FIFTH COMMITTEE BEGINS RESUMED SESSION

Press Release
GA/AB/3062

FIFTH COMMITTEE BEGINS RESUMED SESSION

The United Nations should allow more open access to procurement information by disseminating the information worldwide, the Fifth Committee (Administrative and Budgetary) was told this afternoon, as it began the first part of its resumed session and discussed reform of the United Nations procurement system.

The representative of Italy, speaking for the European Union, said the current procurement system rarely used open advertising and bids were obtained through limited invitations to short-listed vendors. He added that the Secretariat should, among other things, use the facilities of the Department of Public Information (DPI) to control the costs of world-wide advertising.

All Member States must be able to bid for contracts and equitable geographical representation of suppliers was essential, the representative of Tunisia said. Referring to statements about bankruptcy in the Organization, he said that the United Nations was a very competitive market which attracted many countries, despite its financial crisis.

The Organization should ultimately consider integrating all of its procurement, whether for insurance or for foodstuffs, into a single procurement division and that should be the ultimate goal for the Procurement and Transportation Division, South Africa's representative said. The level of the head of the Division should be upgraded from D-1 to D-2 to improve management.

The representatives of India, the Russian Federation and Japan also spoke on the issue.

C.S.M. Mselle, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced his Committee's report.

Introducing the Secretary-General's report on procurement reform, the Assistant Secretary-General for Conference Services, Benon Sevan, stressed that "the reform ... is nothing less than a complete overhaul of the entire system" which could not be brought about overnight. The ACABQ's evaluation of the Secretary-General's report "is truly misleading", he said.

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When the Committee took up the question of the 1996-1997 programme budget, the Secretary-General's report on unforeseen and extraordinary expenses was introduced by the United Nations Controller, Yukio Takasu, while Mr. Mselle introduced the ACABQ's. The representative of the United States made a statement.

Also, the Committee approved a decision by which the General Assembly would take note of the report of the ACABQ for the forty-ninth session.

Due to the divergence of views on the conditions of service for such officials as the Chairman of the ACABQ, the Fifth Committee Chairman, Erich Vilchez Asher (Nicaragua), suspended discussions on the matter pending further consultations in the Committee's Bureau.

The representative of the United States said that the ACABQ Chairman's letter on the issue had not provided substantive guidance. The reasons given for not doing so -- that the members of the ACABQ had a conflict of interest -- had been unpersuasive. It should advise the Fifth Committee on the matter.

The representative of Uganda said that, in view of the ACABQ's letter, referring the question back to it "would be like playing ping-pong". The issue should disposed of by the Fifth Committee.

"The Chinese are excellent in playing ping-pong but we should not play ping-pong with the ACABQ", China's representative said, supporting the call for Fifth Committee action.

The representatives Canada, Kenya, Cuba, Japan, Egypt, India, Algeria, Brazil and Portugal also spoke on the question.

The Committee will meet again at 3 p.m. Wednesday, 20 March, to take up the Secretary-General's reports on death and disability benefits and on the procedure for determining Member States' reimbursement for contingent-owned equipment.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this afternoon to begin the first part of its resumed session, which is expected to review the efficiency of the United Nations administrative and financial functioning, consider the scale used to share out United Nations expense among Member States and various aspects of the 1996-1997 United Nations regular budget. The financing of five peace-keeping missions and an International Tribunal and the administrative and budgetary aspects of that would also be considered.

Among the aspects of the 1996-1997 budget that would be raised relate to unforeseen and extraordinary expenses; special representatives, envoys and related positions; activities of the Advisory Committee on Administrative and Budgetary Questions (ACABQ); and the conditions of service for such officials as those of the International Civil Service Commission (ICSC) and the ACABQ.

In considering administrative and budgetary aspects of the peace-keeping financing, the Committee would take up death and disability benefits, the reform of how Member States are reimbursed for their mission-used equipment and the relocation of Ukraine to a group of Member States charged with lower peace-keeping rates.

For this afternoon's meeting, the Committee had before it the reports relating to the administrative and financial functioning of the Organization and to the 1996-1997 budget, summarized below.

Review of Efficiency

In his report on the implementation of procurement reform in the United Nations Secretariat (document A/C.5/50/13/Rev.1) the Secretary-General states that he has accepted most of the recommendations of the 1994 report of the High-level Group of Experts on Procurement and was fully committed to the reform of the United Nations procurement system. He expresses his determination to establish an efficient and responsive procurement process that ensures expeditious and cost-effective procurement of goods and services, and a policy and procedures for a truly competitive and transparent process.

He states that there is an urgent need to restructure and strengthen the management of procurement services, with the immediate emphasis for reform focused on Headquarters activities, which will subsequently be applied to procurement activities away from Headquarters. The Purchase and Transportation Service has been restructured as a Division, effective 1 January. The Division, presently responsible for procuring goods and services for over $800 million annually, should be headed by a Director at the D-2 level, subject to approval by the General Assembly at its current session.

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The Secretary-General's report provides information and details on the actions already taken or planned to implement the reform measures. Those actions include the training of procurement officers, delegating procurement authority, systems contracts, updating and enhancing the supplier roster, revamping the Headquarters Committee on Contracts, the designation of a Supplier Relations Officer, streamlining procedures, publicizing contract activities and awards, and developing information technology in support of procurement activities.

The report concludes that the necessary funds should be made available in order to ensure an appropriate level of highly qualified staff with procurement expertise within the Division. Member States are requested not to reduce staff resources until the reforms are in place and reviewed thereafter. Noting that the Division's staff costs represent approximately 1 per cent of the funds spent on goods and services, the report states that "a small investment in maintaining or even increasing staff levels for the implementation period would be a prudent decision". When the reforms have been implemented the staffing levels should be critically adjusted to meet the actual requirements necessary to do the work effectively.

The ACABQ in its report on the matter (document A/50/7/Add.13) states that it believes that the implementation of the procurement reform and related management issues at Headquarters, for the field missions and in the field are of fundamental importance to re-establish the confidence of Member States in the efficiency of the United Nations procurement operations. The expeditious implementation of the recommendations of the Group of Experts, as well as previous recommendations by the Board of Auditors, is the basis for a truly competitive and transparent procurement process, with clear lines of authority and accountability.

While it welcomes the progress made so far in the implementation of the reform measures, the ACABQ cautions that the changes, such as the development of sections and clusters, should be effected in a manner that will maintain the necessary internal control mechanisms. Adequate lines of authority, supervision and accountability must remain in place as well.

On the report as a whole, the ACABQ regrets that the Secretary-General provides only a limited update to issues addressed in an earlier report of December 1994 and does not report on procurement activities in other units under his authority. To rectify that situation, the Advisory Committee recommends that the Secretary-General submit to the General Assembly, by 1 October, a full implementation report on procurement reform.

The ACABQ states further that the report should cover comprehensively all the procurement activities of the Secretariat. It should include progress made on the measures now being proposed by the Secretary-General and accepted

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by the General Assembly, as well as on the proposed consequential changes in the financial regulations and rules and standard operating procedures. Regarding the D-2 post of Director, the ACABQ states that, in view of the limited nature of the Secretary-General's report, it does not recommend at this stage acceptance of the reclassification of the post from D-1 to D-2. On the Division's staffing levels, the ACABQ states that, in proportion to the volume of procurement orders, those levels are within an acceptable range and recommends maintaining the current staff strength in the Division. The Advisory Committee will revert to both matters when it examines the report it has requested of the Secretary-General. At that time it will also revert to number of other issues such as the position of Supplies Officer.

The Advisory Committee also raises a number of outstanding matters which it requests the Secretary-General to report on. Those include the issue of responsibility in the Department of Peace-keeping Operations for procurement operations; review of the procurement activities of the Department of Development Support and Management Services with a view to integrating them into those of the Department of Administration and Management; delegation of procurement authority to peace-keeping missions; and on the basis and cost effectiveness, removing restrictions for missions to procure only within a limited geographical area. Other issues the ACABQ calls on the Secretary- General to address are the establishment of an efficient inventory system and effective property control; criteria for admission to the vendor roster, approval and removal procedures and methods to maintain an active vendor roster; and provision of comprehensive statistics on procurement by the Secretariat, including country of origin of goods and services purchased and related value.

On other matters, the ACABQ states that no information was provided to assure it that the practice of an overdependence on suppliers recommended by the requisitioning units has been discontinued. The Advisory Committee believes that the practice undermines the principle of segregation of responsibilities between requisitioning and procurement units. On the granting of exceptions for significant procurement -- in amounts greater than $70,000 -- the ACABQ recommends that in all cases the reasons for seeking exception from competitive bidding should be adequately documented in writing by the requisitioning unit at the time of requesting such exception. The Advisory Committee requests the Board of Auditors to monitor this aspect of the procurement process in its regular audits. It also recommends that the terms of reference of the Headquarters Committee on Contracts and its composition and procedures should be issued at once.

The ACABQ recommends further that the Procurement and Transportation Division make efforts to ensure that, in the case of major procurement above a prescribed monetary threshold, bidding is as open as possible and is accessible to potential new vendors. Currently the Division is not using

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actively all United Nations facilities that may be available to advertise in a wider geographical area. Such advertising, as the use of the United Nations bi-monthly procurement publication, Development Business, and the United Nations information centres, could also contribute to the achievement of the Organization's procurement policy goals of placing more of its procurement orders in a wider geographical area -- including the developing countries. The ACABQ believes that public bid openings should be continued because it enhances transparency and fairness in the procurement process. In another recommendation, the ACABQ states that the practice of the participation of a staff member of the Office of Internal Oversight Services in the Contracts Committee's meetings as an observer be discontinued immediately, as it may compromise the role of the internal audit of procurement operations at Headquarters.

1996-1997 Budget

In a report on unforeseen and extraordinary expenses (document A/C.5/50/30), the Secretary-General recommends that the Assembly raise to $7 million per year from the current level of $5 million what he can commit, without prior concurrence of the ACABQ, to maintain peace and security. This is to avoid situations in which he is prevented from taking prompt action due to financial constraints. Similarly, he seeks authorization to commit up to $3 million per year for the immediate needs of the start-up phase of peace- keeping operations or to implement Security Council decisions.

According to the report, the current limit is inadequate due to the increases in the use of his good offices and activities in preventive diplomacy and peacemaking. The commitment authority is mainly used to appoint special envoys for peacemaking activities, fact-finding and advisory missions, for instance in 1994-1995, to Chad, Georgia, Guyana/Venezuela, the former Yugoslav Republic of Macedonia, Sierra Leone and Yemen, and for political offices for El Salvador and Somalia. The 1995 ceiling was reached in October and that for 1994 has been virtually used up by mid-November 1994. The urgency with which he is required to act on Council decisions make it necessary to raise his commitment authority regarding the needs of starting up missions.

The current procedures cover five categories of the unforeseen activities. They include those he would undertake at his own initiative for peace and security; those to implement Council decisions related to peace and security other than peace-keeping; and those for the immediate needs of the start-up activities of peace-keeping missions. Others are unforeseen duties not related to peace and security and those approved by the Assembly.

In its report (document A/50/7/Add.14), the ACABQ says there is not enough justification for changing current procedures. First of all, total

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spending on peace-keeping, which has been rising in recent years, seems to have peaked in 1994-1995 at $3.2 billion in 1994 and approximately $2.9 billion in 1995; the current forecast for 1996 is $1.5 billion. It then points out that the resolution on unforeseen and extraordinary expenses has been applied in the past to activities that were not unforeseen but of an ongoing nature. For example, it states, the resolution was not intended to cover the creation of positions on continuing bases.

Proper planning, the ACABQ states, is essential for managing the authority the Secretary-General had. The Secretary-General's level of commitment authority should remain at $5 million, as the ACABQ would be available throughout the year to consider additional amounts.

The Secretary-General's report on special representatives, envoys and related positions (document A/C.5/49/50) says there were 44 such positions as of 31 October 1994. Appointments either as Under-Secretaries-General, Assistant Secretaries-General or at the D-2 level, fall into three categories.

The first, category a, are the 23 special representatives and other high-level positions in peace-keeping or observer missions authorized by the Security Council to supervise the execution of political, military, humanitarian and electoral tasks. Their total budgeted remuneration in 1994 was $4.6 million.

The second, category b, are 16 envoys named to help the Secretary- General exercise his good offices and related functions. Appointed sometimes on the Council's or the Assembly's behest, they persuade parties to settle their disputes peacefully. Seven of them, $3.5 million in 1994, are under unforeseen and extraordinary expenses. Of the other nine, five are funded from the regular budget and four from extrabudgetary resources.

The third, category c, are five eminent and experienced officials the Secretary-General appoints to help him carry out some of his duties, including the exercise of good offices. Their $600,000 annualized remuneration are included in the 1994-1995 regular budget.

An annex to the report discloses that 92 special representatives, envoys and related positions had been engaged since 1 January 1990, and provides details on the budgets from which they are paid.

In its related report on special representatives and envoys (document A/50/7/Add.2), the ACABQ states that the positions had increased to 48 as of 15 September 1995. It cautions that cuts in established regular budget posts should not lead to new procedures whereby high-level positions, which may not be linked to keeping peace and security, are funded under the provisions for unforeseen and extraordinary spending. Since some of the advisers in category

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c are paid from regular budget funds for temporary assistance, the use of such positions should be transparent and remain temporary.

The ACABQ asks the Secretary-General to refine the guidelines on the use of funds for temporary assistance to ensure consistent application of relevant procedures. It adds that it had not reviewed some of those high-level positions as mandated by the Assembly. It expresses concern at the flexible interpretation of the guidelines for using funds for general temporary assistance, often to fund de facto temporary posts. The Secretary-General should report to the fiftieth Assembly, through the ACABQ, on what he has done regarding those concerns.

An ACABQ report detailing the Advisory Committee's activities in the forty-ninth Assembly (document A/50/489) states that its meetings were organized into three sessions held in New York: from 20 September to 20 December 1994; from 1 February to 31 March 1995; and from 8 May to 28 July 1995. The Committee also met from 5 to 18 September 1995 before its meetings were carried over to the fiftieth session of the Assembly, on 19 September 1995. From 1 to 5 May 1995, it visited the United Nations Mission in Haiti (UNMIH).

The report summarizes some of the ACABQ correspondences and reports on the entities it had reviewed such as the United Nations High Commissioner for Refugees (UNHCR), United Nations Children's Fund (UNICEF), United Nations Development Programme (UNDP), World Food Programme (WFP), United Nations Environment Programme (UNEP), United Nations Institute for Disarmament Research, United Nations Population Fund (UNFPA) and the Board of Auditors.

On the voluntary funds managed by the UNHCR, the ACABQ drew the attention of the UNHCR Executive Committee to the need to consider appropriate ways to ensure more oversight and monitoring of resources for special programmes. It agreed with the High Commissioner's proposal to establish an inspection and evaluation service in UNHCR due to the recent expansion and the changes in the scale and complexity of UNHCR operations and the need for accountability.

The UNICEF, the Advisory Committee states, should reconsider its proposal to build conference facilities. Due to the limited resources available for UNICEF programmes, the Executive Board should consider using the conference-servicing facilities of the United Nations. Regarding some baseline budget estimates for 1996 and 1997, its states it was not convinced that administrative costs at headquarters and field offices had been carefully analysed. Further streamlining of the administrative and programme support functions, staff rationalization and, if necessary, hiring freeze were essential to deliver programmes cost effectively.

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On the establishment of trust funds by the UNDP, the ACABQ recommended that the Programme review its method of calculating support costs to ensure that the trust funds' administrative and support costs were not subsidized by general resources. The UNDP should continue closing inactive trust funds and report to the Executive Board, through the ACABQ, what it had done to streamline the management of trust fund activities.

On the UNDP revised budget estimates for 1994-1995 and 1996-1997, the ACABQ states that the budget document should be improved by presenting various sections in an integrated manner, avoiding excessive repetitions, so as to avoid confusion. It should include a draft appropriation decision, outlining all of the Administrator's proposals, including those on posts. The next budget presentation should include a concise statement of income and clearly explain organizational changes that effect budget presentation. The ACABQ agreed with the proposal to reclassify the post of Deputy-Director of the Regional Bureau of Africa at the D-2 level. The publication and promotion of the Human Development Report should be carried cost effectively.

The WFP proposed 1996-1997 budget should include steps to minimize the cost of transportation in 1996-1999, detailed information on how austerity measures affected programmes and proposals to develop internal expertise in accounting, procurement and computerization, the ACABQ recommends.

The ACABQ states that its efforts to review and evaluate the UNEP budgets for both the past biennium and for 1996-1997 had been hampered by lack of information in the budget document and the fact that background documentation had not been made available to it at the outset. The document did not contain the income realized in 1994, nor projections in that regard for 1995 and for 1996 to 1997; some important items of spending were left out. The ACABQ recommended that a reformulated budget for 1996 and 1997 should be presented to UNEP's Governing Council's resumed session, with up-to-date data on the 1994-1995 budget performance.

As for the UNFPA, the ACABQ cautions it against setting up an administrative infrastructure it might not be able to sustain if forecast income levels were not realized.

In relation to the Board of Auditors, the ACABQ states that, having considered the Secretary-General's reports on financing the United Nations Operation in Somalia (UNOSOM II), it had not been satisfied that spending on contractual and logistic services had been fully explained or that the payment by the United Nations matched services it received. The ACABQ had then asked the Board to examine the matter for the period 1 May 1993 to 31 March 1995.

In its 7 December 1994 report on UNOSOM II, the ACABQ had noted unusually high overexpenditures for contractual services of some $19.8

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million. It had expressed difficulties in understanding the explanations in the Secretary-General's report. What it had been given was a breakdown of contractual services spending of $93.8 million for work by Brown & Roots Service Corporation and the United States Logistical Support Command, which was above the $74 million apportioned. They comprised $85.8 million for the reporting period 1 November 1993 to 31 May 1994 and $8 million reimbursement to the United States Logistical Support Command in a previous mandate period (1 May 1993 to 31 October 1993).

The major functions of the ACABQ, under General Assembly resolution 14 (I) of 13 February 1946, are to examine and report on the budgets submitted by the Secretary-General to the Assembly, advise the Assembly on any administrative and budgetary matters and examine on its behalf the specialized agencies' administrative budgets. It is also to consider and report to the Assembly on auditors' reports on the United Nations and its agencies' accounts.

The Secretary-General states that his report on the conditions of service of non-Secretariat officials serving the Assembly (document A/C.5/50/12) is meant to help that body in its quinquennial review of those conditions for the Chairman and Vice-Chairman of the ICSC and the Chairman of the ACABQ. In a previous review in 1990, the Assembly decided that, effective 1 January 1991, their annual net compensation would be $112,875, with an additional special allowance of $8,000 for the ACABQ and ICSC Chairmen. He recommends that it should remain at the level the Assembly set in 1990, subject to some annual inflation-related adjustments. Accordingly, the officials' compensation would increase to about $128,023. The special allowance of the Chairmen of ACABQ and ICSC should remain unchanged. He does not propose any change in the manner of applying other conditions of service such as the education grant.

The pensionable remuneration of the ACABQ and ICSC Chairmen remains at $140,000 per annum, and $130,000 for the ICSC Vice-Chairman, as established by the Assembly in 1990. By the terms of a previous Assembly resolution and the $128,023 projected compensation level as at 1 January, the corresponding pensionable remuneration would be $164,900 for the two Chairmen and $153,100 for the Vice-Chairman. As of November 1995, that remuneration for an Under- Secretary-General is projected at $164,284, and $152,003 for an Assistant Secretary-General.

Estimated additional requirements of $112,000 would arise in 1996-1997 if the Assembly approves the suggestions on the conditions of service. Therefore, additional appropriations would be needed in the 1996-1997 budget. They are $37,400 under section 1, on overall policy-making, direction and coordination, and $74,600 under section 27, on jointly financed administrative activities. Those requirements under the jointly financed activities would be

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offset by an increase of $53,400, representing reimbursement by other organizations to the United Nations of their share of ICSC costs.

In an exchange of letters between him and the Chairman of the Fifth Committee on the conditions of service (document A/C.5/50/55), ACABQ Chairman C.S.M. Mselle writes that, while the Advisory Committee had in the past reported on the Secretary-General's proposals on the conditions of service of the Commission's full-time members, it had left it to the Assembly to decide whether to apply those recommendations to the ACABQ Chairman.

"The Advisory Committee recently took this matter up again and its members reiterated their apprehension that since each and every member of the Advisory Committee was a potential Chairman there would be an inherent conflict of interest in taking up the proposals of the Secretary-General, even as they relate to the Commission. It is for this reason that the Advisory Committee has decided to recommend to the General Assembly that it take the matter up directly", Mr. Mselle writes.

Statements

BENON SEVAN, Assistant Secretary-General for Conference Services, giving a paragraph-by-paragraph review of the ACABQ report on procurement reform, said the Secretariat was committed to the reforms and was implementing them as speedily as possible. However, it was easier to identify shortcomings and to make recommendations than it was to implement them, particularly in "a house as complex as the United Nations and one that is going through a harrowing experience".

He stressed that "the reform ... is nothing less than a complete overhaul of the entire system, and as urgent as it is, it cannot be brought about overnight". The present reform was currently focused on Headquarters activities and would be applied to other offices throughout the United Nations system. He disagreed with the evaluation of the ACABQ that the Secretary- General's report as "only a limited update". On the contrary, of the 36 recommendations by the group of experts, 26 were being implemented. Only four recommendations had yet been implemented. The ACABQ appeared to have missed the point that the Procurement and Transportation Division had been completely restructured. Its evaluation of the Secretary-General's report "is truly misleading".

Regarding the ACABQ's failure to support the position of a Director at the D-2 level, he said the 1996-1997 budget had been approved, thus making the proposal to provide a Director of the Division a moot point. He regretted that the ACABQ had postponed that decision. The Advisory Committee did not address the most important question of the need for a full-fledged director at the helm of a division that handled millions of dollars of procurement. He

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expressed the hope that the question would be addressed by the Fifth Committee. "Unless there was someone at the helm we are in deep trouble", he said.

He went on to say that the post of Supply Officer would be needed for the next three years. Suppliers were presently facing a number of difficulties in the absence of a Supply Officer. Current staff resources were essential if all the reforms were to be implemented in a reasonable time- frame. It was a matter for concern that the majority of staff were financed through the peace-keeping account. The Division had been pressed by Member States to remove all restrictions imposed on peace-keeping missions to procure only within a limited geographical area. Now, it was being questioned by the ACABQ. It was not possible to comment in detail on the delegation of procurement authority to peace-keeping missions.

On the immediate operational requirement procedure, he said he shared the concerns of the ACABQ and the Board of Auditors and was making every effort to reduce to the minimum the award of contracts based on exigencies. The development and registration of suppliers had not gone at the pace which was expected. There had been some progress on the draft evaluation criteria for suppliers' registration. Those criteria were based on an evaluation of suppliers' financial stability and soundness, reference checks and other criteria. Over 6,000 suppliers had been solicited during November and October 1995 to re-register. As of February, 1,600 suppliers had responded.

Providing more statistics on new suppliers, he said communication on registration had also been sent to permanent representatives for their assistance to make registration material available to suppliers in their respective countries. United Nations information centres would also be provided with the information. The Division made every effort to invite as many firms as possible over as large a geographic area as practicable within the limits of time available. A computer-generated supplier selection process was being developed by the Division.

Listing a number of other reforms in the Division, he added that a range of efforts was continuing while the Division's staff carried out their normal responsibilities. He stressed that considerable progress had been made. However, while carrying out its responsibilities the Division was "flooded by a multitude of reports submitted by oversight bodies".

"On the one hand, we are directed to do everything all at once but are not given the necessary resources to carry out all the tasks entrusted to us." He reiterated that the D-2 post was central to the aim to bring procurement under one head. The upgrading of the D-1 post to the D-2 level would cost only a "few thousand dollars annually". "The establishment of the post of Director of the Division was critical to the success of the reforms."

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C.S.M. MSELLE, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced his Committee's report. The ACABQ had noted some of the progress that had been made in reforms and its comments should not be regarded as obstructive. It had called for a report to the next session of the General Assembly from the Secretary-General and had indicated the types of additional information to be included.

LORENZO FERRARIN (Italy), also speaking for the European Union, said that while the Experts' report reviewed all procurement activities, the Secretary-General's covered only one part, initiatives in the Department of Administration and Management. No information was given, for example, on procurements by the Department of Peace-keeping Operations and in the Department of Development Support and Management Services. The Secretary- General should review all procurement activities in order to unify the function under the Department of Administration and Management, with the Department of Peace-keeping Operations retaining only operational responsibility. There should be stricter coordination between the procurement units in the Secretariat and those of other United Nations offices. The Union agreed with the ACABQ that the Secretary-General should submit a comprehensive report on procurement reform to the General Assembly at the beginning of the next session, taking into account the views of the Board of Auditors, among other things.

On the Procurement and Transportation Division, the Union endorsed the Secretary-General's proposals to strengthen the management of the Division by appointing a qualified Director, with extensive relevant experience, he said. The creation of a position of a full-time Chairman of the Committee on Contracts was welcome. The practice of having a member of the Office of Internal Oversight Services taking part in the meetings of that Committee should be stopped. Requisition planning should be improved, particularly in the Department of Peace-keeping Operations to make procurement more transparent and cost-effective. Exceptions to competitive bidding should be limited strictly to legitimate and properly documented cases. While welcoming steps taken to widen geographical registration of suppliers in the roster, the European Union believed that the progress had been too slow. The criteria for admitting suppliers to the roster, approval and removal procedures were still not clear. The Organization rarely used open advertising. Too often bids were obtained through limited invitations from short-listed vendors. To facilitate more open access to procurement information in a wider geographical area, worldwide information, through all means of communications, should be used. To control advertising costs, the Secretariat should use the facilities of the Department of Public Information (DPI) and make more use of publications financed by subscriptions from potential suppliers.

PETER SOAL (South Africa) said the question of forward planning should be enhanced. The Lessons Learned Unit of the Department of Peace-keeping

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Operations was undertaking vital work on the topic in another context. That function should be applied to the procurement of goods and services, especially for peace-keeping. The Procurement and Transportation Division should examine on a ongoing basis, potential future procurement requirements in the light of the current contracts which had been let. There should be more serious coordination between the various branches of the Department of Peace-keeping Operation and the Division. That would ensure timely and efficient servicing and cut the need to resort to exigency purchasing even further.

The multiplicity of vendor databases was not consistent with the Assembly's hopes for cost-effectiveness, he said. Attention should be paid to the feasibility of integrating the supplier or vendor rosters which existed at field missions and Headquarters. A supplier registered at Headquarters should automatically be registered at various field missions. The reverse should not necessarily take place. All procurement in the United Nations should take place through a single unit, that of the Procurement and Transportation Division. With a view to eliminating duplication and improving cost- effectiveness, the Assembly should consider immediately integrating the procurement functions of the Department of Development Support and Management Services with the Division. At a later stage, the Organization should consider integrating all procurement by the Organization, whether for insurance or for foodstuffs, into a single organizational procurement division. That should be the ultimate goal for the Division. He expressed support for the upgrading of the D-1 post to D-2 to help improve the management of the procurement process and enhance forward-planning.

VIJAY GOKHALE (India) welcomed the progress made in reforming the management structure and operating procedures of the Division and praised the leadership of Mr. Sevan. It was, however, important to build upon that progress. All procurement should be under the Department of Administration and Management, with the Department of Peace-keeping Operations having operational control, as suggested by the European Union. He supported the current staffing levels of the Division as essential for the reform process. Regarding the D-2 post, he agreed with the ACABQ recommendation that the proposal could be examined in the context of the Secretary-General's comprehensive report to the next Assembly session.

Welcoming the positive moves towards the reform in the Committee on Contracts, he encouraged the Secretariat to improve its functioning so that arbitrariness in submitting and awarding contracts was minimized. Further progress would depend on improvements in procurement planning, particularly in peace-keeping. Despite assurances over the past few months, substantive progress had not been made in formulating a policy on vendor database or in developing a totally revised supplier roster based on established and transparent criteria. The Secretariat should report in detail on the criteria

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for admission to the vendor roster, approval and removal procedures and the methods used to maintain an active vendor roster. The lack of adequate inventory and asset management should be considered as a matter of priority and progress made in that regard should be provided in the report of the Secretary-General to the next session of the Assembly.

EVGENY N. DEINEKO (Russian Federation), welcoming the efforts to reform procurement in the Secretariat, said he agreed with the ACABQ's comments on the Secretary-General's report. Procurement reform was important to determine the general level of cost efficiency in the Secretariat. Reform must be considered as an important and urgent task. The Secretary-General's report did not give a general picture of the process. It touched only on reform that the Department of Administration and Management had embarked on. The Secretary-General's report must be comprehensive and cover all the procurement activities of the Secretariat.

He had noted that the reforms being implemented tended to be those recommended by the Secretariat, he continued. The Board of Auditors' recommendations had been given less attention. The reform priorities had been on restructuring the procurement services. Real progress had been either slow or lacking in fundamental areas needing reform. There was cause for concern about a number of matters such as systems contracts, abuse of operational requirement procedures, the updating of the suppliers' roster, inventory of existing assets and other issues. He had doubts and questions about the restructuring process. The new structure was insufficiently explained in the report. It lacked clarity on the system of control and accountability as had been noted by the ACABQ.

Raising a number of questions, he said the transport section of the Division had not been mentioned in the report. It was important to know the interrelation between the sections. Only then would the need for the Director be clearer. He supported the ACABQ on the need for more information which would help Committee members to make more informed decisions on the Division. He asked the extent to which the restructuring had been able to increase the efficiency of the Division. It was hoped that the process of reform would give the operations greater transparency.

AMMAR AMARI (Tunisia) said he welcomed the initial reform measures being implemented. However, the procurement and transportation system must be more transparent. It must encompass all the activities of the United Nations system. Procurement procedure must be made public for all Member States to be able to bid for contracts. Equitable geographical representation of suppliers was essential. Regarding the performance evaluation of suppliers, he favoured a strengthening of internal oversight. Suppliers must be evaluated before they appear on the suppliers' list. Referring to statements about bankruptcy in the Organization, he said that in spite of the financial crisis the United

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Nations remained a very competitive market which attracted many countries. Ultimately it was a credible organization that was very solvent.

FUMIAKI TOYA (Japan) said he was pleased that action had been started to implement some of the reforms recommended by experts. Measures should be implemented in accordance with target dates for their completion. The implementation of reform measures should be comprehensive, covering not only those conducted by the Department of Administration and Management but also other United Nations procurement services including the United Nations Office of Project Services, with a view to merging the procurement services or ensuring coordination which might bring economies. Reforms should continue even before the submission of the Secretary-General's next report to the Assembly. Possible amendments to the financial and staff regulations and rules should continue to be drafted. His delegation would like to have more information about the status of preparation in due course, especially about concrete ideas that could be included in a set of policy guidelines, retaining adequate oversight mechanisms.

He welcomed the establishment of the Division effective 1 January. The restructuring of its sections would improve the procurement process. The volume of procurement processed by the commodity procurement section of the Division was about $369.4 million in 1995, with 24 Professional and 37 General Service staff. It was difficult to understand the logic of the ACABQ conclusion that the staffing level was within an acceptable range in proportion to the volume of procurement orders. The Division was understaffed compared to some other offices or departments. On the upgrading of the D-1 post to D-2, favourable consideration should be given to it.

The reasons for exigency purchases should be properly documented, as the ACABQ had recommended, he continued. The training of procurement officers should be encouraged.

Statements Relating to 1996-1997 Budget

YUKIO TAKASU, United Nations Controller, introduced the report of the Secretary-General on unforeseen and extraordinary expenses.

Mr. MSELLE, ACABQ Chairman, introduced the report of the ACABQ on the unforeseen expenses.

BARBARA PERREAULT (United States) said she recognized the need to give the Secretary-General some flexibility and agreed that the commitment authority should remain at $5 million, which should be seen as a cash advance that should be replenished in a biennium. She agreed with the ACABQ that close attention should be paid to the criteria for unforeseen expenses. The President of the International Court of Justice should not be allowed to

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continue incurring unforeseen expenses. His costs should be included in the budget for the Court. The subject should be discussed further.

DENIS HALLIDAY, Assistant Secretary-General for Human Resources Management, introduced the Secretary-General's report on special representative envoys and related positions. He said the number of persons in those positions had dropped.

Mr. MSELLE, ACABQ Chairman, said that the number of such positions had dropped from 48 to 40, when the ACABQ report was prepared. Reviewing the recommendations of his Committee, he said the guidelines for the use of general temporary assistance funds should be refined further.

Activities of ACABQ during Forty-Ninth Session

Mr. MSELLE introduced the report on his Committee's activities during the forty-ninth session.

ERICH VILCHEZ ASHER (Nicaragua), Committee Chairman, introduced a related draft decision, which was approved by the Committee. Under the terms of the decision, the General Assembly would note of the report on the activities of the ACABQ during the forty-ninth session of the General Assembly.

The Committee concluded consideration of the report.

Conditions of Service of Officials other than Secretariat serving General Assembly

DAVID BIRENBAUM (United States) said he was still awaiting the ACABQ's views on the matter, since that Committee had given such advice since the 1970s. The letters did not provide substantive guidance. The reasons given - - that the members of the ACABQ had a conflict of interest -- was unpersuasive. There was no report setting out the basis of the decision. There was no basis for the ACABQ as a body to stand down on the issue. Therefore, he requested that it advise the Committee on the matter.

SAM HANSON (Canada) said he was puzzled by the letters on the matter. The Fifth Committee had said it was appropriate for the ACABQ to provide the advice. He awaited that advice. It was commendable that the ACABQ's members were aware of a conflict of interest. However, the concern had been taken too far. They should comply and provide the advice requested by the Committee.

PHILIP OWADE (Kenya) said that his delegation had felt last year that the Fifth Committee could have resolved the issue without sending it back to the ACABQ. He felt vindicated by reading the letter from the ACABQ Chairman,

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which had pointed out the possibility of conflicts of interest. "Trying to send it back to the ACABQ will be like playing children's games, which I don't understand", he said.

NESTER JALOMAYO-ODAGA (Uganda) said he was surprised at the level of interest the issue had raised in the Fifth Committee. In view of the ACABQ letter, referring the question back to the ACABQ "would be like playing ping- pong". There was no reason to do so. Members of the Fifth Committee had been ready to discuss the matter, but the use of the veto powers granted by the consensus mechanism had prevented the matter from being disposed of by the Fifth Committee last year. It should do so this time.

ANA SILVIA RODRIGUEZ ABASCAL (Cuba) said that many delegations had said that the Fifth Committee was competent to discuss the matter and had been ready to do so. The ACABQ had recommended that the Assembly consider the issue. Therefore, Cuba was ready to have the Committee discuss the issue.

Mr. TOYA (Japan) said that he had noted the letter of the ACABQ. Despite the potential for conflicts of interest, the ACABQ might be able to give even some limited advice and should consider the matter further.

MOHAMED FATAH (Egypt) said that his delegation had expressed its views before and nothing had happened to make them change. The Fifth Committee should decide on the matter. He supported the views of Kenya, Uganda and Cuba.

Mr. GOKHALE (India) said that pensionable remuneration should be related to income and the pensionable remuneration of ungraded officials, too, should be considered. The income replacement approach, which linked pension to income, should be applied to all, as decided by an Assembly resolution. The resolution did not exclude those officials from deriving the benefits of that approach. There was no reason why another decision would be required on a matter upon which the Assembly had legislated.

ZHANG WANHAI (China) said, "The Chinese are very excellent in playing ping-pong. We should not play ping-pong with the ACABQ". The Fifth Committee should reach a decision on the matter.

DJAMEL MOKTEFI (Algeria) supported the views expressed by Uganda, Kenya, Cuba and China.

MARCIO FAGUNDES (Brazil) said that the exchange of letters had indicated a potential conflict of interest and had been convincing. The issue should be considered by the Fifth Committee.

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Mr. VILCHEZ ASHER (Nicaragua), Committee Chairman, proposed that the discussion be suspended pending further consultations in the Committee's bureau.

Mr. BIRENBAUM (United States) said he would abide by the decision.

KEITH WALTON, Officer-in- Charge, Operational Services Division, Office of Human Resources Management (OHRM), responding to India's representative, said the Secretary-General had referred to two resolutions on the matter which had been adopted by the forty-fifth and forty-sixth sessions of the General Assembly (45/249 and 46/192). The former resolution had recommended a five- year review of the conditions of service and compensation for the officials in question. The later resolution had made a decision on the pensionable remuneration. The Secretary-General recommended applying that decision in the context of the five-year review.

Mr. GOKHALE (India) said the later resolution meant that the Assembly had taken a decision that superseded one taken before. It had been applied to all ungraded officials. Therefore, the Assembly should not be asked to address the matter again. It should be automatically applied to the officials in question.

Mr. AMARI (Tunisia) said he welcomed the discussion on the issue and especially the points raised by the representative of India. The Secretariat had complicated matters for the Committee. The question should not have been brought before the Fifth Committee because it had already been decided on by the Assembly.

REGINA EMERSON (Portugal) said she wanted the advice on the question of whether the ACABQ could advise on a decision already adopted by the Assembly. A resolution existed and it should be applied.

Mr. VILCHEZ ASHER (Nicaragua), Committee Chairman, suspended discussion on the matter. The Committee's bureau would continue considering it.

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