintaining
qualified vendor rosters. The persistence of weaknesses in these areas
indicates that the UN does not have reasonable assurance that its staff
are complying with management policies and directives.
Although UN Procurement Has Increased Sharply in Recent Years, the Size
of the Headquarters Committee on Contracts and Its Staff Has Remained
Relatively Stable:
We found that although UN procurement has increased sharply in recent
years, the size of the Headquarters Committee on Contracts and its
support staff remained relatively stable. The committee's Chairman and
members stated that the committee does not have the resources to keep
up with its expanding workload. The number of contracts reviewed by the
committee has increased by almost 60 percent since 2003.[Footnote 23]
The committee members stated that the committee's increasing workload
was the result of the growth of UN peacekeeping operations, the
complexity of many new contracts, and increased scrutiny of proposals
in response to recent UN procurement scandals. Committee data from 2005
indicate that the average time taken to report a committee decision is
within the time frames allowed by UN regulations. However, a senior
committee official stated in March 2006 that this time had increased
significantly in recent months due to the committee's workload. He
indicated that the average time to report a committee decision is now
approaching 20 business days instead of 10. In addition, 8 of 19
peacekeeping field procurement officials stated that the committee only
reviewed their cases in a moderately timely manner, while 5 felt that
there was little to no extent of timeliness in these reviews.
Concerns regarding the committee's structure and workload have led UN
auditors to conclude that the committee cannot properly review contract
proposals. It may thus recommend contracts for approval that are
inappropriate and have not met UN regulations. In a 2006 report, OIOS
stated that the committee cannot determine if procurement officials had
complied with regulations or if they had been unduly influenced by
vendors. OIOS cited a report it had prepared in 2001 that concluded
that the committee had not developed the tools needed to provide
reasonable assurance that it could thoroughly and objectively evaluate
contract proposals and add value to the procurement process. OIOS also
reiterated its 2001 recommendation that the UN reduce the committee's
caseload and restructure the committee "to allow competent review of
the cases." Without an effective contract review process, the UN cannot
provide reasonable assurance that high value contracts are undertaken
in accordance with the Financial Regulations and Rules of the UN.
The UN's plans to address these issues are unclear. In January 2006,
the Under-Secretary-General for Management stated that the committee
should be restructured in some form in response to consultant
concerns.[Footnote 24] However, OIOS reported in January 2006 that the
Department of Management had been "unresponsive" to its recommendations
regarding the committee.[Footnote 25] The committee Chairman stated
that the committee's four existing posts are all in support of the
regular budget, and it needs additional support for reviewing contracts
under the peacekeeping budget. The Chairman told us that the committee
has requested that its support staff be increased from 4 to 7, but does
not yet know if this will be approved. The Chairman also stated that
raising the $200,000 threshold for contracts that require review by the
committee would reduce the committee's workload.
The UN Has Not Established an Independent Bid Protest Process:
The UN has not established an independent process to consider vendor
protests, despite the 1994 recommendation of a high-level panel of
international procurement experts that it do so as soon as
possible.[Footnote 26] Such a process would provide reasonable
assurance that vendors are treated fairly when bidding and would also
help alert senior UN management to situations involving questions about
UN compliance. An independent bid protest process is a widely endorsed
control mechanism that permits vendors to file complaints with an
office or official who is independent of the procurement process. The
General Assembly endorsed independent bid protest in 1994 when it
recommended for adoption by member states a model procurement law
drafted by the UN Commission on International Trade Law.[Footnote 27]
Several nations, including the United States, provide vendors with an
independent process to handle complaints.[Footnote 28]
At present, UN vendors cannot protest the handling of their bids to an
independent official or office. The Procurement Service directs its
vendors to file protests through a complaints ladder process that
begins with the Procurement Service chief and moves up to his immediate
supervisor. The majority of peacekeeping field procurement officers
also stated that vendor protests were not reviewed by an independent
body at their mission. Procurement Service and peacekeeping field staff
told us that, in their opinion, there is no vendor demand for a more
independent process.
The lack of an independent bid protest process, as endorsed by the
General Assembly and used by the United States and other nations,
limits the transparency of the UN procurement process by not providing
a means for a vendor to protest the outcome of a contract decision to
an independent official or office. If handled through an independent
process, vendor complaints could alert senior UN officials and UN
auditors to the failure of UN procurement staff to comply with stated
procedures. As a result of recent findings of impropriety involving the
Procurement Service, the United Nations hired a consultant to evaluate
the internal controls of its procurement operations. One of the
consultant's conclusions was that the UN needs to establish an
independent bid protest process for suspected wrongdoing that would
include an independent third-party evaluation, and arbitration, due
process, and formal resolution for all reports.
The UN Has Not Updated the Procurement Manual Since 2004:
The UN has not updated its procurement manual since January 2004 to
reflect current UN procurement policy. As a result, UN procurement
staff may not be aware of changes to UN procurement procedures that
have been adopted over the past 2 years. An organization's control
activities include taking action to make staff aware of its policies
and procedures. The Procurement Service's procurement manual is
intended to guide UN staff in their conduct of procurement actions
worldwide. All 19 Peacekeeping Department field procurement officials
informed us that they have access to the manual at their mission, and
all are somewhat to very familiar with it.
The Procurement Service revised the manual in 2004 to address several
problems. In 1999, we noted that the manual did not provide detailed
discussions of procedures and policies.[Footnote 29]As revised by the
Procurement Service, the manual now has detailed step-by-step
instructions on the procurement process for both field and headquarters
staff, including illustrative flow charts. It also includes more
guidance that addresses headquarters and field procurement concerns,
such as more specific descriptions of short-and long-term acquisition
planning and the evaluation of requests for proposals valued at more
than $200,000.
In a decentralized organization with geographically dispersed field
missions, it is essential that staff have access to the most current
procurement policy so that they can be informed of and consistently
comply with UN regulations. While 16 of 19 peacekeeping procurement
officers acknowledged that the Procurement Service or the Peacekeeping
Department provided them with timely updates on the most current
procurement policies and procedures to a great or moderate extent, the
procurement manual still does not contain the latest information
concerning procurement policies and procedures. For example, the manual
does not reflect the June 2005 delegation of procurement authority from
the Department of Management to the Peacekeeping Department. The new
delegation of authority allows peacekeeping field missions to purchase
up to $1 million in goods or services in support of their core
requirements (e.g., waste disposal services, fresh food, janitorial
services, and building materials) without obtaining the prior approval
of the Department of Management and the Headquarters Committee on
Contracts. When we spoke with peacekeeping procurement officers in the
field, one officer stated that his mission staff were not using this
new delegation of authority because they were not sure whether it was
official UN policy. Another peacekeeping procurement officer was
unclear on some of the details for implementation of the new authority.
Also missing from the procurement manual is a section regarding
procurement for construction. In June 2005, a UN consultant recommended
that the UN develop separate guidelines in the manual for the planning
and execution of construction projects.[Footnote 30] These guidelines
could be useful in planning the UN's future renovation of its
headquarters building.
A Procurement Service official who took part in the manual's 2004
revision stated that the Procurement Service had been unable to
allocate the time and resources needed to update the manual since that
time. In addition, in January 2006, OIOS found that changes in
procurement policies were not always effectively disseminated, leading
to possible inconsistency in the awarding of contracts. A UN consultant
also has recommended that the Department of Management address the lack
of a standard process for updating the procurement manual. Department
of Management staff informed us that they plan to follow these
recommendations.
UN Does Not Consistently Implement Its Process for Helping to Ensure
That It Conducts Business with Qualified Vendors:
The UN does not consistently implement its process for helping to
ensure that it is conducting business with qualified vendors. As a
result, the UN may be vulnerable to favoring certain vendors or dealing
with unqualified vendors. Approved vendor rosters are an important
procurement control activity for limiting procurement to vendors that
meet stated standards. Vendors apply for registration to the list and
are then evaluated by the agency before placement on the approved list.
Effective rosters are impartial and provide sufficient control over
vendor qualifications.
The UN has long had difficulties in maintaining effective rosters of
qualified vendors. In 1994, a high-level group of international
procurement experts concluded that the UN's vendor roster was outdated,
inaccurate, and inconsistent across all locations. It warned that
inconsistent and nonstandardized rosters could expose the procurement
system to abuse and fraud. In 2003, an OIOS report found that the
Procurement Service's roster contained questionable vendors. For
example, one vendor appeared to have been awarded approximately $36
million in contracts without completing its registration to the list.
Another vendor appeared to not have applied for registration to the
list but was nonetheless awarded a $16.6 million contract. Although the
Procurement Service corrected some of the noted weaknesses, OIOS
concluded that, as of 2005, the roster was not fully reliable as a tool
for identifying qualified vendors that could bid on contracts.
To address such concerns, the Procurement Service became a partner in
an interagency procurement vendor roster in 2004, which was intended to
serve as a single roster for potential suppliers to apply for
registration with participating organizations within the UN system and
to be used by peacekeeping field missions.[Footnote 31] It was seen as
a common system that would allow sharing of vendor performance
information within the UN.
The UN's use of the interagency procurement vendor roster, however, has
not fully addressed concerns regarding UN vendor lists. OIOS found that
many vendors that have applied through the interagency procurement
vendor roster have not submitted additional documents requested by the
Procurement Service to become accredited vendors. In addition to the
audited financial statements and income tax returns that a vendor must
submit to be registered in the UN interagency vendor roster, the
Procurement Service also requires the vendors to submit a copy of a
certificate of incorporation, copies of quality certification standards
for the goods and services to be registered, and letters of reference
from at least three clients to which the vendor has provided its goods
or services over the past 12 months. OIOS found that, as of December
2005, about 2,800 vendor applicants had not submitted the necessary
documents for the Procurement Service to review. OIOS expressed concern
that the Procurement Service vendor registration procedure remains
vulnerable to procurement officials who might manipulate it to favor
certain vendors.
In addition, most Peacekeeping Department field procurement officials
we spoke with stated that they prefer to use their own locally
developed rosters instead of the interagency vendor roster because the
local lists were shorter and contained more specific information
regarding the goods and services available in the area near their field
missions. Moreover, some field mission procurement staff also stated
that they were unable to comply with Procurement Service regulations
for their vendor rosters due to the lack of reliable vendor information
in underdeveloped countries in which there were conflicts, as is common
in peacekeeping missions. One procurement officer in the field stated
that many of the local vendors could not prepare financial statements
required by the Procurement Service and the interagency database
because the country was just starting to recover from a war. Other
field procurement officers noted that issues such as low levels of
education and literacy and smaller vendors not being in a position to
deliver internationally prevented vendors from registering on the
interagency vendor list. OIOS reported in 2006 that peacekeeping
operations were vulnerable to substantial abuse in procurement because
of inadequate or irregular registration of vendors, insufficient
control over vendor qualifications, and dependence on a limited number
of vendors.
The UN Has Not Comprehensively Assessed Procurement Risks:
The UN lacks a comprehensive risk assessment framework for identifying,
evaluating and managing the procurement activities most vulnerable to
fraud, waste, and abuse. UN officials and auditors have identified
significant risks associated with headquarters and peacekeeping
procurement operations. However, without a comprehensive risk
assessment framework, the United Nations cannot have reasonable
assurance that it allocates proper attention to procurement activities
that could be most prone to fraud, waste, and abuse.
OIOS has repeatedly identified procurement as one of the areas in the
UN with significant potential for inefficiency, corruption, fraud,
waste, and abuse. For example, OIOS issued recommendations relating to
collusion and conflicts of interest between UN staff and vendors,
accountability for theft of UN property, and misuse of UN equipment. In
addition, senior UN officials identified several major risks impacting
peacekeeping procurement. First, they stated that field procurement
staff currently operate under regulations that do not always reflect
differences inherent in operating in field locations. According to
Peacekeeping Department officials, present UN procurement rules and
processes are difficult to apply in peacekeeping missions during start-
up. Second, field procurement staff work in demanding operating
environments, especially during the first few months of a mission's
start-up, and must expediently resolve issues such as uncertainties
regarding the free movement of goods, customs clearances, and taxation.
Finally, the Peacekeeping Department stated that its missions do not
have enough field procurement staff willing to serve under current
conditions of service. An environment laden with such considerable
risks demonstrates the need for management to establish a comprehensive
framework for continuously identifying, analyzing, and managing risks
in procurement operations. While Peacekeeping Department officials
informed us that they have developed strategies to mitigate certain
risks, they acknowledged that the UN does not have a formal risk
management framework.
Procurement Service officials stated that they do not systematically
assess procurement risks. In addition, 13 out of 19 peacekeeping field
procurement chiefs stated that they do not prepare formal or informal
risk assessments for their missions. A November 2005 consultant report
found that the Procurement Service does not have a formal and regular
risk management process to assess compliance, evaluate risks, implement
controls, and bring serious issues to the attention of management.
Similarly, OIOS reported in January 2006 that UN management had failed
to establish and implement a formal procurement risk management
strategy. An OIOS official also identified several risk areas in the
UN's procurement operations relating to individual span of control and
supervision, segregation of functions, access to bids, and the use of
brokers and subcontractors.
Without a risk management strategy for procurement, the UN would not be
fully equipped to identify areas that would require stronger oversight.
For example, start-up peacekeeping missions constitute a high-risk area
because they require a significant volume of procurement activity under
demanding time pressures in challenging geographic regions. Similarly,
UN efforts to adjust procurement rules to suit field conditions or to
reduce the caseload of the Headquarters Committee on Contracts would be
hampered by the absence of a risk assessment process.
Fragmented Information Systems Impede UN Procurement:
The UN lacks an integrated information management system, which
adversely impacts its ability to oversee field and headquarters
procurement operations. A sound internal control system requires that
relevant, reliable information be recorded and communicated in a timely
manner to equip management to carry out their responsibilities.
The UN is exposed to risks arising from fragmented procurement and
financial systems in both headquarters and field procurement
operations. We found that Procurement Service staff had limited access
to data on procurement activities conducted locally in field missions.
No single procurement database supports both the Procurement Service
and peacekeeping missions; they utilize two separate procurement
systems. As a result, no single UN entity was able to readily provide
us with data on the total value of purchase orders and contract awards
issued by each peacekeeping mission, including actions procured both
locally and by the Procurement Service at headquarters. These issues
raise concerns about the ability of headquarters managers to
comprehensively oversee procurement by the various field missions.
Moreover, the Peacekeeping Department has established only limited
reporting requirements for field missions and lacks a full-time manager
at headquarters to review the reports of all peacekeeping missions. A
November 2005 consultant study also found that the fragmented
information systems limit the Procurement Service's ability to generate
comprehensive and timely management reports. Furthermore, the study
found that the current information systems did not use fraud detection
tools and exception reports. Such reports, if used, would serve to
alert management of procurement actions requiring additional
monitoring. For example, a report of cumulative awards to vendors would
help management identify instances of inadequate competition or bid
rigging by vendors.
Procurement Managers Lack Mechanisms to Monitor Procurement and Rely on
Oversight Entities:
Procurement officials lack a systematic and standardized approach for
conducting management oversight of procurement activity. Instead, to
monitor procurement activity, they rely heavily on UN oversight
entities. Although these entities have identified numerous weaknesses
in the procurement process, the UN has not always implemented their
recommendations to correct the weaknesses. In many cases, the oversight
entities found similar problems in different field missions and issued
similar recommendations. Yet, UN management does not review the audit
reports systematically to determine whether changes to policy or
processes are warranted to address recurring problems. In addition, the
UN does not have a mechanism that provides reasonable assurance that
corrective actions, once taken, are institutionalized. Further, the UN
does not have an effective process for consistently holding procurement
staff accountable for their actions, and it is too early to determine
whether a newly established management performance board will do so.
UN Officials Lack Mechanisms for Monitoring Headquarters and Field
Procurement Activity:
Internal control standards state that while audits and other reviews of
controls by internal and external auditors can be useful, the
responsibility for establishing mechanisms to monitor and evaluate
program activities rests with managers. Ongoing monitoring occurs
during normal operations and includes regular management and
supervisory activities, such as helping to ensure that staff follow UN
procurement policies.
As noted earlier, the UN lacks an effective organizational structure
for managing procurement at headquarters and in the field. In addition,
UN procurement managers do not have a standardized and systematic
process to monitor headquarters or field procurement during normal
operations as part of their regular management duties. In 2006, OIOS
reported that the UN does not have sufficient controls for providing
reasonable assurance of compliance with the Financial Regulations and
Rules of the UN and that important controls were lacking, existing
controls were often bypassed, and senior officials did not take proper
care to design controls for overseeing peacekeeping procurement
operations. Senior procurement officials at headquarters stated that
they rely heavily on the auditors to monitor procurement activity.
Also, in 2005 a consultant reported that the Procurement Service cannot
adequately monitor procurement activities due to (1) inadequate
reporting of procurement activity, and (2) a lack of system support for
management reporting and financial transaction information.
Field procurement managers also lack a standardized and systematic
approach for monitoring procurement activity to provide reasonable
assurance that the Financial Regulations and Rules of the UN are
followed. Although UN chief procurement officers reported taking a
variety of actions to determine whether their staff comply with the
Financial Regulations and Rules of the UN, there were considerable
differences in the steps reported, both in terms of what the officers
were doing and the degree of their involvement. For example, while one
chief procurement officer reported that he reviewed all procurement
files, another stated that he did not have the time or resources to
provide any oversight. Most field procurement officials told us that
the local committee on contracts at their mission is generally helpful
and timely in reviewing contract proposals. However, UN auditors have
found that noncompliance with the UN's Financial Regulations and Rules
has resulted in financial losses to the UN. For example, in its audit
of peacekeeping operations in 2004, the Board of Auditors found that
one contractor was declared bankrupt in May 2002 and could not fulfill
contract requirements. A performance bond for $1.4 million should have
been provided, as required by the contract, but it could not be located
by UN officials. In addition, OIOS found instances where procurement
staff split requisitions to come in under review thresholds;
requisitioners sometimes procured items directly; vendors were not
properly registered; and contracts were awarded without sufficient
justification.
Also, most UN chief procurement officers report taking a variety of
actions to determine whether vendors comply with the Financial
Regulations and Rules of the UN; however, there were considerable
differences between the steps the officers were taking and the degree
of their involvement. Most chief procurement officers stated that they
inform vendors of the UN regulations that need to be followed and that
the regulations were also in the contracts. Some officers stated that
they had an independent unit for contracts management in their mission
that would monitor vendors for contract performance and hold meetings
with the vendors to discuss their performance, while others said that
they used vendor performance reports to monitor vendors. However, UN
auditors have noted that in many instances, procurement staff did not
prepare vendor performance reports. For example, in 2005, the Board of
Auditors reported that for seven of a sample of nine contracts worth
nearly $163 million, no supplier evaluations could be found for $160.7
million of those purchases.
UN Lacks Centralized Process for Addressing Oversight Recommendations:
Internal controls guidance states that monitoring should provide
reasonable assurance that the findings of audits and other reviews are
promptly resolved. OIOS and the Board of Auditors conduct regular
examinations of procurement. In many cases, the oversight entities have
found similar problems and issued similar recommendations in multiple
field missions. UN management, however, does not systematically review
the audit reports to determine whether changes to policies or processes
are warranted to address systemic problems.
OIOS conducts smaller-scope audits on specific procurement policies and
procedures at one or more missions or offices. Over the past 5 years,
OIOS has identified numerous weaknesses in areas such as management
accountability, planning and needs assessments, vendor qualifications
and rosters, and contract reviews. OIOS's recommendations-tracking
database indicates that the Procurement Service and the Peacekeeping
Department have implemented about 88 percent of about 330 procurement
recommendations and about 85 percent of approximately 170 critical
procurement recommendations.[Footnote 32] However, a recent study by a
UN consultant concluded that while OIOS provides spot audit coverage,
OIOS has lacked the resources to provide coverage that would be
sufficient to prevent breakdowns in internal controls.
The Board of Auditors serves as the UN's external auditor and is
charged with auditing the UN financial statements biannually, including
those of the Procurement Service. The board also audits peacekeeping
field operations annually, including field procurement. According to
board staff, the board devotes about half of its operations to
procurement oversight, primarily peacekeeping oversight. Over the past
4 years, the board identified weaknesses concerning procurement ethics,
vendor performance reports, and the absence of a comprehensive internal
antifraud plan. According to some board officials, the UN could further
benefit from procurement audits of system contracts, the bid-tendering
process, and air operations. The board also pointed to the lack of an
adequately trained and professional procurement workforce and stated
that the UN should create a professional cadre of procurement officers.
In addition, the board reported that the UN has not fully implemented
key audit recommendations, such as having peacekeeping missions
identify training needs for procurement officers and establishing a
time frame for implementing ethical guidelines for procurement staff.
According to board officials, based on the board's audit of
peacekeeping operations for the period ended June 30, 2003, of 69
recommendations, 26 were implemented; 33 were in progress; and 10 had
not yet started.
The Joint Inspection Unit (JIU) conducts UN-wide evaluations,
inspections, and investigations and prepares reports and notes
identifying best practices and opportunities for cost savings within
the UN system. JIU has called attention to weaknesses in UN procurement
training. In 2004, JIU reported that training funds for procurement
staff were small relative to procurement volumes and amounted to about
0.01 percent of aggregate procurement expenditures with the majority of
UN entities allocating no resources for that purpose. The UN had not
fully addressed JIU's call for additional funding for procurement
training and certification for procurement officers. However, JIU does
not track separately and report on the implementation rate of its
procurement recommendations.
In many cases, the oversight entities have found similar problems in
different field missions and issued similar recommendations. Yet, UN
management does not review the audit reports in a methodical manner to
determine whether changes to policy or processes are warranted to
address systemic problems or have a mechanism to help ensure that
corrective actions, once taken, are institutionalized. According to UN
officials, the UN currently does not systematically track all of the
information from the oversight entities and does not perform any
systematic analysis of what the three oversight entities are reporting
to identify systemic weaknesses or lessons learned. The UN had begun
exploring the possibility of establishing a high-level follow-up
mechanism to help ensure proper and systematic implementation of
oversight recommendations and share audit-related information and
lessons learned, where appropriate; however, such a mechanism has yet
to be implemented. At the request of the General Assembly, in 2005 the
Secretary-General called for a high-level mechanism to be established
to help ensure proper implementation of all oversight recommendations.
As proposed, this oversight committee would (1) provide independent
advice to the Secretary-General on all Secretariat activities relating
to oversight and investigations, (2) advise the Secretary-General on
the response of management to the recommendations made by oversight
bodies and on the manner in which the implementation of those
recommendations can have the greatest impact, and (3) help ensure
systematic implementation of recommendations that have been approved by
the General Assembly or accepted by the Secretariat. However, the UN
has yet to implement such a mechanism and plans for doing so are
uncertain.
UN Does Not Have an Effective Mechanism for Holding Staff Accountable:
The UN does not have an effective mechanism in place for holding
procurement staff accountable for their actions. Internal control
standards state that management should maintain the organization's
ethical tone, provide guidance for proper behavior, remove temptations
for unethical behavior, and provide discipline when appropriate. OIOS
recently reported that the UN's lack of enforcement of accountability
and reluctance to investigate the mismanagement of resources, fraud,
and abuse of delegated authority has increased the risk of corrupt
practices in UN procurement. In addition, peacekeeping officials agree
that a lack of enforcement of accountability in some locations has led
to a pattern of poor control over procurement practices. Both OIOS and
peacekeeping officials agree that there is evidence that some senior
managers in the peacekeeping and management departments may not have
been reasonably diligent in discharging their duties or helping to
ensure that adequate internal controls and procedures are in place to
safeguard the organization's assets.
In May 2005, the Secretary-General abolished an accountability panel
established in 2000 because it was ineffective and replaced it with a
management performance board. This panel was to help ensure that the UN
addressed findings of its oversight review bodies from a systemic
perspective and to reinforce existing accountability mechanisms. It
consisted of the Deputy Secretary-General, acting as the chairperson,
and four members at the under-secretary-general level, appointed by the
Secretary-General. The new management performance board will focus
primarily on the performance and accountability of senior managers and
advise the Secretary-General, according to a UN official. Chaired also
by the Deputy Secretary-General, this board is intended to help ensure
that the UN addresses serious managerial issues identified by its
oversight bodies in a timely manner, monitors senior managers in their
exercise of their authority, and reviews UN justice proceedings for
management accountability purposes. The board also consists of two
members at the under-secretary level and an external expert in public
sector management. A UN official stated that the board has met twice as
of February 2006. The board has been operational for too short a time
to allow a determination of its effectiveness.
The United States Has Recently Taken Steps to Support UN Procurement
Reform:
The United States has recently taken steps to advocate procurement
reform at the UN as part of its efforts to advance overall UN
management reforms.[Footnote 33] The U.S. Mission has publicly stated
that accountable, cost-effective, and transparent procurement practices
at the UN are vital to UN operations and are therefore an ongoing
management priority. The Permanent U.S. Representative to the UN has
recognized management weaknesses in the procurement area, particularly
with regard to the unclear lines of authority and responsibility
between the Departments of Management and Peacekeeping. He has
indicated that clarifying these lines of authority would need to be
part of overall UN management reform. The U.S. Mission also has pressed
to have peacekeeping procurement concerns brought to the attention of
the Security Council, despite the objections of some other member
states. As a result, a senior UN official briefed the Security Council
in February 2006 on OIOS's audit of procurement practices in Security
Council-mandated peacekeeping missions.
A staffing vacancy at the U.S. Mission to the UN in New York may have
limited U.S. influence in encouraging and formulating proposals for
procurement reform. The position of ambassador to the UN for management
and reform was vacant from February 2005 until late March 2006.
According to State officials, statements from ambassador-level
representatives in UN bodies have more impact and influence than
statements from other U.S. representatives. This key vacancy represents
a missed opportunity for the United States in the formation of the UN
management reform agenda agreed to at the World Summit in 2005. As a
result, officials said, the U.S. Mission had limited capacity to
influence reform.
Conclusions:
Long-standing weaknesses in the UN's internal controls over procurement
have left UN procurement funds highly vulnerable to fraud, waste, and
abuse. Many of these weaknesses have been known and documented by
outside experts and the UN's own auditors for more than a decade. The
UN, however, has not demonstrated the sustained leadership needed to
correct these weaknesses. It has instead undertaken piecemeal reforms
while failing to clearly establish management accountability for
correcting procurement weaknesses. The negative effects of this lack of
UN leadership in procurement have been compounded by a peacekeeping
program that has more than tripled in size since 1999 and may expand
even further.
Recommendations for Executive Action:
We recommend that the Secretary of State and the Permanent
Representative of the United States to the UN work with other member
states to encourage the Secretary-General to take the following eight
actions:
* establish clear and effective lines of authority and responsibility
between headquarters and the field for UN procurement;
* enhance the professionalism of the UN procurement workforce by
establishing a comprehensive procurement training program and a formal
career path;
* provide the Headquarters Committee on Contracts with an adequate
structure and manageable workload for contract review needs;
* establish an independent bid protest process for UN vendors;
* take action to keep the UN procurement manual complete and updated on
a timely basis and complete the ethics guidance;
* develop a consistent process for providing reasonable assurance that
the UN is conducting business with only qualified vendors;
* develop a strategic risk assessment process that provides reasonable
assurance of systematic and comprehensive examination of headquarters
and field procurement; and:
* standardize and strengthen monitoring of procurement activities by
procurement managers, including actions aimed at helping to ensure that
oversight agencies' recommendations are implemented and that officials
are held accountable for their actions.
We also recommend that the Secretary of State report to the Congress
annually regarding UN progress in reforming its procurement process,
with particular attention to the status of UN progress in addressing
the above recommendations.
Agency Comments and Our Evaluation:
The Department of State provided written comments on a draft of this
report that are reproduced in appendix III. The department stated that
it welcomed our report and endorsed its recommendations. The UN did not
provide us with written comments. State and UN officials provided us
with a number of technical suggestions and clarifications that we have
addressed, as appropriate.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to other interested Members of Congress, the Secretary of State, and
the U.S. Permanent Representative to the United Nations. We will also
make copies available to others upon request. In addition, this report
will be available at no charge on the GAO Web site at [Hyperlink,
http://www.gao.gov.]
If you or your staff have any questions about this report, please
contact me at (202) 512-9601 or melitot@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix IV.
Signed by:
Thomas Melito:
Director, International Affairs and Trade:
[End of section]
Appendix I: Scope and Methodology:
To assess internal controls in the United Nations (UN) procurement
process, we used a framework that is widely accepted in the
international audit community and has been adopted by leading
accountability organizations, including the International Organization
of Supreme Audit Institutions, the U.S. Office of Management and
Budget, and GAO.[Footnote 34] Specifically, we assessed five key
elements of internal control: (1) the control environment, (2) control
activities, (3) risk assessment, (4) information and communications,
and (5) monitoring.
Our review focused primarily on the Department of Management, the
United Nations Procurement Service (which reports to the Department of
Management), and the Department of Peacekeeping Operations
(Peacekeeping Department), including 19 field missions. To assess the
control environment for UN procurement, we reviewed the UN's
procurement manual, organizational structure, financial regulations and
rules, and information obtained from the Headquarters Committee on
Contracts. We also examined training and staffing data, information on
ethics guidance, and the UN Office of Internal Oversight Service's
(OIOS) 2006 report on peacekeeping procurement activities.[Footnote 35]
To assess the control activities, risk assessments, and information and
communications for UN procurement, we reviewed certain policies,
procedures, and mechanisms that the UN has in place to provide
reasonable assurance that staff comply with directives. Specifically,
we reviewed (1) the mechanism that the UN has established to review
procurement contracts; (2) approaches to addressing vendor grievances,
updating the procurement manual, and the maintenance of qualifying
vendor rosters; and (3) approaches to assessing procurement risk to the
UN, as well as the UN's information management system for procurement.
To assess procurement monitoring, we reviewed the structure and
mandates of OIOS, the UN Board of Auditors, and the UN Joint Inspection
Unit (JIU). We also reviewed their roles in monitoring UN procurement
activities. We also reviewed the board's audited financial statements
and reports for Secretariat and peacekeeping operations, which includes
procurement findings and recommendations; OIOS and JIU reports
containing procurement findings and recommendations; annual reports of
the monitoring entities covering the status of implementation of their
recommendations, as well as the process they have in place to track
their recommendations; resolutions and reports on the UN Secretariat
Accountability Panel, the Management Performance Board, and the
Oversight Committee. We discussed OIOS's process for monitoring and
reporting on its recommendations with relevant officials. While the
evidence these officials have obtained indicates that the data are
generally reliable, the officials said they would like to perform more
testing of recommendations that have been implemented but lack the
resources to do so. We obtained the recommendations data set from OIOS
and performed basic reliability checks. Based on our interviews and
checks, we determined the data were sufficiently reliable for the
purposes of this report.
In addition, to assess the control environment and other standards, we
prepared an interview instrument and conducted a series of structured
interviews with the principal procurement officers at each of the
Peacekeeping Department's 19 missions in Africa, Asia, Europe, and the
Americas (see fig. 5). We developed the interview questions based on
our audit work, discussions with UN officials, and review of
questionnaires conducted of headquarters staff. The structured
interview instrument included open-and closed-ended questions, and
covered various topics, including the background of procurement staff
at each mission, such as experience, training, and certification;
information on the types and volume of procurement at each mission; and
questions regarding integrity, openness, competitiveness, and
accountability. We conducted pretests of the instrument to provide
reasonable assurance that our questions were clear and would be
interpreted correctly. We addressed possible interviewer bias by
ensuring that all respondents received copies of the instrument ahead
of time and had them available when we conducted our interviews by
telephone.
To examine U.S. government efforts to support reform of UN procurement,
we reviewed position statements and various program documents. We also
met with senior Department of State officials in Washington, D.C., and
senior officials with the U.S. Permanent Mission to the UN in New York.
In addition, we reviewed reports prepared in 2005 by consulting firms
hired by the UN to assess its procurement process.[Footnote 36] In
addition, we reviewed reports by the Oil for Food Independent Inquiry
Committee,[Footnote 37] the UN Panel on United Nations Peace
Operations, and the UN High-Level Expert Procurement Group.[Footnote
38] We interviewed officials of the Department of Management, the
Department of Peacekeeping Operations, the Headquarters Committee on
Contracts, the UN Procurement Service, OIOS, and the Board of Auditors
in New York.
We performed our work from April 2005 through March 2006 in accordance
with generally accepted government auditing standards.
Figure 5: Peacekeeping and Other Missions Administered by the
Department of Peacekeeping Operations:
[See PDF for image]
Notes: Dollars in millions.
We contacted the 19 missions shown above. They consist of all 15 of the
UN's current peacekeeping operations, one logistics base (UNLB), and
three other missions administratively supported by the Peacekeeping
Department (UNAMA, UNAMI, and UNIOSIL).
[End of figure]
[End of section]
Appendix II: UN Procurement Processes:
Figure 6: Procurement Process in the Field:
[See PDF for image]
Note: In cases of certain defined core requirements, peacekeeping field
offices may award up to $1 million without prior review by the
Headquarters Committee on Contracts or the approval of the Department
of Management.
[End of figure]
Figure 7: Procurement Process in UN Headquarters for Contracts Greater
Than $200,000:
[See PDF for image]
[End of figure]
[End of section]
Appendix III: Comments from the Department of State:
United States Department of State:
Assistant Secretary and Chief Financial Officer:
Washington, D.C. 20520:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
April 18 2006:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report,
"UNITED NATIONS: Procurement Internal Controls Are Weak," GAO Job Code
320345.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Heather Ward, Program Analyst, Bureau of International Organization
Affairs, at (202) 647-6279.
Sincerely,
Signed by:
Bradford R. Higgins:
cc: GAO - Pierre Toureille:
IO - Kristen Silverberg:
State/OIG - Mark Duda:
Department of State Comments on GAO Draft Report United Nations:
Procurement Internal Controls are Weak (GAO-06-577, GAO Code --320345):
Thank you for the opportunity to comment on your draft report entitled
United Nations: Procurement Internal Controls are Weak. The Department
of State welcomes the GAO report and endorses its recommendations. The
Department has actively supported procurement reform in the UN. Our
efforts have been reflected, among other places, in relevant General
Assembly resolutions (e.g., A/RES/59/288, A/RES/57/279, and A/RES/55/
247), where we have joined other Member States in acknowledging the
Secretary-General's efforts to reform procurement practices and, more
importantly, called on the Secretary-General to improve training for
procurement staff, purchasing practices, and implement ethics
guidelines.
We are pleased that GAO highlights the Department of State's most
recent actions to advocate procurement reform. The U.S. Permanent
Representative to the UN has stressed the urgent need to address
management weaknesses in procurement. During the U.S. Presidency of the
Security Council in February 2006, the U.S. Permanent Representative
raised the profile of procurement weaknesses by chairing a historic
Security Council review of the Department of Peacekeeping Operation's
(DPKO) problems. The session highlighted the institutional weaknesses,
in the Department of Management and DPKO, including the lack of
effective internal controls that led to the procurement problems.
As the GAO report notes, the U.S. Mission to the UN has actively
advocated management reforms aimed at achieving a more efficient,
effective, accountable, and transparent UN, including by pressing for
the establishment of an Ethics Office, strengthened auditing and
oversight systems, and creation of an Independent Audit Advisory
Committee (IAAC). We believe these measures, in addition to an overhaul
of the procurement system, will strengthen internal controls and
thereby create a more transparent and accountable organization.
The Department of State concurs that institutional weaknesses,
leadership failures, lack of accountability and the growth of
peacekeeping operations have caused UN procurement operations to be
vulnerable to fraud, waste, abuse, and mismanagement. We found GAO's
conclusions to be thoughtful and note that they echo the conclusions
reached in previous reports in this subject area, including the
Deloitte report entitled Assessment of Internal Controls in the UN
Secretariat Procurement Operations, the OIOS's report entitled
Comprehensive Management:
Review of the Department of Peacekeeping Operations - Procurement, and
the reports of the Independent Inquiry Committee into the Oil for Food
Program.
We recognize that since the last GAO report on UN procurement in 1999,
the UN has taken concrete measures to increase training for field and
headquarter personnel, harmonize procurement practices and cooperation
among UN entities, promote procurement manual effectiveness, and adopt
and implement the procurement principle of the "best value for money."
However, these reforms and proactive efforts have to date been
insufficient to address adequately system-wide problems, including
resource shortfalls and the lack of oversight and internal controls
noted in various reports and by procurement officials themselves.
We will work with other Member States to encourage the Secretary-
General to follow through on the recommendations contained in the
report. In the recent report, Investing in the UN: for a stronger
Organization Worldwide (A/60/692), the Secretary-General recognized
that procurement must be strengthened and made proposals that address
many of the concerns raised by the GAO. The Secretary-General's report
includes proposals on concluding investigations quickly, updating
procedures, implementing a risk-management framework, improving
training, reprofiling procurement staff, and increasing information
sharing.
The necessity of procurement reform is undeniable given the problems
already exposed and the increasing number of peacekeeping missions.
Indeed, it is a time for wholesale change in procurement. Our ultimate
goal must be effective, efficient, responsible and accountable
management of this billion dollar-plus operation. The United States has
established several partnerships with other like-minded UN members
towards that goal.
[End of section]
Appendix IV GAO Contact and Staff Acknowledgments:
GAO Contact:
Thomas Melito, (202) 512-9601 or melitot@gao.gov:
Staff Acknowledgments:
In addition to the person named above, Phyllis Anderson, Assistant
Director; Pierre Toureille; Kristy Kennedy; Clarette Kim; Barbara
Shields; and Lynn Cothern made key contributions to this report. Jaime
Allentuck, Martin De Alteriis, Bonnie Derby, Timothy DiNapoli, Mark
Dowling, Etana Finkler, and John Krump also provided technical
assistance.
[End of Section]
Related GAO Products:
United Nations: Funding Arrangements Impede Independence of Internal
Auditors. GAO-06-575. Washington, D.C.: April 25, 2006.
United Nations: Lessons Learned from Oil for Food Program Indicate the
Need to Strengthen UN Internal Controls and Oversight. GAO-06-330.
Washington, D.C.: April 25, 2006.
Peacekeeping: Cost Comparison of Actual UN and Hypothetical U.S.
Operations in Haiti. GAO-06-331. Washington, D.C.: February 21, 2006.
United Nations: Preliminary Observations on Internal Oversight and
Procurement Practices. GAO-06-226T. Washington, D.C.: October 31, 2005.
United Nations: Sustained Oversight Is Needed for Reforms to Achieve
Lasting Results. GAO-05-392T. Washington, D.C.: March 2, 2005.
United Nations: Oil for Food Program Audits. GAO-05-346T. Washington,
D.C.: February 15, 2005.
United Nations: Reforms Progressing, but Comprehensive Assessments
Needed to Measure Impact. GAO-04-339. Washington, D.C.: February 13,
2004.
United Nations: Progress of Procurement Reforms. GAO/NSIAD-99-71.
Washington, D.C.: April 15, 1999.
(320345):
FOOTNOTES
[1] This report focuses solely on the procurement activities of the UN
Secretariat. It does not address the procurement activities of other UN
entities, funds, and programs, such as the World Food Program or the UN
Development Program. For the purposes of this report, the term "UN"
refers to the UN Secretariat.
[2] GAO, Internal Control: Standards for Internal Control in the
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November
1999).
[3] Committee of Sponsoring Organizations of the Treadway Commission,
Internal Control--Integrated Framework (September 1992).
[4] For example, Deloitte, Assessment of Internal Controls in the
United Nations Secretariat Procurement Operations-Final Report (Nov.
30, 2005).
[5] The 19 missions we contacted are identified in figure 5, in
appendix 1. They consist of all 15 of the UN's current peacekeeping
operations, one logistics base, and three other missions
administratively supported by the Peacekeeping Department.
[6] The UN has not yet released detailed data regarding the allocation
of its 2005 procurement funds.
[7] The UN Financial Regulations and Rules outline the following
general principles for UN procurement: best value for money; fairness,
integrity and transparency; effective international competition; and
the interest of the United Nations.
[8] Peacekeeping missions may award contracts of up to $1 million
without prior approval by the Department of Management and the
Headquarters Committee on Contracts for fresh food, waste disposal
services, building materials, and other defined "core requirements"
that lend themselves to local procurement.
[9] As of February 2006, the Peacekeeping Department's field
procurement staff consisted of 147 international staff and 120 local
staff.
[10] Financial Regulations and Rules of the United Nations, ST/SGB/
2003/7, Rule 105.13. According to the Financial Regulations and Rules,
the under-secretary-general for management is responsible for all
procurement functions of the UN and is to establish all UN procurement
systems and designate the officials responsible for performing
procurement functions. The Financial Regulations and Rules allow the
under-secretary-general for management to authorize UN officials to act
on the under-secretary-general's behalf to contract for purchases of
services, products, or equipment.
[11] The Panel on United Nations Peace Operations was convened by the
Secretary-General of the UN to assess the UN's ability to effectively
conduct peace operations and to recommend ways to enhance that ability.
The Secretary-General transmitted the panel's findings to the UN
General Assembly and Security Council on August 21, 2000, in UN
document A/55/305-S2000/809.
[12] According to UN officials, prior to 2005 the Department of
Management delegated procurement authority directly to the Peacekeeping
Department's field missions and not to the Peacekeeping Department's
headquarters.
[13] Deloitte, Assessment of Internal Controls in the United Nations
Secretariat Procurement Operations (Nov. 30, 2005).
[14] The Peacekeeping Department indicated that expedient steps had
been warranted and that appropriate action was later taken to
regularize the contracts.
[15] The Inter-Agency Procurement Working Group is composed of
procurement officials drawn from across the UN system. The group is
developing a common certification program that would define a body of
knowledge and competency framework for assessing procurement staff.
Certification at the basic level has not yet begun, and the advanced
level program has not yet been developed.
[16] By contrast, other organizations have recognized the role of a
career path in maintaining a qualified professional procurement
workforce and preventing fraud. For example, the U.S. Department of
Defense has established career paths for its procurement workforce that
includes career development opportunities linked to progressive
attainment of training, education, and experience. (Public Law 101-510,
National Defense Authorization Act for Fiscal Year 1991, Title XII,
Defense Acquisition Workforce Improvement Act, Nov. 5, 1990.)
[17] General Assembly Res. 52/252, UN Doc. A/RES/52/252, at para.10.
[18] See Secretary-General Bulletin 2002/13, UN Doc. ST/SGB/2002/13,
Status, Basic Rights and Duties of United Nations Staff Members.
[19] General Assembly Res. 59/288, UN Doc. A/RES/59/288, at para. 12.
[20] The UN has recently adopted new whistleblower protection policies
and established a new ethics office for all UN staff. See General
Assembly UN Doc. A/60/568. Also, 11 of 19 peacekeeping procurement
chiefs in the field have acknowledged receiving some form of ethics
training.
[21] GAO, United Nations: Preliminary Observations on Internal
Oversight and Procurement Practices, GAO-06-226T (Washington, D.C.:
Oct. 31, 2005).
[22] According to a UN official, the UN Ethics Office has been
participating in the effort, largely in an advisory role, by reviewing
and commenting on the draft declaration of ethics responsibilities for
procurement staff.
[23] In 2005, the committee reviewed 881 contracts valued at $3 billion
(including long-term contracts), while in 2003 it reviewed 558
contracts valued at about $2.3 billion.
[24] A November 2005 study by a consultant for the UN concluded that
the committee was not effective in preventing all forms of corruption
and sometimes delayed procurement of items.
[25] Office of Internal Oversight Services, Comprehensive Management
Review of the Department of Peacekeeping Operations--Procurement,
AP2005/600/20 (Jan. 20, 2006).
[26] United Nations, High Level Expert Group Procurement Study Report
(New York, December 1994).
[27] See GA Res. 49/54, UN Doc. A/Res/49/54; UN Commission on
International Trade Law (UNCITRAL), Model Law on Procurement of Goods,
Construction and Services (1994), ch. 6.
[28] In the United States, vendors may protest to the involved
agencies, the U.S. Court of Federal Claims, or GAO. GAO receives more
than 1,100 such protests annually.
[29] GAO, United Nations: Progress of Procurement Reforms, GAO/NSIAD-
99-71 (Washington, D.C.: Apr. 15, 1999).
[30] National Institute of Governmental Purchasing Inc., Assessment of
UNPS Procurement Processes (Herndon, Va., June 30, 2005).
[31] The interagency procurement vendor roster is known as the Global
Marketplace. It is maintained by the UN Development Programme's Inter-
Agency Procurement Services Office.
[32] We analyzed procurement recommendations from the Procurement
Service and the Peacekeeping Department (18 missions in total) from
July 2000 to June 2005; the recommendations were extracted from OIOS's
recommendations-tracking database.
[33] The U.S. Mission to the UN has advocated management reforms aimed
at achieving a more effective and accountable UN, including an
adequately resourced ethics office, stronger UN auditing and oversight
systems, and a new Independent Audit Advisory Committee.
[34] Committee of Sponsoring Organizations of the Treadway Commission,
Internal Control--Integrated Framework (September 1992).
[35] Office of Internal Oversight Services, Comprehensive Management
Review of the Department of Peacekeeping Operations--Procurement,
AP2005/600/20 (Jan. 20, 2006).
[36] Deloitte, Assessment of Internal Controls in the United Nations
Secretariat Procurement Operations-Final Report (Nov. 30, 2005); and
the National Institute of Governmental Purchasing, Assessment of UNPS
Procurement Processes (Herndon, Va., June 2005).
[37] Independent Inquiry Committee into the Oil-for-Food Programme,
Third Interim Report (Aug. 8, 2005).
[38] United Nations, Procurement Study Report (New York, December
1994).
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