ADMINISTRATIVE AND BUDGETARY COMMITTEE BEGINS RESUMED SESSION

Press Release
GA/AB/3134

ADMINISTRATIVE AND BUDGETARY COMMITTEE BEGINS RESUMED SESSION

As the Fifth Committee (Administrative and Budgetary) began its resumed session this morning, the representative of the United States said he would hold consultations with other Member States on a proposal to enlarge the Advisory Committee on Administrative and Budgetary Questions (ACABQ).

The United States representative said the Fifth Committee should, therefore, allocate time during the resumed session to a debate on the enlargement of the ACABQ. He added that he had also made his suggestion to the past and recent meetings of the High-Level Working Group on the Financial Situation of the United Nations.

The representative of Malaysia said, however, that the Fifth Committee should be aware that increasing the membership of some United Nations bodies would increase the costs of the Organization. Furthermore, when discussing oversight bodies the Committee should not selectively discuss only the expansion of the ACABQ.

The United States was a member of the ACABQ until last year. In November, France and New Zealand defeated the United States in an election to fill two ACABQ seats reserved for the Western European and Other States Group.

Also on its programme of work this morning, the Committee decided to postpone to its resumed session in May the consideration of the financing of the International Criminal Tribunals for Rwanda and for the Former Yugoslavia, since the Secretary-General had not yet submitted budget proposals for the Tribunals.

Speaking on the Committee's programme of work were the representatives of Cuba, United States, Mexico, Syria, Philippines, Malaysia, Algeria and Syria.

Speaking on procurement reform, the representative of the Netherlands, speaking for the European Union and associated States, said the Union would propose a draft decision to introduce an arrangement that would give preference in the awarding of contracts to suppliers from Member States that

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had paid their dues. He added that the Secretariat should make greater use of advertising and increase the number of suppliers in the roster of vendors to address a situation in which almost 50 per cent of the total procurement handled by the Secretariat in New York in 1994-1995 went to United States' companies.

Saudi Arabia and the Russian Federation also spoke.

The Assistant Secretary-General for Conference and Support Services and United Nations Security Coordinator, Benon Sevan, introduced the Secretary- General's report on procurement reform. The Chairman of the ACABQ, C.S.M. Mselle, introduced his Committee's report. The report of the Office of Internal Oversight Services on the Contracts and Procurement Service of the Department of Development Support and Management Services was introduced by Tenpaparai Krishnamachari.

The Under-Secretary-General for Administration and Management, Joseph E. Connor, introduced the Secretary-General's report on the Integrated Management Information System (IMIS). The Chairman of the ACABQ, Mr. Mselle, introduced his Committee's report on IMIS. Commenting on the reports on IMIS were the representatives of the United States, France, Algeria and Costa Rica.

Mr. Connor also briefed the Committee on the United Nations financial situation. Statements were made by the representatives of the United States, Egypt, Pakistan, France, Argentina, Mexico, Uruguay and Canada.

At the start of the meeting, the Committee observed a minute of silence to mark the death of the Leader of China, Deng Xiaoping, and of a Member Emeritus of the Committee on Contributions, Syed Amjad Ali (Pakistan). In response, the representatives of China and Pakistan thanked the Committee for its expression of sympathy.

The Committee is scheduled to meet again at 10 a.m. Tuesday, 11 March, to consider the issues of gratis personnel, human resources management and the financing of the United Nations Observer Mission in Liberia (UNOMIL).

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to start the first part of its resumed fifty-second session, which will last from 10 to 27 March. During the session, the Committee will discuss various aspects of the 1996-1997 United Nations regular budget and how to improve the Organization's financial situation. It will also consider the review of the Organization's efficiency, human resources management, the scale of assessments for sharing United Nations expenses and the reports of the Office of Internal Oversight Services.

Financing will also be discussed for: the newly authorized Military Observer Group of the United Nations Mission for the Verification of Human Rights and of Compliance with the Commitments of the Comprehensive Agreement on Human Rights in Guatemala (MINUGUA); the United Nations Observer Mission in Liberia (UNOMIL); and of the International Criminal Tribunals for Rwanda and the former Yugoslavia.

In deliberating on aspects related to the 1996-1997 budget, the Committee will examine the performance report on the budget and reports of the Secretary-General and the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the Integrated Management Information System (IMIS). Under human resources management, the Committee will discuss the issue of personnel loaned by various governments and entities to the United Nations, reports of the Joint Inspection Unit (JIU) and the Secretary-General on the Organization's recruitment, placement and promotion policies and on the methods of calculating equitable geographical distribution in the United Nations common system. In reviewing the Organization's efficiency, it will examine procurement reform in the Secretariat and the overall management of resources.

On the Oversight Office, the Committee will consider reports on: the misappropriation of resources at the United Nations Gift Centre; a management audit of electronic mail at the Secretariat; the activities of the Office itself; internal oversight in United Nations operational funds and programmes; and the Secretariat's catering services and its outsourcing practices.

At today's meeting, the Committee is scheduled to discuss its organization of work, the progress report on the IMIS, procurement reform and hear a statement on the financial situation by the Under-Secretary-General for Administration and Management, Joseph Connor.

Aspects of 1996-1997 Budget: Progress Report on IMIS

In the eighth progress report on the Integrated Management Information System (IMIS) project (document A/C.5/51/23), the Secretary-General says that

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IMIS was conceived to replace current administrative systems, many of which were more than 30 years old, and to provide all major duty stations with a modern system. In addition, it would help current efforts to improve the efficiency of the Secretariat's functioning by enforcing consistent processing procedures and by improving quality and timely availability of financial and personnel data throughout the Organization.

In the past 12 months, he says, major steps were achieved in the efforts to complete the system's development and implementation and the establishment of a maintenance structure. Meanwhile, the project has emerged as a major component in the United Nations reform process. New work methods are being introduced, processes rationalized, detailed information made available swiftly and staff skills upgraded.

Due to its complexity and the broad range of work it covers, it was not easy to reach the targets already attained in implementing the system, and difficulties are being dealt with, according to the Secretary-General. The problems include system errors, bad data in pre-existing systems and the difficulties inherent in the need for hundreds of staff to change their long- held work habits and learn procedures introduced with the system.

In 1996, he adds, IMIS personnel applications were installed at six offices away from Headquarters and implemented at two. At Headquarters, the new financial systems, including procurement, were implemented together with a funds sufficiency checking mechanism to ensure that allocations were not exceeded and a new cheque printing system that ensures greater security and controls. Despite the difficulties faced, the report states, the system works satisfactorily.

The purpose of the IMIS, as approved by General Assembly resolution 43/217, of 21 December 1988, is to develop an integrated system for processing and reporting on administrative actions at all major duty stations. It is replacing the numerous independent systems no longer able to provide the support needed by management at a time of increasing demands to support peace-keeping work and those financed from extrabudgetary resources. The system covers personnel management, post management, accounting, purchasing, travel, payroll and budget execution.

In its related report on IMIS (document A/51/7/Add.4), the ACABQ recommends that the General Assembly take note of the Secretary-General's report. However, it says that the report would have been more useful if it had contained information on budget performance, personnel and other administrative matters related to the system. Other necessary information, which should be provided in future reports, include the number and composition of the staff working on the project, the vacancy situation in the IMIS team, their contractual status and the redeployment of staff to the project.

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The ACABQ states that the total expenditure for IMIS is approximately $76 million, including maintenance costs for 1994-1995 and 1996-1997. It welcomed the increase in the number of IMIS users to more than 1,100 between 1 April and 30 September, with more than 400 users daily.

Expressing concern about the tendency of some United Nations entities to develop incompatible systems, the ACABQ recommends that the Secretary-General exercise greater efforts to coordinate with all organizations a broader use of IMIS applications in order to develop computer-based information systems that adhere to common standards.

Review of Administrative and Financial Efficiency

The Secretary-General's report on procurement reform (document A/C.5/51/9*), dated 16 October 1996, provides information about the procurement reform process and actions already taken, or in progress, to implement the reform measures, including: the establishment of a Division; training of procurement officers; revised delegation of procurement authority; greater use of systems contracts; updating the Supplier Roster; strengthening the Headquarters Committee on Contracts and the local committees on contracts and increasing their procurement thresholds; streamlining procedures; publicizing contract activities and awards; and developing information technology in support of procurement activities.

Based on those developments, the Secretary-General states that most of the recommendations made by the High-level Group of Experts on Procurement, as well as the suggestions and concerns expressed by the General Assembly, the ACABQ, the Board of Auditors and the Office of Internal Oversight Service, have either been fully implemented or are in an advanced stage of implementation.

Accordingly, the report states that the Purchase and Transportation Service was restructured and established as the Procurement and Transportation Division, effective 1 January 1996, with the Division Head reporting directly to the Assistant Secretary-General for Conference and Support Services. Delegation of procurement authority has resulted in contract committees away from Headquarters having authority to consider cases ranging from $15,000 to $200,000, while the Headquarters Committee on Contracts will consider all cases above $200,000.

In addition, the Supplier Roster has been voided and updated, and all Member and Observer States have been requested to assist the Division's efforts to expand its pool of potentially qualified suppliers, the report states. The bid-opening procedures have been revised to provide further clarity, fairness and transparency. Coordination of the procurement responsibilities of the relevant Divisions in the Departments of

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Administration and Management, Peace-keeping Operations and the Office of Legal Affairs have been better defined to remove bottlenecks.

The Secretary-General states that he is satisfied that there is a renewed determination and commitment by the staff to implement the necessary reforms, as directed. However, unfortunately, there is a general tendency to blame the Division, a priori, for all procurement problems affecting the Organization. Too often the Division's staff have been unjustly maligned and accused of actions that very frequently have occurred outside the realm of the Division and its responsibility. Referring to assistance in implementing the reforms, the Secretary-General expresses his gratitude to the Governments of South Africa, Sweden and the United Kingdom for providing experts during the period August 1995 to July 1996 at no cost to the Organization.

On the issue of the staffing, the Secretary-General stresses that establishing the post of Director of the Division remains critical to the success of the reforms and the Division's proper management. In addition, owing to overall budgetary constraints, the Assistant Secretary-General for Conference and Support Services, assisted by his Principal Officer, has undertaken the functions of Supplier Relations Officer, until more suitable arrangements can be made. Between 1995 and 1996 the posts in the Division were reduced -- by 2 Professional posts (of 32) and 15 General Service posts (of 47). At the same time, the Division is assisted by four officers, seconded by the Governments of Ireland, Norway, Spain and the United States, at no cost to the Organization. However, they do not have delegated procurement signing authority, pursuant to the Organizations financial rules and regulations.

The report states that from January to August 1996, the Division processed procurement requirements in the amount of $340 million (expected to exceed $400 million by the end of the current year -- 1996), involving a total of 2,062 purchase orders and/or contracts. In addition, the Division prepared and submitted 301 presentations to the Headquarters Committee on Contracts and reviewed and submitted to the Committee 109 presentations from local committees on contracts involving a total of more than $378 million.

The ACABQ's report on procurement reform (document A/51/7/Add.3), dated 6 December 1996, states that the Secretary-General's report (A/C.5/51/9*) constitutes an incremental step in placing procurement reform as a top priority. It requests the Board of Auditors, in its next report, to focus on evaluating the adequacy of measures taken in response to its recommendations and those of the ACABQ and the General Assembly.

The Advisory Committee requests the Secretary-General to refine the criteria for evaluating suppliers so as to broaden the base. The continued efforts to revise and expand the vendor database should obviate the necessity

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to use brokers in place of vendors/suppliers except under exceptional circumstances -- the reasons for which should be recorded in each case. The ACABQ recalled that the Board of Auditors report, submitted to the fifty-first Assembly, had noted that of the 1,237 re-registered vendors in 1996, 1,061 (86 per cent) were based in Western Europe and North America. Furthermore, 48 per cent of the suppliers belonged to one Member State and a further 13 per cent belonged to a second Member State.

In further comments, the ACABQ refers to the issue of granting exceptions to competitive bidding because of "exigency" and reiterates the need for a sharper definition of exigency, as called for in General Assembly resolution 49/219 C. It also comments on limiting ex post facto submissions to the Headquarters Committee on Contracts and the evaluation of the appropriateness of such action. Noting the improved coordination in procurement, the ACABQ states that it is not clear from the Secretary- General's report how procurement planning has been enhanced.

On staffing, the ACABQ recommends that the vacant posts be filled as soon as possible, because of the importance of procurement and the impact it has on the Organization's expenditure. Regarding the use of officers seconded from their governments, the ACABQ notes that they are engaged in areas such as purchasing and operational activities. As such, there is a serious potential conflict of interest, since they are not answerable under the Organization's regulations and rules.

A note by the Secretary-General (document A/50/945), dated 30 April 1996, transmits to the Assembly the report conveyed to him by the Under- Secretary-General for Internal Oversight services, on the audit of procurement handled by the Contracts and Procurement Service of the Department for Development Support and Management Services. The Secretary-General concurs with the recommendations in the report which is annexed to the note.

The report provides recommendations on such issues as: the acceptance of facsimile bids, which could compromise the confidentiality of the bidding process; the need to attain equitable geographical distribution in the procurement of equipment and supplies; the irregular acceptance of belated bids, which could jeopardize the credibility of the procurement process; and the non-maintenance of vendor files, which frustrates audit and management reviews.

Organization of Work

ANA SILVIA RODRIGUEZ ABASCAL (Cuba) said the Secretariat should make some clarifications regarding the follow-up on the work of the Office of Internal Oversight Services. The Cuban delegation had already expressed its reservations regarding the Office, especially on its report on the work of the

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Special Committee on the Situation with Regard to the Implementation of the Declaration on the Granting of Independence to Colonial Countries and Peoples. She asked why the report on the implementation of programmes in the budget had not yet been provided, despite a request in the form of a General Assembly resolution. The Committee's bureau should allocate at least one formal meeting to a debate on the implementation of budget programmes. The Under- Secretary-General for Administration and Management, Joseph E. Connor, should shed light on the progress made in creating certain posts that had been requested in the process of negotiating the budget.

VICTOR MARRERO (United States) said his delegation had made proposals on budgetary and financial matters last year at the High-Level Working Group on the Financial Situation of the United Nations. One of the proposals was on how to improve the working of the ACABQ. The United States had also asked for an enlargement of the ACABQ at the recent meeting of that working group. Since there was wide interest on the subject, the current session of the Fifth Committee should consider the enlargement of the ACABQ. The United States delegation would consult with other members of the Fifth Committee in order to submit a formal proposal. The consultations would be bilateral or held in small groups of interested delegations.

The Committee Chairman, NGONI FRANCIS SENGWE (Zimbabwe), said the questions raised by the Cuban delegation would be answered in due course by the Committee's bureau. He then informed the Committee that the Secretariat had appointed Nora Benary as a deputy to the Secretary of the Committee.

MARTA PENA (Mexico) said she was extremely happy about the appointment of the deputy to the Secretary of the Committee, in response to an Assembly request.

TAMMAM SULAIMAN (Syria) said the issue of personnel who were loaned to the United Nations should be discussed in more than two formal meetings, since it was of special significance. Two more formal meetings should be allocated.

MARY JO ARAGON (Philippines) said, as coordinator of informal consultations on the work of the Office of Internal Oversight Services, that the consultations scheduled on the agenda item had been postponed.

NORMA GOICOCHEA ESTENOZ (Cuba) said more time should be allocated to debating the issue of gratis military officers. Further, no time had been allocated for a discussion of the report of the Secretary-General on the reform of the Human Rights Centre. When would that subject be discussed? she asked. In addition, whenever the Committee considered oversight, it should discuss all bodies that were engaged in that process: the JIU, the Board of Auditors; and the Committee for Programme and Coordination (CPC). She asked

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about the status of the Efficiency Board, since the Secretary-General had said it would be dismantled.

ZULKIFLI ADNAN (Malaysia) supported the views of Cuba and Mexico on the strengthening of oversight bodies. The Committee should not selectively discuss only the expansion of the ACABQ. It should also be aware that increasing the membership of some bodies would also increase the costs of the United Nations.

DJAMEL MOKTEFI (Algeria) supported the comments made by Cuba. He also supported what Syria had said. The Committee should devote more meetings to a debate on loaned personnel.

Mr. SULAIMAN (Syria) asked when a report in relation to the oversight mechanism of the United Nations Disengagement Observer Force (UNDOF) would be submitted to the General Assembly.

Mr. SENGWE (Zimbabwe), the Committee Chairman, said he had noted all the Committee members' comments and would report back.

Report on Integrated Management Information System

JOSEPH E. CONNOR, Under-Secretary-General for Administration and Management, introduced the Secretary-General's eighth progress report on IMIS. The system was making work much easier in the Organization, with its use being spread to more duty stations. The IMIS was being completed without the need for additional appropriations and its maintenance was gradually being taken over by the United Nations.

C.S.M. MSELLE, Chairman of the ACABQ, recommended that the Fifth Committee advise that the Assembly take note of the Secretary-General's report and concur with the observations and recommendations in the ACABQ's report on the IMIS.

Mr. SENGWE (Zimbabwe), the Committee Chairman, proposed that the Committee recommend that the Assembly should take note of the Secretary- General's report and concur with the ACABQ's observations and recommendations.

LINDA SHENWICK (United States) asked when the questions asked by the ACABQ report would be addressed.

Mr. CONNOR said the Secretariat welcomed the call in the ACABQ report for a review of the IMIS project by the Board of Auditors, which would be timely. Other questions raised would be answered by the ninth progress report on the IMIS.

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LUCIEN SCOTTI (France) said the United Nations Children's Fund (UNICEF) was currently considering whether to use IMIS or an entirely different system. More time should be allowed to enable delegations to get more information on, for instance, the developments at UNICEF, before a decision was taken by the Fifth Committee.

Mr. MOKTEFI (Algeria) expressed concern about the financial and technical implications that could arise in light of the difficulties experienced in applying IMIS and of the issues raised by the ACABQ.

Ms. SHENWICK (United States) said at least one informal meeting should be held to allow members to draft language on a decision on IMIS. She asked when the ninth report would be released.

Mr. CONNOR said the report could be submitted around the beginning of the next Assembly session.

Ms. SHENWICK (United States) proposed that informal consultations be held to enable the Committee to approve a resolution that could guide the Secretariat in its preparation of the next budget, as it pertained to IMIS.

NAZARETH INCERA (Costa Rica) supported the United States representative.

Improving United Nations Financial Situation

Mr. CONNOR, Under-Secretary-General for Administration and Management, introduced a statement on the Organization's finances, which he said would be reproduced as an official document in the official languages. He said that, if present trends in foreign currency exchange rates continued, the 1998-1999 appropriations would fall below the outline for the biennium approved last December by the Assembly. The 1994-1995 budget was $2.608 billion, while the latest revised 1996-1997 appropriation was $2.603 billion. The overall $5 million cut was achieved by making real reductions of $210 million, which were offset by higher costs for inflation and foreign exchange fluctuations.

For 1998-1999, he went on, the Assembly had approved a budget outline of $2.480 billion, based on the price levels used for the revised 1996-1997 budget. The amount was $123 million less than that of 1996-1997, at comparable prices. If current rates of inflation and foreign exchange continued, the United Nations could have a negative nominal growth budget for 1998 and 1999.

Turning to the funding of peace-keeping missions, Mr. Connor said there was a sharp rise in peace-keeping assessments in the early 1990s, which peaked between 1993 and 1995. The assessments then fell rapidly in 1996, and in 1997 was at $1.2 billion. For the first time in many years the peace-keeping

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assessments for 1997 will be lower than the amount appropriated for the regular budget.

On the status of contributions at the end of 1996, Mr. Connor said unpaid dues were less than $2.2 billion, down from the record high of $2.3 billion at the end of 1995. Despite that, the level of unpaid dues at the end of 1996 was $400 million higher than in 1994 and $600 million above 1993. Of the total amount owed, $511 million was for the regular budget, compared to $564 million at the same time in 1995, a drop of $53 million.

Similarly, he went on, the regular budget arrears of the Member State with the largest assessment rate was reduced by $37 million, while those of all other States was lowered by $16 million. However, in aggregate, peace- keeping arrears stood at $1.6 billion at the end of 1996, compared with $1.7 billion a year earlier.

Regarding the amount of unpaid assessments, the Under-Secretary-General said there was a discernible pattern in the picture of unpaid dues from 1985 to 1996 -- unpaid dues periodically became highly concentrated. For example, while the United States accounted for 17 per cent of all unpaid dues in 1985, its share had risen to 61 per cent by 31 December 1996. Further, the United States arrears could be described in two ways, late payment and partial payment.

The present year, he said, had begun on a brighter note. New regular budget assessments of $1.1 billion were issued to Member States, and a large number of Member States had paid their new assessments. The response had been encouraging, with 28 Member States paying their dues by 31 January. By 28 February, 39 had paid up their regular budget dues, up from 33 in 1996 and 27 in 1995. In dollar terms, about $554 million had been received for the regular budget, compared with $383 million in the same period last year. However, the surge in payments would not carry the regular budget through 1997. The United Nations would experience five months of borrowing of up to about $355 million and end the year with a negative cash position of some $225 million.

He said the need to borrow peace-keeping cash and the growth of peace- keeping arrears prevented the Organization from fully reimbursing Member States' costs for the troops and equipment they provided the United Nations. The increase in such unpaid costs meant that one group of States, waiting for its reimbursements, was funding the late payment of dues by another. As of 31 December 1996, the United Nations owed about $867 million for troops and equipment, down from $1.155 billion at the end of 1995, but up from $789 million in 1994. The improvement was brought about when the prompt payment of 1996 peace-keeping dues by many Member States enabled the Organization to reimburse $350 million in troop and equipment costs for 1996.

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The payment of arrears by the Russian Federation also enabled the United Nations to pay $200 million of past troop and equipment costs by the end of 1996.

As for 1997, he said, the Organization would do well if it contained increases in its troop and equipment debts by promptly collecting current assessments. However, since reimbursements would depend on substantial payments of arrears, peace-keeping cash needed to be retained as an insurance against regular budget cash shortages.

Ms. SHENWICK (United States) asked whether the amount shown in one of Mr. Connor's charts, regarding the 1994-1995 budget, should not be $2.630 billion, instead of $2.608 billion.

Mr. CONNOR said her numbers were correct, but the Secretariat had used "base-case" figures. The amount the United States delegate had highlighted contained an amount that was added later on to the budget.

AMR NOUR (Egypt) referred to the Under-Secretary-General's list of States that had paid up their dues for the 1997 regular budget. His country had been excluded. Since the charts were contained in the same document that was distributed to the High-level Working Group on the United Nations Financial Situation, the Secretariat should issue a revised list that would take into account the fact that Egypt had paid up its regular budget dues on 2 January.

AMJAD SIAL (Pakistan) said the list of those who had paid up should include Pakistan, which had also paid up its dues.

Mr. CONNOR said the Pakistani assessment had been paid up in March, while the chart only covered the period up to the end of February. The problem with Egypt was that it had paid its dues in local currency, which might not have yet been recorded at Headquarters. He added that he would pursue the matter further to seek clarification.

Mr. SCOTTI (France) said that the Committee's members should be given more figures on such matters as contingent-owned equipment and death and disability benefits.

CARLOS RIVA (Argentina) said the Under-Secretary-General's charts on the amounts owed by the United Nations for troops and contingent-owned equipment did not include an individual reference to Argentina, even though it was owed some $20 million.

Mr. CONNOR said that the total amount owed by the United Nations was $1.242 billion as of the end of January, comprising: $207.5 million for

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troops; $672.7 million for contingent-owned equipment; $320.8 million for letters of assist; and $40.7 million for death and disability and other costs. The United Nations record showed that the Organization owed Argentina about $12 million.

Mr. PENA (Mexico) said the Under-Secretary-General's oral reports could not replace the written ones that should be submitted to the Assembly.

BERNARDO GREIVER (Uruguay) asked what the chance was for reimbursements in 1997. The sums owed troop-contributing States was a burden on them. The United Nations owed his country amounts that were larger than its assessments.

Mr. CONNOR said the Secretariat hoped to pay something similar to what it had paid last year. However, there would not be a major change in the level of debts to Member States unless there was a large payment of arrears by Member States, similar to what the Russian Federation had done last year. He could not guarantee a major reduction in the Organization's debts to Member States.

SAM HANSON (Canada) expressed concern about the prospects for continued borrowing from the peace-keeping budget to finance the regular budget. He also expressed concern about the high levels of debt related to contingent- owned equipment, compared with debts related to Member States' troop costs.

Mr. CONNOR said the payment of costs to Member States was made on a mission-by-mission basis. It was easier to pay troop costs because they were easier to compute and agree upon with Member States. The payment of contingent-owned equipment was much more complicated, involving extensive negotiations with Member States on how to determine the amounts owed by the United Nations.

Review of United Nations Efficiency: Procurement Reform

BENON SEVAN, Assistant Secretary-General for Conference and Support Services and United Nations Security Coordinator, introduced the report of the Secretary-General. The lack of overall authority over procurement must be addressed by the Secretariat, as well as by Member States. Regarding the staffing of the Procurement and Transportation Division, he said the post of Director should be created, since the Division needed management expertise to guide it. A final decision must be made by the Committee as to whether the post of Director should be upgraded or not. The Office of Conference Services was a conglomerate of disparate services and it was difficult for him to continue running the procurement offices.

Mr. MSELLE, Chairman of the ACABQ, introduced the report of the ACABQ, reviewed some its contents and repeated some if its recommendations.

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TENPAPARAI KRISHNAMACHARI, of the Office of Internal Oversight Services, said the Office's report was written after an audit of some of the contracts awarded by the United Nations. The audit addressed such aspects of procurement as how bids were sought, confidentiality of bids, transparency in the process and the need to increase the use of vendors from developing countries. The report was a response to Member States' desire to ensure transparency in the procurement process.

PAUL MENKVELD (Netherlands) speaking for the European Union -- and Bulgaria, Cyprus, Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Norway -- recalled that the ACABQ had recommended that all procurement activities be integrated at Headquarters and that they be coordinated with those of the United Nations Office for Project Services and other entities. The findings of the recent Internal Oversight Services investigation of the International Criminal Tribunal for Rwanda had underlined the importance of that recommendation. Furthermore, the High-level Expert Group on Procurement had recommended that the functional responsibility for all procurement should be granted to the Department of Administration and Management. The European Union concurred with the ACABQ recommendation that immediate steps be taken, within a specific period of time, to review the procurement structures. The Secretary-General should complete the review and report to the Assembly by 15 May.

Speaking on procurement authority, he said the European Union endorsed the Secretary-General's view that the local committees on contracts should not be abolished. The Union also supported open tender and access to the procurement information in the widest possible geographical area. The United Nations should make greater use of publications financed by subscriptions from potential suppliers to announce procurement opportunities. He asked why the Procurement and Transport Division was not making greater use of the Procurement Update publication and the Internet to announce such opportunities.

He said increasing the number on the Supplier Roster and making more use of advertising would lead to more transparency and make the Organization less vulnerable to criticisms that too much procurement came from too few Member States. The Board of Auditors and the Secretariat had indicated that almost 50 per cent of the total procurement handled by the Secretariat in New York in 1994-1995 went to United States' companies. That showed a serious deficiency that should be addressed by establishing an active and viable Roster and by making greater use of public advertising.

He said the Union would continue pursuing an arrangement in which preference would be given in the awarding of contracts to equally qualified suppliers from Member States that had paid up their dues. It would propose draft language to that effect in the Fifth Committee. As for the staffing of

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the Procurement and Transport Division, the Union supported the establishment of the post of a Director for the Division.

NIKOLAI LOZINSKI (Russian Federation) said the report of the Secretary- General was relatively dated, since it was about six months old. He anticipated the report of the Board of Auditors on the issue. The Russian Federation had noted the measures to reform the Procurement and Transportation Division, but the issue of consolidating the various procurement subdivisions should be considered. He did not agree with the ACABQ views on the delegation of financial authority. The roster of vendors and suppliers had not been reformed sufficiently to make it reflect the broadest possible geographical distribution. The matter should be duly addressed. The Secretariat should provide information on the use procurement brokers.

He said the workload of personnel should be the main criterion for determining the level of staffing for the procurement sections, bearing in mind that other United Nations sections had experienced reductions in resources. Expressing concern about the Internal Oversight Services report on contract personnel, he said the issues raised by the Office should be dealt with accordingly.

AHMED FARID (Saudi Arabia) said, as the ACABQ had stated, procurement reform should be given top priority in the United Nations and its programmes and funds. Such reforms should place emphasis on the training of officers and the restructuring of the procurement sections. Training should be emphasized for staff involved in procuring goods and services for the Organization. He welcomed the efforts to stop the granting of ex post facto contracts. He also welcomed the issuance of a new procurement manual. Sharing the ACABQ's concern that about 48 per cent of suppliers came from one Member State, he said that efforts should be made to tackle that problem.

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