ASTONISHING THAT MEMBER STATES HEAR ABOUT PROCUREMENT CASES IN ARBITRATION ONLY AFTER THEY HAVE REACHED EXTREME STATUS, FIFTH COMMITTEE TOLD

9 March 1999

Press Release
GA/AB/3284

ASTONISHING THAT MEMBER STATES HEAR ABOUT PROCUREMENT CASES IN ARBITRATION ONLY AFTER THEY HAVE REACHED EXTREME STATUS, FIFTH COMMITTEE TOLD

19990309 Committee Concludes its Discussion of Procurement Reform; Discusses Programme of Work, Issues Related to United Nations Security Arrangements

Member States should be told what disciplinary actions were taken against officials responsible for procurement-related decisions that resulted in arbitration between the United Nations and its suppliers, the Fifth Committee (Administrative and Budgetary) was told this morning as it concluded its discussion of procurement reform.

It was astonishing that Member States heard about procurement cases in arbitration only after they had reached such extreme status, and only after demanding the information, the representative of the Russian Federation continued. Information was needed about how arbitration-related payments were financed, what impact those had on the budget, and who took the decision to make payments when a matter did not reach arbitration.

Those comments were made in response to a report from the Office of Internal Oversight Services (OIOS) reviewing procurement-related arbitration cases, all of which related to United Nations peacekeeping operations.

From January 1992 to June 1997, claims were made by suppliers against the United Nations for some $96.7 million, or 16 per cent of a total procurement budget of $594 million, according to the report. In the five settled cases the Oversight Office reviewed, some $52.6 million had been claimed, of which the Organization paid $23 million in settlements and awards.

As the Committee discussed the question of procurement reform and its programme of work, the representatives of India, Bangladesh, Uganda and Costa Rica also spoke. The Assistant Secretary-General for Central Support Services, Toshiyuki Niwa, addressed the Committee on procurement reform and answered questions posed yesterday, relating primarily to the Organization's security arrangements.

At the outset of the meeting, Movses Abelian (Armenia), Fifth Committee Chairman, announced that Carlos Vegega (Argentina), Vice-Chairman of the International Civil Service Commission, had unexpectedly passed away. The Committee observed a moment of silence in his memory.

The Committee will meet again at 10 a.m. on Thursday, 11 March, to discuss the Integrated Management Information System.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to continue discussion of its agenda item reviewing the efficiency of the administrative and financial functioning of the United Nations, and, specifically, to conclude its general discussion on procurement reform. (For background see press release GA/AB/3283 of 8 March).

Statements

At the commencement of the meeting, following a request from its Chairman, Movses Abelian (Armenia), the Committee observed a minute's silence in memory of Carlos Vegega, Vice-Chairman of the International Civil Service Commission (ICSC), who had died unexpectedly.

RAJAT SAHA (India) said that, after hearing the explanation of the Assistant Secretary-General for Central Support Services, Toshiyuki Niwa, in response to his question yesterday on procurement information on the Internet, he had checked and had been pleased to discover that the statistics portion of the website was working, but not the announcements section.

INOURI G. ORLOV (Russian Federation) said that the matter of arbitration was particularly important. The Office of Internal Oversight Services efforts to prepare a report on that issue were appreciated. While recognizing the sensitive and delicate nature of the information, the Russian Federation, nonetheless, could not but take note of the report with regret. More than a year ago in this room, a number of questions had been directed to the Secretariat on arbitration. He had hoped the report would clarify the situation, including explaining how payment of arbitration was financed and what impact it had on the budget. Additionally, he wished to know who took the decision on paying out agreed sums if an issue did not go to arbitration, how United Nations attorneys were selected to carry out arbitration, and how they were paid. He also wished to know what disciplinary actions were taken against officials responsible for decisions that resulted in arbitration and the like.

He noted with deep regret that, rather than an across-the-board analytical report, the Committee had received a detailed report that did not answer the questions that had been raised. He was also extremely alarmed at the number of issues brought forward and the sums paid out as a consequence of those complaints. The level was unacceptable, judging by the information that had been provided, and there seemed to be no question of reducing the level in the near future. To put it mildly, he was surprised to see that critical procurement functions were not infrequently dealt with by individuals not responsible to the Organization for what they did. Member States were only now finding out about problems that had already reached serious dimensions, and only after they had demanded to be informed.

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He had doubts as to the quality of the precision of the arbitration, he said, and sought reassurance on that. The report passed over that in silence. Multi-million dollar sums seemed to have been paid as a result of arbitration, and, if that was the case, it must be immediately be halted. Arbitration procedures must be made transparent as far as their results were concerned.

He said he was astonished to see that the report passed over the responsibility of executives in the Secretariat for what had caused the procedures. He recognized that all Secretariat officials were accountable to the Secretary-General, but sought information as to what specific measures had been taken to deal with individuals responsible for multi-million dollar losses that the Organization and Member States had experienced. That issue had become more significant, particularly as it had found its way into the media. He had seen a report stating that in one case compensation of $7 million had been paid. Was that the result of arbitration, or an outcome otherwise agreed upon? he asked. The report did not seem to include that sum. The media had also said the same supplier had brought a claim under arbitration for an additional $40 million in punitive damages. He sought a response as to whether that information was accurate and, if so, where in report it was addressed. He also wanted details as to the Organization's policies and practices on punitive damages.

Those questions and others, to which Member States would like answers, remained before the Committee, he said, and it continued to look for answers.

TOSHIYUKI NIWA, Assistant Secretary-General for Central Support Services, thanked the representative of India for looking into the issue of website coverage. The website required constant attention and improvement. He understood that while not all procurement opportunities were included, the major ones were. He had asked the Director of the Procurement Division, Andrew Toh, to ensure that the quality of website announcements was improved. He looked forward to further discussion during informal discussions.

Other Matters

The CHAIRMAN said that the Committee would await the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on outsourcing before scheduling consultations on that issue. At the meeting yesterday, the representatives of Cuba and Costa Rica had raised questions about the escalators.

Mr. NIWA said that, after checking with his staff, he had been unable to ascertain exactly what issues were involved regarding the escalators. If he could be enlightened on this matter, he would investigate and provide a response.

Questions posed yesterday on security matters had to do with the positioning or deployment of security staff, the use of dogs, and the conduct or training for security officers, he said. The United Nations security

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service strove to address the risks the Organization faced on a continuous basis. Obviously, security coverage had to be redeployed as needed to provide maximum protection. Regarding the North Delegates Lounge, an earlier decision by which security officers would be redeployed had been reviewed, and coverage would be reinstated.

On the question of coverage for the General Assembly President, he said it varied from time to time, in response to the risks faced by the Organization. There was no set formula. Security risks were assessed to provide appropriate security to the President. Full-time coverage was being provided to the President. When he was not in the office, the coverage was not provided. Those were professional judgements; he wanted to trust his people to take those decisions in light of the information they had before them.

Turning then to the use of canines, he said that the Organization faced all kinds of security risks. When it came to letter bombs and other suspicious objects, detection was essential. The custom had been for the Organization to turn to the host city's bomb squad. That, however, generally took between one and two hours, working in cooperation with the New York City Police Department.

In light of the number of incidents of letter bombs and other suspicious objects, it had been decided last September to use canines on a trial basis, he continued. Interruptions to the Secretariat and the conference rooms would be reduced to a matter of minutes. It was not about dogs, he said, but rather about service and expertise related to dealing with the suspicious objects left in the Building.

Sweeping the Security Council, the General Assembly and the conference rooms were now done using canine services, he explained. That service was necessary and should be provided on a permanent basis.

Questions regarding the Trusteeship Council probably had to do with special events to celebrate International Women's Day 1999, he said. Due to the presence of the Secretary-General and the First Lady of the United States, there had been overwhelming interest in participating. While the room had been filled to capacity, over a 100 persons were flowing in around 10 a.m. His staff had tried to make sure that heads of delegations were not prevented from entering the room -- even in the absence of available seats -- but the situation might have resulted in misunderstandings.

Like a utility company, when operations went well, no one noticed, he said. In hindsight, the Women's Day function might have been organized to have pre-assigned seats for certain delegates. Those issues would be explored.

The CHAIRMAN drew attention to the revised programme of work that had been distributed in the room. Evening meetings would begin next week. Yesterday, delegations had indicated which agenda items they felt should be

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postponed. However, such decisions should be taken during informal consultations.

HUMAYUN KABIR (Bangladesh) said that yesterday a session had been held on the Development Account. Delegations needed more time to exchange views in an "informal informal context". This afternoon's meeting should be rescheduled.

The CHAIRMAN said that "backdoor information" should not cause the rescheduling of a meeting. He drew attention to an error in the work programme: outsourcing was not to be taken up Wednesday.

NESTER ODAGA-JALOMAYO (Uganda) said night meetings should not go beyond 9:30 p.m. Regarding the paper distributed yesterday on the Committee's utilization of conference services, hours should be measured against output. Whichever department had prepared the chart should include comparative figures on output achieved, such as how many agenda times had been dealt with in each session, as well as what percentage of those items had been concluded, and what percentage deferred. Then the Committee's use of time available could be measured.

The CHAIRMAN said that he understood that night meetings went from 6:30 p.m. to 9:30 p.m., and he had no intention to scheduling meetings beyond that. On the information distributed yesterday to Member States, it had been put together by Conference Services, and they could not judge the work of the Committee. Only the Committee itself could do that. The information was only intended to indicate that commencing meetings on time could result in savings. The Committee itself would have some sense of how much time it spent on simple issues.

Mr. ODAGA-JALAMAYO (Uganda) said that he wished to clarify that he had not raised the issue of the quality of work. He had only requested information on the number of agenda items conclusively finished to resolution and the number deferred in each session. As given, the information could be very misleading.

The CHAIRMAN said that the Committee faced an almost equal number of items each session. However, one item could result in 15 resolutions. He would determine whether answers to the representative of Uganda's questions were available, and provide them if they were. The information provided yesterday had been for statistical purposes only, and the intention had not been to analyse it in the Committee. However, as he had been asked, he would look for the additional information.

NAZARETH INCERA (Costa Rica) said she regretted having arrived late to the meeting, and so having missed the answers given to the questions she had posed yesterday. She had had commitments she could not sidestep. She would ask for the floor again when the matters were further discussed.

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