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Report to Congressional Committees: 

April 2006: 

United Nations: 

Procurement Internal Controls Are Weak: 

GAO-06-577: 

GAO Highlights: 

Highlights of GAO-06-577, a report to congressional committees. 

Why GAO Did This Study: 

For more than a decade, experts have called on the United Nations (UN) 
Secretariat to correct serious deficiencies in its procurement process. 
Recent evidence of corruption and mismanagement in procurement suggests 
that millions of dollars contributed to the UN by the United States and 
other member states are at risk of fraud, waste and abuse. During the 
last decade, UN procurement has more than tripled to more than $1.6 
billion in 2005, largely due to expanding UN peacekeeping operations. 
More than a third of that amount is procured by UN peacekeeping field 
missions. 

To review the UNís internal controls over procurement, GAO assessed key 
control elements, including (1) the overall control environment and (2) 
specific control activities aimed at providing reasonable assurance 
that staff are complying with directives. 

What GAO Found: 

Weak internal controls over UN headquarters and peacekeeping 
procurement operations expose UN resources to significant risk of 
waste, fraud, and abuse. The UNís overall control environment for 
procurement is weakened by the absence of (1) an effective 
organizational structure, (2) a commitment to a professional workforce, 
and (3) specific ethics guidance for procurement staff. GAO found that 
leadership responsibilities for UN procurement are highly diffused. 
While the UN Department of Management is responsible for UN 
procurement, field procurement staff are instead supervised by the UN 
Department of Peacekeeping Operations, which currently lacks the 
expertise and capacities needed to manage field procurement activities. 
Also, the UN has not demonstrated a commitment to maintaining a 
qualified, professional procurement workforce. It has not established 
training requirements or a procurement career path. In addition, the UN 
has yet to establish specific ethics guidance for procurement staff in 
response to long-standing mandates by the UN General Assembly, despite 
recent findings of unethical behavior. 

Diffusion of Leadership Responsibilities for UN Procurement: 

[See PDF for Image] 

[End of Figure] 

GAO also found weaknesses in key control activities. For example, the 
UN has not addressed workload and resource problems that are impeding 
the ability of a key committee to review high-value contracts. Also, 
the UN has yet to establish an independent process to review vendor 
complaints, despite long-standing recommendations that it do so. In 
addition, the UN has not updated its procurement manual since 2004. As 
a result of these and other weaknesses, many millions of dollars in 
U.S. and other member state contributions could be vulnerable to fraud, 
waste, and abuse. 

What GAO Recommends: 

GAO recommends that the State Department work with member states to 
encourage the UN to establish clear lines of authority, enhance 
training, adopt ethics guidance, establish an independent bid protest 
mechanism, and implement other steps to improve UN procurement. GAO 
provided State and the UN with an opportunity to comment on a draft of 
this report. State endorsed GAOís recommendations. The UN chose not to 
provide comments. 

For more information, contact Thomas Melito at (202) 512-9601 or 
meltiot@gao.gov. 

[End of Section] 

Contents: 

Letter:  

Results in Brief:  

Background:  

The Control Environment over UN Procurement Is Weak:  

The UN Has Weaknesses in Key Procurement Control Activities : 

The UN Has Not Comprehensively Assessed Procurement Risks:  

Fragmented Information Systems Impede UN Procurement:  

Procurement Managers Lack Mechanisms to Monitor Procurement and Rely on 
Oversight Entities:  

The United States Has Recently Taken Steps to Support UN Procurement 
Reform:  

Conclusions:  

Recommendations for Executive Action:  

Agency Comments and Our Evaluation:  

Appendixes: 

Appendix I: Scope and Methodology:  

Appendix II: UN Procurement Processes:  

Appendix III: Comments from the Department of State:  

Appendix IV: GAO Contact and Staff Acknowledgments:  

Related GAO Products: 

Figures:  

Figure 1: Major Commodities Purchased in 2004:  

Figure 2: UN Peacekeeping Expenditures and Military Personnel, 1999- 
2005:  

Figure 3: UN Headquarters and Peacekeeping Procurement for 2004:  

Figure 4: Supervisory Oversight and Delegation of Field Procurement 
Authority:  

Figure 5: Peacekeeping and Other Missions Administered by the 
Department of Peacekeeping Operations:  

Figure 6: Procurement Process in the Field:  

Figure 7: Procurement Process in UN Headquarters for Contracts Greater 
Than $200,000:  

Abbreviations:

JIU: Joint Inspection Unit: 

OIOS: Office of Internal Oversight Services: 

UN: United Nations: 

Letter: 

April 25, 2006: 

The Honorable Norm Coleman: 
Chairman: 
The Honorable Carl Levin: 
Ranking Minority Member: 
Permanent Subcommittee on Investigations: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Henry J. Hyde: 
Chairman: 
The Honorable Tom Lantos: 
Ranking Minority Member: 
Committee on International Relations: 
House of Representatives: 

The United Nations (UN) Secretariat procured more than $1.6 billion in 
goods and services in 2005, primarily to support a peacekeeping program 
that has more than tripled in size since 1999.[Footnote 1] For more 
than a decade, experts have called on the UN to correct serious 
deficiencies in its procurement process. However, audits and 
investigations continue to uncover evidence of corruption and 
mismanagement in the UN's procurement activities. For example, in 2005, 
a former UN procurement officer pled guilty to charges of accepting 
money from vendors seeking contracts. In 2006, the UN placed eight 
officials on administrative leave pending the outcome of an ongoing 
investigation involving procurement activities. Four of the officials 
were in the Department of Management, which is responsible for all UN 
procurement functions--including establishing procurement policies 
through its UN Procurement Service and approving high-value contracts. 
The remaining four staff were from the Department of Peacekeeping 
Operations. Procurement staff in field peacekeeping missions procure 
goods and services amounting to more than one-third of all UN 
procurement. 

UN procurement occurs in a highly decentralized organizational 
structure, widely dispersed geographic setting, and conflict 
situations. These conditions underscore the need for effective internal 
controls to help provide reasonable assurance against fraud, waste, 
mismanagement, and abuse. Internal controls serve as the first line of 
defense in safeguarding assets and preventing fraud. The United States 
is the largest financial contributor to the UN and has a strong 
interest in helping to ensure that the UN exercises sound internal 
controls over its resources. In addition, the United States, through 
the Department of State, takes measures to advance reform of UN 
management processes. 

In this report, we assess the UN's procurement process according to the 
five key standards for internal control.[Footnote 2] First, we assessed 
the control environment over procurement by examining the 
organizational structure for managing procurement, elements required 
for a professional procurement workforce, and ethics guidance for 
procurement staff. Second, we assessed several UN control activities, 
including its process for reviewing contracts; mechanisms for 
considering vendor protests; processes for updating the procurement 
manual; and procedures for maintaining vendor rosters. Third, we 
determined the extent to which the UN examines the risks regarding its 
procurement activities. Fourth, we reviewed the UN's measures for 
recording procurement information and communicating it to management. 
Fifth, we examined the UN's mechanisms for monitoring management 
oversight of procurement activity and closing audit recommendations. In 
addition, we examined the U.S. government's efforts to support reform 
of UN procurement. 

To assess internal controls in the UN procurement process, we used a 
framework that is widely accepted in the international audit community 
and has been adopted by leading accountability organizations, including 
the International Organization of Supreme Audit Institutions, the U.S. 
Office of Management and Budget, and GAO.[Footnote 3] We also reviewed 
reports issued by the UN's internal oversight unit, the Office of 
Internal Oversight Services; and by its external auditors, the Board of 
Auditors and the Joint Inspection Unit. We also analyzed reports 
prepared for the UN in 2005 by consulting firms[Footnote 4] and 
reviewed documents and data provided by the UN Procurement Service and 
the Department of Peacekeeping Operations (Peacekeeping Department) and 
by the U.S. Department of State. We interviewed UN and Department of 
State officials in New York and conducted structured interviews with 
the principal procurement officers at each of 19 missions.[Footnote 5] 
To determine the implementation rate of the internal oversight unit's 
recommendations, we discussed the data collection procedures with 
relevant officials and performed basic reliability checks. We 
determined that the recommendations data used were sufficiently 
reliable for the purposes of this report. 

We performed our work from April 2005 through March 2006 in accordance 
with generally accepted government auditing standards. Appendix I 
provides detailed information on our scope and methodology. 

Results in Brief: 

UN resources are unnecessarily vulnerable to mismanagement, fraud, 
waste, and abuse because the UN (1) lacks an effective organizational 
structure for managing procurement; (2) has not demonstrated a 
commitment to maintaining a professional, trained procurement 
workforce; and (3) has failed to adopt the full range of ethics 
guidance for procurement officials. First, the UN has not established a 
single organizational entity or mechanism capable of comprehensively 
managing procurement. This condition may have hampered efforts to 
correct long-standing procurement weaknesses. Second, the UN has not 
demonstrated a commitment to improving the professionalism of its 
procurement staff in the form of training, a career development path, 
or other key human capital practices critical to attracting, 
developing, and retaining a qualified professional workforce. For 
example, the UN has not established training requirements for its 
procurement staff. We also found that 16 of 19 field procurement chiefs 
did not possess a professional certification of their procurement 
qualifications. Because significant control weaknesses have led the UN 
to rely disproportionately on the actions of its staff to safeguard its 
resources, the UN's commitment to providing a professional, trained 
procurement workforce is particularly critical. Third, the UN has 
failed to adopt a full range of ethics guidance for procurement 
officials despite directives from the General Assembly in 1998 and 
2005. Since the control environment provides the structure and climate 
for the quality of internal controls of an organization, failure to 
address these weaknesses undermines other UN efforts for taking 
corrective action to improve its procurement process. 

We also found weaknesses in key procurement control activities that are 
intended to provide reasonable assurance that management's directives 
are followed. These activities include processes for (1) reviewing high-
value procurement contracts; (2) considering vendor protests; (3) 
updating the procurement manual; and (4) maintaining qualified vendor 
rosters. 

* We found that, although UN procurement tripled over the past 7 years, 
the size of the UN's principal contract review committee and its 
support staff remained relatively stable. In 2005, the Headquarters 
Committee on Contracts reviewed contracts valued at $3 billion 
(including long-term contracts) and committee members stated that they 
do not have resources to keep pace with the current workload. In 
addition, UN auditors have concluded that the committee cannot properly 
review contract proposals. Without an effective contract review 
process, the UN cannot provide reasonable assurance that high-dollar 
value contracts are undertaken in accordance with the Financial 
Regulations and Rules of the UN. 

* The UN has not established an independent process to consider vendor 
protests despite a 1994 recommendation by a high-level panel of 
international procurement experts to do so as soon as possible. Without 
such a process, the UN may not be able to provide reasonable assurance 
of the fair treatment of vendors. In addition, senior UN management may 
not be alerted to procurement staff's failure to comply with 
procurement regulations. 

* The UN has not updated its procurement manual since 2004 to reflect 
current UN procurement policy. For example, the manual does not reflect 
a June 2005 delegation of procurement authority that allows 
peacekeeping missions to purchase up to $1 million in certain goods or 
services without obtaining the prior approval of the Department of 
Management and the Headquarters Committee on Contracts. All 19 
Peacekeeping Department field procurement officials informed us that 
they have access to the manual at their mission, and all are somewhat 
to very familiar with it. In a highly decentralized organization with 
geographically dispersed field missions, it is essential that staff 
have access to the most current procurement policy so that they can be 
informed of and consistently comply with UN regulations. 

* The UN does not consistently implement its process for helping to 
ensure that it is conducting business with qualified vendors. As a 
result, the UN may be vulnerable to favoring certain vendors and 
awarding contracts to vendors that are unqualified. For example, 
according to UN auditors, one vendor appears to have been awarded 
approximately $36 million in contracts without completing the vendor 
registration process. 

The UN lacks a risk assessment framework for identifying and managing 
the procurement activities that are most vulnerable to mismanagement, 
fraud, waste, and abuse. UN procurement officials and auditors have 
identified significant risks associated with headquarters and 
peacekeeping procurement operations, such as start-up peacekeeping 
missions that operate under tight time frames in logistically complex 
environments. Without a comprehensive risk assessment framework, the UN 
is at risk of not allocating proper attention to start-up missions or 
other procurement activities prone to fraud, waste, and abuse. 

We found that the UN lacks an integrated information management system, 
which adversely affects its ability to oversee field and headquarters 
procurement operations. We also found that the Peacekeeping Department 
has established only limited reporting requirements for field missions. 
A wider range of management reports, if used, would serve to alert 
management of procurement actions requiring additional monitoring. For 
example, a report of cumulative awards to vendors would help management 
identify possible instances of inadequate competition and bid rigging 
by vendors. Without such reporting tools or a full-time manager to 
review them, the likelihood that procurement mismanagement, fraud, and 
abuse go undetected is increased. 

UN procurement officials lack internal mechanisms for monitoring 
procurement activity in headquarters and the field. For example, we 
found that chief procurement officers in the field did not have a 
systematic, standardized approach for determining whether procurement 
under their supervision is consistent with UN regulations. Instead, to 
monitor procurement activity, officials rely heavily on the UN 
oversight entities' periodic audits. Although these entities have 
identified numerous weaknesses in the procurement process, the UN has 
not always implemented their recommendations to correct the weaknesses. 
In many cases, the oversight entities have found similar problems in 
different field missions and issued similar recommendations. Yet, UN 
management does not review the audit reports in a methodical manner to 
determine whether changes to policy or processes are warranted to 
address systemic problems. In addition, the UN does not have a 
mechanism that provides reasonable assurance that corrective actions, 
once taken, are institutionalized. Without effective management 
oversight of procurement activity, the UN is unable to identify and 
correct existing control weaknesses that could lead to mismanagement, 
fraud, waste, and abuse. 

The United States has recently taken steps to advocate procurement 
reform as one element of overall UN management reform. The most visible 
of these steps was a U.S.-chaired Security Council review of the 
Peacekeeping Department's procurement problems in February 2006. 
However, the position of Ambassador for UN Management and Reform at the 
U.S. Mission to the UN in New York was vacant for more than 1 year. 
This position was recently filled in March 2006. U.S. Mission officials 
stated that this vacancy limited the mission's ability to influence 
procurement reform. 

We are recommending that the Secretary of State and the Permanent 
Representative of the United States to the UN work with other member 
states to encourage the UN Secretary-General to take several steps to 
address these problems, including establishing clear and effective 
lines of authority and responsibility between headquarters and the 
field over UN procurement; establishing a comprehensive training 
program and formal career path for procurement staff; providing the 
Headquarters Committee on Contracts with an adequate structure and 
manageable workload; and establishing an independent bid protest 
process. We also are recommending that the Secretary of State report to 
the Congress annually regarding UN progress in reforming its 
procurement process. 

The Department of State provided written comments on a draft of this 
report, which are reproduced in appendix III. The department stated 
that it welcomed our report and endorsed its recommendations. The UN 
did not provide us with written comments. State and UN officials 
provided us with a number of technical suggestions and clarifications 
that we have addressed as appropriate. 

Background: 

UN Secretariat procurement has tripled over the past decade, as 
peacekeeping operations have grown. The UN procures a variety of goods 
and services, including freight services, motor vehicle parts, and 
telecommunications equipment. UN procurement is conducted by the 
Department of Management and the Department of Peacekeeping Operations 
through its field missions. Internal controls can be used to manage an 
organization and to identify areas of weaknesses and strengths in the 
procurement process. 

The UN Procures Many Goods and Services: 

In 2004, the UN spent a total of $1.31 billion on procurement, with 
$276 million being devoted to air transportation services 
alone.[Footnote 6] The UN procures a variety of goods and services, 
including air transportation, freight forwarding and delivery, motor 
vehicle parts and transportation equipment, and telecommunications 
equipment and services, as shown in figure 1. 

Figure 1: Major Commodities Purchased in 2004: 

[See PDF for image] 

[End of figure]

Procurement Primarily Involves Two Departments: 

The Department of Management is responsible for procurement in the UN 
Secretariat. The department's Procurement Service develops policies and 
procedures for headquarters and field procurement based on the UN 
Financial Regulations and Rules.[Footnote 7] The Procurement Service 
also oversees training for all staff involved in procurement. In 
addition, it also provides advisory support for field purchases within 
the authority of field missions. The Procurement Service also 
negotiates, prepares, and administers contracts for goods and services 
for UN headquarters and certain large contracts (such as air 
transportation services or multi-year systems contracts) for 
peacekeeping missions. The UN's procurement process at headquarters 
involves several steps (see fig. 7, app. II). 

The UN's field procurement process involves the Peacekeeping Department 
and includes additional steps (see fig. 6, app. II). Each field mission 
is required to establish a Local Committee on Contracts to review and 
recommend contract awards for approval by the chief administrative 
officer of the mission. The Local Committee on Contracts is composed of 
four members from the mission: a legal advisor, and the respective 
chiefs of the mission's finance, general services, and transport 
sections. Field missions may not award contracts worth more than 
$75,000 without approval by the chief administrative officer of the 
mission based on the advice of the Local Committee on Contracts. In 
addition, field missions may not award contracts worth more than 
$200,000 without approval first by the mission's chief administrative 
officer based on the advice of the Local Committee on Contracts and 
then by the Department of Management based on the advice of the 
Headquarters Committee on Contracts.[Footnote 8] The Headquarters 
Committee on Contracts evaluates the proposed contracts and advises the 
Department of Management as to whether the contracts are in accordance 
with UN Financial Regulations and Rules and other UN policies. 

The Procurement Service employs about 70 individuals to procure items 
for the UN's headquarters operations, peacekeeping missions, 
international criminal tribunals, regional commissions, and upon 
request, other UN agencies and subsidiary organs. The Peacekeeping 
Department employs about 270 field procurement staff at its field 
missions.[Footnote 9] The members of the Headquarters Committee on 
Contracts are drawn from the UN Office of Central Support Services; 
Office of Programme Planning, Budget and Accounts; Office of Legal 
Affairs; and the Department of Economic and Social Affairs. The 
committee relies on support staff to assist it in coordinating its 
activities and drafting minutes detailing the results of its meetings. 

UN Procurement Tripled Due to Growth in Peacekeeping Operations: 

UN procurement has more than tripled over the past decade as UN 
peacekeeping operations have grown. UN procurement grew from $430 
million in 1997 to $1.6 billion in 2005. This increase has been due 
primarily to a rapid increase in UN peacekeeping operations. Eight of 
the UN's 15 current peacekeeping missions were established in 1999 or 
later. Peacekeeping expenditures more than tripled between 1999 and 
2005, as shown in figure 2. In addition, the number of military 
personnel in peacekeeping missions has increased fivefold, from about 
14,000 in 1999 to about 73,000 as of February 2006. Although 
peacekeeping missions were originally conceived as short term in 
nature, many missions are long-standing and have continued for more 
than 5 years. 

Figure 2: UN Peacekeeping Expenditures and Military Personnel, 1999- 
2005: 

[See PDF for image] 

Note: Military personnel includes civilian police, troops, and 
observers. It does not include UN civilian personnel.

[End of figure] 

As shown in figure 3, 85 percent of UN procurement in 2004 was 
conducted in support of peacekeeping operations. Peacekeeping field 
missions alone procured 35 percent of all UN procurement in 2004. 

Figure 3: UN Headquarters and Peacekeeping Procurement for 2004: 

[See PDF for image] 

[End of figure]

Internal Control Framework Useful for Assessing Procurement Process: 

Internal control is an integral part of managing an organization and 
can be used to identify areas of weaknesses and strengths in the UN's 
procurement process. Internal control guidance provides a framework for 
establishing and maintaining internal control and for identifying and 
addressing major performance and management challenges and areas at 
greatest risk of fraud, waste, abuse, and mismanagement. Internal 
control comprises the plans, methods, and procedures used to meet 
missions, goals, and objectives. There are five interrelated components 
of internal control: (1) control environment, (2) control activities, 
(3) risk assessment, (4) information and communications, and (5) 
monitoring. 

The Control Environment over UN Procurement Is Weak: 

UN funds are unnecessarily vulnerable to fraud, waste, and abuse 
because the UN lacks an effective organizational structure for managing 
procurement, has not demonstrated a commitment to improving its 
professional procurement workforce, and has failed to adopt specific 
ethics guidance for procurement officials. These conditions have 
weakened the UN control environment for procurement. 

The UN Lacks an Effective Organizational Structure for Managing 
Procurement: 

The UN has not established a single organizational entity or mechanism 
capable of comprehensively managing procurement. As a result, it is 
unclear which department is accountable for addressing problems in the 
UN's field procurement process. While the Department of Management is 
ultimately responsible for all UN procurement, neither it nor the UN 
Procurement Service has the organizational authority to supervise 
peacekeeping field procurement staff to provide reasonable assurance 
that they comply with UN regulations (see fig. 4).[Footnote 10] 
Procurement field staff, including the chief procurement officers, 
instead report to the Peacekeeping Department at headquarters through 
each mission's chief administrative officer. Although the Department of 
Management has delegated authority for procurement of goods and 
services to the Peacekeeping Department's Office of Mission Support at 
headquarters, we found that the Peacekeeping Department lacks the 
expertise, procedures, and capabilities needed to provide reasonable 
assurance that its field procurement staff are complying with UN 
regulations in executing this authority. The UN's Office of Internal 
Oversight Services (OIOS) has concluded that neither department has 
taken reasonable care to safeguard UN assets. 

Figure 4: Supervisory Oversight and Delegation of Field Procurement 
Authority: 

[See PDF for image]

[End of figure]

The UN previously considered giving the Peacekeeping Department the 
headquarters positions it needs to oversee field procurement 
activities. In 2000, a UN panel[Footnote 11] recommended that the 
Department of Management transfer procurement positions to the 
Peacekeeping Department's headquarters.[Footnote 12] The Department of 
Management subsequently drafted a delegation of procurement authority 
that would have required the Peacekeeping Department to provide trained 
procurement staff at each peacekeeping mission with procurement 
authority and to establish headquarters systems to administer and 
monitor field procurement activities. However, the Department of 
Management's delegation of authority did not provide for a transfer of 
procurement staff to the Peacekeeping Department. According to UN 
officials, the Peacekeeping Department rejected the proposed delegation 
of authority because (1) the department lacked resources to oversee 
field procurement activities, (2) the proposed delegation did not 
include a transfer of procurement staff to the Peacekeeping Department, 
and (3) the proposed delegation was more restrictive than previous 
delegations to the missions themselves. 

In 2005, the Department of Management delegated procurement authority 
to the headquarters of the Peacekeeping Department. Although the 
headquarters of the Peacekeeping Department accepted the delegation, it 
did so without the resources needed to oversee the execution of the 
delegation by its field procurement activities. The Peacekeeping 
Department is seeking to hire an individual to manage its field 
procurement activities. The individual's responsibilities would include 
supervising field procurement activities, developing centralized 
procurement reporting procedures, monitoring field procurement trends, 
implementing improved management control tools, and working with the 
Department of Management to review existing procurement rules and 
regulations. Given the scope of these responsibilities, it is unclear 
how one individual would be able to fulfill the responsibilities of the 
proposed position. As of March 2006, Peacekeeping Department 
headquarters officials were interviewing candidates for this position. 

While the Peacekeeping Department field procurement staff may seek 
guidance on UN procurement policies from the Procurement Service, we 
found that they do so infrequently. Of the 19 field procurement chiefs 
or acting chiefs that we spoke with, 12 stated that they contacted 
Procurement Service staff as often as once a month or once a quarter. 
Four others stated that they contacted the Procurement Service once or 
twice a year, and three others stated that they had never contacted the 
Procurement Service for guidance during the past year. 

The lack of more frequent contact between the Procurement Service and 
Peacekeeping Department field staff is significant because field staff 
face the challenge of complying with the procurement policies 
established by the Procurement Service while securing needed goods and 
services under often difficult conditions to meet peacekeeping 
deadlines. The Peacekeeping Department has characterized its 
operational needs as being too great and its human resource demands as 
too intense for the UN's existing procurement regulations and 
procedures. While most field officials that we spoke with reported that 
the Procurement Service had been at least somewhat helpful to them, 
several stated that they do not believe the Procurement Service 
understands the difficult field conditions in which they work. 

The UN Lacks a Commitment to Improving Its Professional Procurement 
Workforce: 

The UN has not demonstrated a commitment to improving its professional 
procurement staff in the form of training, a career development path, 
and other key human capital practices critical to attracting, 
developing, and retaining a qualified professional workforce. Due to 
significant control weaknesses in the UN's procurement process, the UN 
has relied disproportionately on the actions of its staff to safeguard 
its resources. Given this reliance on staff and their substantial 
fiduciary responsibilities, management's commitment to maintaining a 
competent, ethical procurement workforce is a particularly critical 
element of the UN's internal control environment. 

Recent studies indicate that Procurement Service staff and peacekeeping 
procurement staff lack knowledge of UN procurement policies. For 
example, a November 2005 consultant report stated that Procurement 
Service staff did not appear to have a clear understanding of 
procurement policies and procedures, resulting in inconsistent 
application of procurement policies.[Footnote 13] In addition, OIOS 
found that field procurement staff in one of the largest peacekeeping 
missions lack sufficient knowledge of basic procurement policies and 
procedures. OIOS also found that, in another mission, requisitioning 
units that lacked procurement authority had directly purchased $9 
million in goods and services during the start-up phase, violating the 
principle of segregation of duties between requisitioners and 
procurement staff.[Footnote 14] Moreover, most procurement staff lack 
professional certifications attesting to their procurement education, 
training, and experience. We found that 16 of 19 field procurement 
chiefs did not possess any professional certification of their 
procurement qualifications. A June 2005 consultant survey also found 
that only 3 of 41 Procurement Service officers and assistants had been 
certified by a recognized procurement certification body. 

The UN has not established requirements for headquarters and 
peacekeeping staff to obtain continuous training, resulting in 
inconsistent levels of training across the procurement workforce. Most 
field procurement chiefs stated that the training they had received 
from the UN was at least generally useful to their procurement roles, 
but 11 of 19 field procurement chiefs stated that they had received no 
procurement training over the last year. While most field procurement 
chiefs stated that their staff are adequately trained, all of them said 
that their staff would benefit from additional training, citing areas 
such as contract drafting and management, negotiation, business 
writing, and bid evaluation. Recently, a UN interagency group developed 
common certification standards for procurement staff in all UN 
agencies.[Footnote 15] However, the decision for a UN agency to 
participate in the certification program is voluntary. Each UN agency 
would be responsible for developing its own training materials to 
prepare staff for certification. As of January 2006, Procurement 
Service officials had not yet determined whether this common UN 
procurement certification would be a requirement for existing staff or 
for hiring new staff. 

Furthermore, UN officials acknowledged that the UN has not committed 
sufficient resources to a comprehensive training and certification 
program for its procurement staff. UN officials stated that Procurement 
Service training resources are insufficient to deliver adequate 
training. The Procurement Service's annual training budget was $20,000 
for approximately 70 staff as of March 2006. Similarly, 11 of 19 
peacekeeping chief procurement officers stated that their training 
opportunities and resources are inadequate. Some indicated that a 
single field individual's attendance at an annual conference of chief 
procurement officers consumed the mission's annual allotment for 
procurement training. Peacekeeping Department officials noted that the 
lack of resources to train field procurement officers is symptomatic of 
the general lack of professional development funding for all 
peacekeeping mission personnel. 

The UN has not established a career path for professional advancement 
for Procurement Service and peacekeeping procurement staff.[Footnote 
16] Career paths, if well designed by management, can actively 
encourage and support staff to undertake progressive training and work 
experiences in order to prepare them for increased levels of 
responsibility. A procurement career path also would serve to recognize 
procurement as a specialized profession in the UN. A November 2005 
consultant report recommended that the Secretariat establish and define 
career paths for Procurement Service management and staff. In field 
missions, most procurement chiefs told us that the absence of a career 
path is detrimental to the professional caliber of procurement staff. 
In addition, 14 of 19 field procurement officials told us that they do 
not have professional development plans for all of their staff. UN 
auditors also have expressed concern that UN managers do not give 
proper care to helping ensure the qualifications and integrity of 
procurement staff. 

Difficult staffing conditions and practices in both the Procurement 
Service and peacekeeping missions continue to expose the UN to 
significant risks. The Procurement Service reported that it lacks the 
staffing resources to implement recommended controls such as team-based 
rather than individual procurement, peer review of major bidding, and 
periodic rotation of staff. Peacekeeping staff said that staff turnover 
at the Procurement Service has also hurt the continuity of their 
operations. In the field, the Peacekeeping Department faces challenges 
in deploying qualified, experienced staff to missions, especially 
during the critical start-up phase. For example, OIOS noted that a 
staff member involved in leaking confidential information to a UN 
supplier had been appointed to a post on a short-term temporary duty 
assignment and was later competitively selected for the post. 

The Peacekeeping Department has had difficulties in retaining high- 
quality procurement staff for sustained periods in peacekeeping 
missions. For example, a peacekeeping official informed us that about 
23 percent of procurement staff positions in peacekeeping missions were 
vacant as of December 2005. Peacekeeping officials informed us that a 
chronic lack of field procurement staff has helped to undermine 
existing control mechanisms. The peacekeeping procurement workforce is 
adversely affected by considerable staff turnover, especially in 
peacekeeping missions where UN staff must operate in demanding, 
unpredictable, and dangerous conditions. The current conditions of 
service in peacekeeping missions are not competitive with those of 
other UN entities or similar organizations, according to UN officials. 
For example, peacekeeping officials stated that peacekeeping mission 
staff are not able to have their families at their duty station and 
that the benefits and short-term nature of employment contracts for 
peacekeeping mission staff are disadvantageous compared with those at 
UN headquarters and other UN funds and programs. In March 2006, the 
Secretary-General issued proposals to revise the UN's human resource 
policies to address the unfavorable conditions of service in 
peacekeeping missions. However, the UN has not provided specific facts 
regarding the substance and time frames for these revisions, and they 
would require the action and support of member states of the General 
Assembly to implement. 

The UN Has Not Fully Established Ethics Guidance for Procurement 
Personnel: 

The UN has failed to adopt the full range of ethics guidance for 
procurement officials despite repeated directives from the General 
Assembly in 1998 and 2005. Such guidance would include a declaration of 
ethics responsibilities for procurement staff and a code of conduct for 
vendors. Ethical principles are key elements of an internal control 
environment, and management plays an important role in providing 
guidance for proper behavior. Because of the fiduciary responsibilities 
held by procurement staff, the lack of specific ethics guidance 
increases the risk of fraud, waste and abuse. Earlier in 2005, a former 
UN procurement officer pled guilty to charges of accepting money from 
vendors seeking contracts. 

The UN has been considering the development of specific ethics policies 
for procurement officers for almost a decade. For example, on September 
8, 1998, the General Assembly asked the Secretary-General to prepare 
additional ethics guidance for procurement officers "as a matter of 
priority."[Footnote 17] In 2002, the Secretary-General acknowledged 
that separate procurement ethics guidance should be developed "pursuant 
to the request of the General Assembly."[Footnote 18] In 2005, the 
General Assembly again asked the Secretary-General to issue ethical 
guidelines for those involved in the procurement process and called for 
"the early adoption of a code of conduct for vendors and a declaration 
of ethical responsibilities for all staff involved in the procurement 
process."[Footnote 19] 

Despite other efforts to bolster ethics policies at the UN,[Footnote 
20] the UN has yet to fully enact new ethics guidance for procurement 
officials. As we reported in October 2005,[Footnote 21] the Procurement 
Service has drafted such guidance. It would include a declaration of 
ethics responsibilities for procurement staff and embody a code of 
conduct for vendors.[Footnote 22] It would also outline current rules 
and regulations relating to procurement staff and address ethics 
standards for procurement staff on conflict of interest and acceptance 
of gifts. In addition, the draft ethics guidance would outline UN 
rules, regulations, and procedures for suppliers of goods and services 
to the UN. 

Since October 2005, the UN has made only limited progress toward 
addressing the directives of the General Assembly. UN officials stated 
that the UN has not established ethics guidance for procurement 
personnel due to resource constraints and the need for extensive 
consultations within the UN. In November 2005, a consultant review 
concluded that the Procurement Service lacked an effective and well- 
coordinated ethics program that makes ethics a fundamental element of 
the Procurement Service culture, including a single recognized and well-
understood code of conduct governing ethics and integrity expectations 
and requirements for UN procurement staff. The UN has subsequently 
adopted new procedures that outline UN rules, regulations, and 
procedures for suppliers of goods and services to the UN. The UN also 
now requires all procurement officers to file financial disclosure 
statements. However, most of the other draft regulations continue to be 
reviewed within the UN. The UN has not set firm dates for their 
adoption. Department of Management officials informed us in April 2006 
that rules for governing the conduct of staff engaged in procurement 
activities, including a declaration of ethical responsibilities, would 
be promulgated "shortly." 

The UN Has Weaknesses in Key Procurement Control Activities: 

We found weaknesses in key procurement control activities that are 
intended to provide reasonable assurance that management's directives 
are followed. UN procurement control activities include processes for 
(1) reviewing high-value procurement contracts, (2) considering vendor 
protests, (3) updating the procurement manual, and (4) maintaining 
qualified vendor rosters. The persistence of weaknesses in these areas 
indicates that the UN does not have reasonable assurance that its staff 
are complying with management policies and directives. 

Although UN Procurement Has Increased Sharply in Recent Years, the Size 
of the Headquarters Committee on Contracts and Its Staff Has Remained 
Relatively Stable: 

We found that although UN procurement has increased sharply in recent 
years, the size of the Headquarters Committee on Contracts and its 
support staff remained relatively stable. The committee's Chairman and 
members stated that the committee does not have the resources to keep 
up with its expanding workload. The number of contracts reviewed by the 
committee has increased by almost 60 percent since 2003.[Footnote 23] 
The committee members stated that the committee's increasing workload 
was the result of the growth of UN peacekeeping operations, the 
complexity of many new contracts, and increased scrutiny of proposals 
in response to recent UN procurement scandals. Committee data from 2005 
indicate that the average time taken to report a committee decision is 
within the time frames allowed by UN regulations. However, a senior 
committee official stated in March 2006 that this time had increased 
significantly in recent months due to the committee's workload. He 
indicated that the average time to report a committee decision is now 
approaching 20 business days instead of 10. In addition, 8 of 19 
peacekeeping field procurement officials stated that the committee only 
reviewed their cases in a moderately timely manner, while 5 felt that 
there was little to no extent of timeliness in these reviews. 

Concerns regarding the committee's structure and workload have led UN 
auditors to conclude that the committee cannot properly review contract 
proposals. It may thus recommend contracts for approval that are 
inappropriate and have not met UN regulations. In a 2006 report, OIOS 
stated that the committee cannot determine if procurement officials had 
complied with regulations or if they had been unduly influenced by 
vendors. OIOS cited a report it had prepared in 2001 that concluded 
that the committee had not developed the tools needed to provide 
reasonable assurance that it could thoroughly and objectively evaluate 
contract proposals and add value to the procurement process. OIOS also 
reiterated its 2001 recommendation that the UN reduce the committee's 
caseload and restructure the committee "to allow competent review of 
the cases." Without an effective contract review process, the UN cannot 
provide reasonable assurance that high value contracts are undertaken 
in accordance with the Financial Regulations and Rules of the UN. 

The UN's plans to address these issues are unclear. In January 2006, 
the Under-Secretary-General for Management stated that the committee 
should be restructured in some form in response to consultant 
concerns.[Footnote 24] However, OIOS reported in January 2006 that the 
Department of Management had been "unresponsive" to its recommendations 
regarding the committee.[Footnote 25] The committee Chairman stated 
that the committee's four existing posts are all in support of the 
regular budget, and it needs additional support for reviewing contracts 
under the peacekeeping budget. The Chairman told us that the committee 
has requested that its support staff be increased from 4 to 7, but does 
not yet know if this will be approved. The Chairman also stated that 
raising the $200,000 threshold for contracts that require review by the 
committee would reduce the committee's workload. 

The UN Has Not Established an Independent Bid Protest Process: 

The UN has not established an independent process to consider vendor 
protests, despite the 1994 recommendation of a high-level panel of 
international procurement experts that it do so as soon as 
possible.[Footnote 26] Such a process would provide reasonable 
assurance that vendors are treated fairly when bidding and would also 
help alert senior UN management to situations involving questions about 
UN compliance. An independent bid protest process is a widely endorsed 
control mechanism that permits vendors to file complaints with an 
office or official who is independent of the procurement process. The 
General Assembly endorsed independent bid protest in 1994 when it 
recommended for adoption by member states a model procurement law 
drafted by the UN Commission on International Trade Law.[Footnote 27] 
Several nations, including the United States, provide vendors with an 
independent process to handle complaints.[Footnote 28] 

At present, UN vendors cannot protest the handling of their bids to an 
independent official or office. The Procurement Service directs its 
vendors to file protests through a complaints ladder process that 
begins with the Procurement Service chief and moves up to his immediate 
supervisor. The majority of peacekeeping field procurement officers 
also stated that vendor protests were not reviewed by an independent 
body at their mission. Procurement Service and peacekeeping field staff 
told us that, in their opinion, there is no vendor demand for a more 
independent process. 

The lack of an independent bid protest process, as endorsed by the 
General Assembly and used by the United States and other nations, 
limits the transparency of the UN procurement process by not providing 
a means for a vendor to protest the outcome of a contract decision to 
an independent official or office. If handled through an independent 
process, vendor complaints could alert senior UN officials and UN 
auditors to the failure of UN procurement staff to comply with stated 
procedures. As a result of recent findings of impropriety involving the 
Procurement Service, the United Nations hired a consultant to evaluate 
the internal controls of its procurement operations. One of the 
consultant's conclusions was that the UN needs to establish an 
independent bid protest process for suspected wrongdoing that would 
include an independent third-party evaluation, and arbitration, due 
process, and formal resolution for all reports. 

The UN Has Not Updated the Procurement Manual Since 2004: 

The UN has not updated its procurement manual since January 2004 to 
reflect current UN procurement policy. As a result, UN procurement 
staff may not be aware of changes to UN procurement procedures that 
have been adopted over the past 2 years. An organization's control 
activities include taking action to make staff aware of its policies 
and procedures. The Procurement Service's procurement manual is 
intended to guide UN staff in their conduct of procurement actions 
worldwide. All 19 Peacekeeping Department field procurement officials 
informed us that they have access to the manual at their mission, and 
all are somewhat to very familiar with it. 

The Procurement Service revised the manual in 2004 to address several 
problems. In 1999, we noted that the manual did not provide detailed 
discussions of procedures and policies.[Footnote 29]As revised by the 
Procurement Service, the manual now has detailed step-by-step 
instructions on the procurement process for both field and headquarters 
staff, including illustrative flow charts. It also includes more 
guidance that addresses headquarters and field procurement concerns, 
such as more specific descriptions of short-and long-term acquisition 
planning and the evaluation of requests for proposals valued at more 
than $200,000. 

In a decentralized organization with geographically dispersed field 
missions, it is essential that staff have access to the most current 
procurement policy so that they can be informed of and consistently 
comply with UN regulations. While 16 of 19 peacekeeping procurement 
officers acknowledged that the Procurement Service or the Peacekeeping 
Department provided them with timely updates on the most current 
procurement policies and procedures to a great or moderate extent, the 
procurement manual still does not contain the latest information 
concerning procurement policies and procedures. For example, the manual 
does not reflect the June 2005 delegation of procurement authority from 
the Department of Management to the Peacekeeping Department. The new 
delegation of authority allows peacekeeping field missions to purchase 
up to $1 million in goods or services in support of their core 
requirements (e.g., waste disposal services, fresh food, janitorial 
services, and building materials) without obtaining the prior approval 
of the Department of Management and the Headquarters Committee on 
Contracts. When we spoke with peacekeeping procurement officers in the 
field, one officer stated that his mission staff were not using this 
new delegation of authority because they were not sure whether it was 
official UN policy. Another peacekeeping procurement officer was 
unclear on some of the details for implementation of the new authority. 

Also missing from the procurement manual is a section regarding 
procurement for construction. In June 2005, a UN consultant recommended 
that the UN develop separate guidelines in the manual for the planning 
and execution of construction projects.[Footnote 30] These guidelines 
could be useful in planning the UN's future renovation of its 
headquarters building. 

A Procurement Service official who took part in the manual's 2004 
revision stated that the Procurement Service had been unable to 
allocate the time and resources needed to update the manual since that 
time. In addition, in January 2006, OIOS found that changes in 
procurement policies were not always effectively disseminated, leading 
to possible inconsistency in the awarding of contracts. A UN consultant 
also has recommended that the Department of Management address the lack 
of a standard process for updating the procurement manual. Department 
of Management staff informed us that they plan to follow these 
recommendations. 

UN Does Not Consistently Implement Its Process for Helping to Ensure 
That It Conducts Business with Qualified Vendors: 

The UN does not consistently implement its process for helping to 
ensure that it is conducting business with qualified vendors. As a 
result, the UN may be vulnerable to favoring certain vendors or dealing 
with unqualified vendors. Approved vendor rosters are an important 
procurement control activity for limiting procurement to vendors that 
meet stated standards. Vendors apply for registration to the list and 
are then evaluated by the agency before placement on the approved list. 
Effective rosters are impartial and provide sufficient control over 
vendor qualifications. 

The UN has long had difficulties in maintaining effective rosters of 
qualified vendors. In 1994, a high-level group of international 
procurement experts concluded that the UN's vendor roster was outdated, 
inaccurate, and inconsistent across all locations. It warned that 
inconsistent and nonstandardized rosters could expose the procurement 
system to abuse and fraud. In 2003, an OIOS report found that the 
Procurement Service's roster contained questionable vendors. For 
example, one vendor appeared to have been awarded approximately $36 
million in contracts without completing its registration to the list. 
Another vendor appeared to not have applied for registration to the 
list but was nonetheless awarded a $16.6 million contract. Although the 
Procurement Service corrected some of the noted weaknesses, OIOS 
concluded that, as of 2005, the roster was not fully reliable as a tool 
for identifying qualified vendors that could bid on contracts. 

To address such concerns, the Procurement Service became a partner in 
an interagency procurement vendor roster in 2004, which was intended to 
serve as a single roster for potential suppliers to apply for 
registration with participating organizations within the UN system and 
to be used by peacekeeping field missions.[Footnote 31] It was seen as 
a common system that would allow sharing of vendor performance 
information within the UN. 

The UN's use of the interagency procurement vendor roster, however, has 
not fully addressed concerns regarding UN vendor lists. OIOS found that 
many vendors that have applied through the interagency procurement 
vendor roster have not submitted additional documents requested by the 
Procurement Service to become accredited vendors. In addition to the 
audited financial statements and income tax returns that a vendor must 
submit to be registered in the UN interagency vendor roster, the 
Procurement Service also requires the vendors to submit a copy of a 
certificate of incorporation, copies of quality certification standards 
for the goods and services to be registered, and letters of reference 
from at least three clients to which the vendor has provided its goods 
or services over the past 12 months. OIOS found that, as of December 
2005, about 2,800 vendor applicants had not submitted the necessary 
documents for the Procurement Service to review. OIOS expressed concern 
that the Procurement Service vendor registration procedure remains 
vulnerable to procurement officials who might manipulate it to favor 
certain vendors. 

In addition, most Peacekeeping Department field procurement officials 
we spoke with stated that they prefer to use their own locally 
developed rosters instead of the interagency vendor roster because the 
local lists were shorter and contained more specific information 
regarding the goods and services available in the area near their field 
missions. Moreover, some field mission procurement staff also stated 
that they were unable to comply with Procurement Service regulations 
for their vendor rosters due to the lack of reliable vendor information 
in underdeveloped countries in which there were conflicts, as is common 
in peacekeeping missions. One procurement officer in the field stated 
that many of the local vendors could not prepare financial statements 
required by the Procurement Service and the interagency database 
because the country was just starting to recover from a war. Other 
field procurement officers noted that issues such as low levels of 
education and literacy and smaller vendors not being in a position to 
deliver internationally prevented vendors from registering on the 
interagency vendor list. OIOS reported in 2006 that peacekeeping 
operations were vulnerable to substantial abuse in procurement because 
of inadequate or irregular registration of vendors, insufficient 
control over vendor qualifications, and dependence on a limited number 
of vendors. 

The UN Has Not Comprehensively Assessed Procurement Risks: 

The UN lacks a comprehensive risk assessment framework for identifying, 
evaluating and managing the procurement activities most vulnerable to 
fraud, waste, and abuse. UN officials and auditors have identified 
significant risks associated with headquarters and peacekeeping 
procurement operations. However, without a comprehensive risk 
assessment framework, the United Nations cannot have reasonable 
assurance that it allocates proper attention to procurement activities 
that could be most prone to fraud, waste, and abuse. 

OIOS has repeatedly identified procurement as one of the areas in the 
UN with significant potential for inefficiency, corruption, fraud, 
waste, and abuse. For example, OIOS issued recommendations relating to 
collusion and conflicts of interest between UN staff and vendors, 
accountability for theft of UN property, and misuse of UN equipment. In 
addition, senior UN officials identified several major risks impacting 
peacekeeping procurement. First, they stated that field procurement 
staff currently operate under regulations that do not always reflect 
differences inherent in operating in field locations. According to 
Peacekeeping Department officials, present UN procurement rules and 
processes are difficult to apply in peacekeeping missions during start- 
up. Second, field procurement staff work in demanding operating 
environments, especially during the first few months of a mission's 
start-up, and must expediently resolve issues such as uncertainties 
regarding the free movement of goods, customs clearances, and taxation. 
Finally, the Peacekeeping Department stated that its missions do not 
have enough field procurement staff willing to serve under current 
conditions of service. An environment laden with such considerable 
risks demonstrates the need for management to establish a comprehensive 
framework for continuously identifying, analyzing, and managing risks 
in procurement operations. While Peacekeeping Department officials 
informed us that they have developed strategies to mitigate certain 
risks, they acknowledged that the UN does not have a formal risk 
management framework. 

Procurement Service officials stated that they do not systematically 
assess procurement risks. In addition, 13 out of 19 peacekeeping field 
procurement chiefs stated that they do not prepare formal or informal 
risk assessments for their missions. A November 2005 consultant report 
found that the Procurement Service does not have a formal and regular 
risk management process to assess compliance, evaluate risks, implement 
controls, and bring serious issues to the attention of management. 
Similarly, OIOS reported in January 2006 that UN management had failed 
to establish and implement a formal procurement risk management 
strategy. An OIOS official also identified several risk areas in the 
UN's procurement operations relating to individual span of control and 
supervision, segregation of functions, access to bids, and the use of 
brokers and subcontractors. 

Without a risk management strategy for procurement, the UN would not be 
fully equipped to identify areas that would require stronger oversight. 
For example, start-up peacekeeping missions constitute a high-risk area 
because they require a significant volume of procurement activity under 
demanding time pressures in challenging geographic regions. Similarly, 
UN efforts to adjust procurement rules to suit field conditions or to 
reduce the caseload of the Headquarters Committee on Contracts would be 
hampered by the absence of a risk assessment process. 

Fragmented Information Systems Impede UN Procurement: 

The UN lacks an integrated information management system, which 
adversely impacts its ability to oversee field and headquarters 
procurement operations. A sound internal control system requires that 
relevant, reliable information be recorded and communicated in a timely 
manner to equip management to carry out their responsibilities. 

The UN is exposed to risks arising from fragmented procurement and 
financial systems in both headquarters and field procurement 
operations. We found that Procurement Service staff had limited access 
to data on procurement activities conducted locally in field missions. 
No single procurement database supports both the Procurement Service 
and peacekeeping missions; they utilize two separate procurement 
systems. As a result, no single UN entity was able to readily provide 
us with data on the total value of purchase orders and contract awards 
issued by each peacekeeping mission, including actions procured both 
locally and by the Procurement Service at headquarters. These issues 
raise concerns about the ability of headquarters managers to 
comprehensively oversee procurement by the various field missions. 
Moreover, the Peacekeeping Department has established only limited 
reporting requirements for field missions and lacks a full-time manager 
at headquarters to review the reports of all peacekeeping missions. A 
November 2005 consultant study also found that the fragmented 
information systems limit the Procurement Service's ability to generate 
comprehensive and timely management reports. Furthermore, the study 
found that the current information systems did not use fraud detection 
tools and exception reports. Such reports, if used, would serve to 
alert management of procurement actions requiring additional 
monitoring. For example, a report of cumulative awards to vendors would 
help management identify instances of inadequate competition or bid 
rigging by vendors. 

Procurement Managers Lack Mechanisms to Monitor Procurement and Rely on 
Oversight Entities: 

Procurement officials lack a systematic and standardized approach for 
conducting management oversight of procurement activity. Instead, to 
monitor procurement activity, they rely heavily on UN oversight 
entities. Although these entities have identified numerous weaknesses 
in the procurement process, the UN has not always implemented their 
recommendations to correct the weaknesses. In many cases, the oversight 
entities found similar problems in different field missions and issued 
similar recommendations. Yet, UN management does not review the audit 
reports systematically to determine whether changes to policy or 
processes are warranted to address recurring problems. In addition, the 
UN does not have a mechanism that provides reasonable assurance that 
corrective actions, once taken, are institutionalized. Further, the UN 
does not have an effective process for consistently holding procurement 
staff accountable for their actions, and it is too early to determine 
whether a newly established management performance board will do so. 

UN Officials Lack Mechanisms for Monitoring Headquarters and Field 
Procurement Activity: 

Internal control standards state that while audits and other reviews of 
controls by internal and external auditors can be useful, the 
responsibility for establishing mechanisms to monitor and evaluate 
program activities rests with managers. Ongoing monitoring occurs 
during normal operations and includes regular management and 
supervisory activities, such as helping to ensure that staff follow UN 
procurement policies. 

As noted earlier, the UN lacks an effective organizational structure 
for managing procurement at headquarters and in the field. In addition, 
UN procurement managers do not have a standardized and systematic 
process to monitor headquarters or field procurement during normal 
operations as part of their regular management duties. In 2006, OIOS 
reported that the UN does not have sufficient controls for providing 
reasonable assurance of compliance with the Financial Regulations and 
Rules of the UN and that important controls were lacking, existing 
controls were often bypassed, and senior officials did not take proper 
care to design controls for overseeing peacekeeping procurement 
operations. Senior procurement officials at headquarters stated that 
they rely heavily on the auditors to monitor procurement activity. 
Also, in 2005 a consultant reported that the Procurement Service cannot 
adequately monitor procurement activities due to (1) inadequate 
reporting of procurement activity, and (2) a lack of system support for 
management reporting and financial transaction information. 

Field procurement managers also lack a standardized and systematic 
approach for monitoring procurement activity to provide reasonable 
assurance that the Financial Regulations and Rules of the UN are 
followed. Although UN chief procurement officers reported taking a 
variety of actions to determine whether their staff comply with the 
Financial Regulations and Rules of the UN, there were considerable 
differences in the steps reported, both in terms of what the officers 
were doing and the degree of their involvement. For example, while one 
chief procurement officer reported that he reviewed all procurement 
files, another stated that he did not have the time or resources to 
provide any oversight. Most field procurement officials told us that 
the local committee on contracts at their mission is generally helpful 
and timely in reviewing contract proposals. However, UN auditors have 
found that noncompliance with the UN's Financial Regulations and Rules 
has resulted in financial losses to the UN. For example, in its audit 
of peacekeeping operations in 2004, the Board of Auditors found that 
one contractor was declared bankrupt in May 2002 and could not fulfill 
contract requirements. A performance bond for $1.4 million should have 
been provided, as required by the contract, but it could not be located 
by UN officials. In addition, OIOS found instances where procurement 
staff split requisitions to come in under review thresholds; 
requisitioners sometimes procured items directly; vendors were not 
properly registered; and contracts were awarded without sufficient 
justification. 

Also, most UN chief procurement officers report taking a variety of 
actions to determine whether vendors comply with the Financial 
Regulations and Rules of the UN; however, there were considerable 
differences between the steps the officers were taking and the degree 
of their involvement. Most chief procurement officers stated that they 
inform vendors of the UN regulations that need to be followed and that 
the regulations were also in the contracts. Some officers stated that 
they had an independent unit for contracts management in their mission 
that would monitor vendors for contract performance and hold meetings 
with the vendors to discuss their performance, while others said that 
they used vendor performance reports to monitor vendors. However, UN 
auditors have noted that in many instances, procurement staff did not 
prepare vendor performance reports. For example, in 2005, the Board of 
Auditors reported that for seven of a sample of nine contracts worth 
nearly $163 million, no supplier evaluations could be found for $160.7 
million of those purchases. 

UN Lacks Centralized Process for Addressing Oversight Recommendations: 

Internal controls guidance states that monitoring should provide 
reasonable assurance that the findings of audits and other reviews are 
promptly resolved. OIOS and the Board of Auditors conduct regular 
examinations of procurement. In many cases, the oversight entities have 
found similar problems and issued similar recommendations in multiple 
field missions. UN management, however, does not systematically review 
the audit reports to determine whether changes to policies or processes 
are warranted to address systemic problems. 

OIOS conducts smaller-scope audits on specific procurement policies and 
procedures at one or more missions or offices. Over the past 5 years, 
OIOS has identified numerous weaknesses in areas such as management 
accountability, planning and needs assessments, vendor qualifications 
and rosters, and contract reviews. OIOS's recommendations-tracking 
database indicates that the Procurement Service and the Peacekeeping 
Department have implemented about 88 percent of about 330 procurement 
recommendations and about 85 percent of approximately 170 critical 
procurement recommendations.[Footnote 32] However, a recent study by a 
UN consultant concluded that while OIOS provides spot audit coverage, 
OIOS has lacked the resources to provide coverage that would be 
sufficient to prevent breakdowns in internal controls. 

The Board of Auditors serves as the UN's external auditor and is 
charged with auditing the UN financial statements biannually, including 
those of the Procurement Service. The board also audits peacekeeping 
field operations annually, including field procurement. According to 
board staff, the board devotes about half of its operations to 
procurement oversight, primarily peacekeeping oversight. Over the past 
4 years, the board identified weaknesses concerning procurement ethics, 
vendor performance reports, and the absence of a comprehensive internal 
antifraud plan. According to some board officials, the UN could further 
benefit from procurement audits of system contracts, the bid-tendering 
process, and air operations. The board also pointed to the lack of an 
adequately trained and professional procurement workforce and stated 
that the UN should create a professional cadre of procurement officers. 
In addition, the board reported that the UN has not fully implemented 
key audit recommendations, such as having peacekeeping missions 
identify training needs for procurement officers and establishing a 
time frame for implementing ethical guidelines for procurement staff. 
According to board officials, based on the board's audit of 
peacekeeping operations for the period ended June 30, 2003, of 69 
recommendations, 26 were implemented; 33 were in progress; and 10 had 
not yet started. 

The Joint Inspection Unit (JIU) conducts UN-wide evaluations, 
inspections, and investigations and prepares reports and notes 
identifying best practices and opportunities for cost savings within 
the UN system. JIU has called attention to weaknesses in UN procurement 
training. In 2004, JIU reported that training funds for procurement 
staff were small relative to procurement volumes and amounted to about 
0.01 percent of aggregate procurement expenditures with the majority of 
UN entities allocating no resources for that purpose. The UN had not 
fully addressed JIU's call for additional funding for procurement 
training and certification for procurement officers. However, JIU does 
not track separately and report on the implementation rate of its 
procurement recommendations. 

In many cases, the oversight entities have found similar problems in 
different field missions and issued similar recommendations. Yet, UN 
management does not review the audit reports in a methodical manner to 
determine whether changes to policy or processes are warranted to 
address systemic problems or have a mechanism to help ensure that 
corrective actions, once taken, are institutionalized. According to UN 
officials, the UN currently does not systematically track all of the 
information from the oversight entities and does not perform any 
systematic analysis of what the three oversight entities are reporting 
to identify systemic weaknesses or lessons learned. The UN had begun 
exploring the possibility of establishing a high-level follow-up 
mechanism to help ensure proper and systematic implementation of 
oversight recommendations and share audit-related information and 
lessons learned, where appropriate; however, such a mechanism has yet 
to be implemented. At the request of the General Assembly, in 2005 the 
Secretary-General called for a high-level mechanism to be established 
to help ensure proper implementation of all oversight recommendations. 
As proposed, this oversight committee would (1) provide independent 
advice to the Secretary-General on all Secretariat activities relating 
to oversight and investigations, (2) advise the Secretary-General on 
the response of management to the recommendations made by oversight 
bodies and on the manner in which the implementation of those 
recommendations can have the greatest impact, and (3) help ensure 
systematic implementation of recommendations that have been approved by 
the General Assembly or accepted by the Secretariat. However, the UN 
has yet to implement such a mechanism and plans for doing so are 
uncertain. 

UN Does Not Have an Effective Mechanism for Holding Staff Accountable: 

The UN does not have an effective mechanism in place for holding 
procurement staff accountable for their actions. Internal control 
standards state that management should maintain the organization's 
ethical tone, provide guidance for proper behavior, remove temptations 
for unethical behavior, and provide discipline when appropriate. OIOS 
recently reported that the UN's lack of enforcement of accountability 
and reluctance to investigate the mismanagement of resources, fraud, 
and abuse of delegated authority has increased the risk of corrupt 
practices in UN procurement. In addition, peacekeeping officials agree 
that a lack of enforcement of accountability in some locations has led 
to a pattern of poor control over procurement practices. Both OIOS and 
peacekeeping officials agree that there is evidence that some senior 
managers in the peacekeeping and management departments may not have 
been reasonably diligent in discharging their duties or helping to 
ensure that adequate internal controls and procedures are in place to 
safeguard the organization's assets. 

In May 2005, the Secretary-General abolished an accountability panel 
established in 2000 because it was ineffective and replaced it with a 
management performance board. This panel was to help ensure that the UN 
addressed findings of its oversight review bodies from a systemic 
perspective and to reinforce existing accountability mechanisms. It 
consisted of the Deputy Secretary-General, acting as the chairperson, 
and four members at the under-secretary-general level, appointed by the 
Secretary-General. The new management performance board will focus 
primarily on the performance and accountability of senior managers and 
advise the Secretary-General, according to a UN official. Chaired also 
by the Deputy Secretary-General, this board is intended to help ensure 
that the UN addresses serious managerial issues identified by its 
oversight bodies in a timely manner, monitors senior managers in their 
exercise of their authority, and reviews UN justice proceedings for 
management accountability purposes. The board also consists of two 
members at the under-secretary level and an external expert in public 
sector management. A UN official stated that the board has met twice as 
of February 2006. The board has been operational for too short a time 
to allow a determination of its effectiveness. 

The United States Has Recently Taken Steps to Support UN Procurement 
Reform: 

The United States has recently taken steps to advocate procurement 
reform at the UN as part of its efforts to advance overall UN 
management reforms.[Footnote 33] The U.S. Mission has publicly stated 
that accountable, cost-effective, and transparent procurement practices 
at the UN are vital to UN operations and are therefore an ongoing 
management priority. The Permanent U.S. Representative to the UN has 
recognized management weaknesses in the procurement area, particularly 
with regard to the unclear lines of authority and responsibility 
between the Departments of Management and Peacekeeping. He has 
indicated that clarifying these lines of authority would need to be 
part of overall UN management reform. The U.S. Mission also has pressed 
to have peacekeeping procurement concerns brought to the attention of 
the Security Council, despite the objections of some other member 
states. As a result, a senior UN official briefed the Security Council 
in February 2006 on OIOS's audit of procurement practices in Security 
Council-mandated peacekeeping missions. 

A staffing vacancy at the U.S. Mission to the UN in New York may have 
limited U.S. influence in encouraging and formulating proposals for 
procurement reform. The position of ambassador to the UN for management 
and reform was vacant from February 2005 until late March 2006. 
According to State officials, statements from ambassador-level 
representatives in UN bodies have more impact and influence than 
statements from other U.S. representatives. This key vacancy represents 
a missed opportunity for the United States in the formation of the UN 
management reform agenda agreed to at the World Summit in 2005. As a 
result, officials said, the U.S. Mission had limited capacity to 
influence reform. 

Conclusions: 

Long-standing weaknesses in the UN's internal controls over procurement 
have left UN procurement funds highly vulnerable to fraud, waste, and 
abuse. Many of these weaknesses have been known and documented by 
outside experts and the UN's own auditors for more than a decade. The 
UN, however, has not demonstrated the sustained leadership needed to 
correct these weaknesses. It has instead undertaken piecemeal reforms 
while failing to clearly establish management accountability for 
correcting procurement weaknesses. The negative effects of this lack of 
UN leadership in procurement have been compounded by a peacekeeping 
program that has more than tripled in size since 1999 and may expand 
even further. 

Recommendations for Executive Action: 

We recommend that the Secretary of State and the Permanent 
Representative of the United States to the UN work with other member 
states to encourage the Secretary-General to take the following eight 
actions: 

* establish clear and effective lines of authority and responsibility 
between headquarters and the field for UN procurement; 

* enhance the professionalism of the UN procurement workforce by 
establishing a comprehensive procurement training program and a formal 
career path; 

* provide the Headquarters Committee on Contracts with an adequate 
structure and manageable workload for contract review needs; 

* establish an independent bid protest process for UN vendors; 

* take action to keep the UN procurement manual complete and updated on 
a timely basis and complete the ethics guidance; 

* develop a consistent process for providing reasonable assurance that 
the UN is conducting business with only qualified vendors; 

* develop a strategic risk assessment process that provides reasonable 
assurance of systematic and comprehensive examination of headquarters 
and field procurement; and: 

* standardize and strengthen monitoring of procurement activities by 
procurement managers, including actions aimed at helping to ensure that 
oversight agencies' recommendations are implemented and that officials 
are held accountable for their actions. 

We also recommend that the Secretary of State report to the Congress 
annually regarding UN progress in reforming its procurement process, 
with particular attention to the status of UN progress in addressing 
the above recommendations. 

Agency Comments and Our Evaluation: 

The Department of State provided written comments on a draft of this 
report that are reproduced in appendix III. The department stated that 
it welcomed our report and endorsed its recommendations. The UN did not 
provide us with written comments. State and UN officials provided us 
with a number of technical suggestions and clarifications that we have 
addressed, as appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to other interested Members of Congress, the Secretary of State, and 
the U.S. Permanent Representative to the United Nations. We will also 
make copies available to others upon request. In addition, this report 
will be available at no charge on the GAO Web site at [Hyperlink, 
http://www.gao.gov.]

If you or your staff have any questions about this report, please 
contact me at (202) 512-9601 or melitot@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made major contributions to 
this report are listed in appendix IV. 

Signed by:

Thomas Melito: 
Director, International Affairs and Trade: 

[End of section] 

Appendix I: Scope and Methodology: 

To assess internal controls in the United Nations (UN) procurement 
process, we used a framework that is widely accepted in the 
international audit community and has been adopted by leading 
accountability organizations, including the International Organization 
of Supreme Audit Institutions, the U.S. Office of Management and 
Budget, and GAO.[Footnote 34] Specifically, we assessed five key 
elements of internal control: (1) the control environment, (2) control 
activities, (3) risk assessment, (4) information and communications, 
and (5) monitoring. 

Our review focused primarily on the Department of Management, the 
United Nations Procurement Service (which reports to the Department of 
Management), and the Department of Peacekeeping Operations 
(Peacekeeping Department), including 19 field missions. To assess the 
control environment for UN procurement, we reviewed the UN's 
procurement manual, organizational structure, financial regulations and 
rules, and information obtained from the Headquarters Committee on 
Contracts. We also examined training and staffing data, information on 
ethics guidance, and the UN Office of Internal Oversight Service's 
(OIOS) 2006 report on peacekeeping procurement activities.[Footnote 35] 

To assess the control activities, risk assessments, and information and 
communications for UN procurement, we reviewed certain policies, 
procedures, and mechanisms that the UN has in place to provide 
reasonable assurance that staff comply with directives. Specifically, 
we reviewed (1) the mechanism that the UN has established to review 
procurement contracts; (2) approaches to addressing vendor grievances, 
updating the procurement manual, and the maintenance of qualifying 
vendor rosters; and (3) approaches to assessing procurement risk to the 
UN, as well as the UN's information management system for procurement. 

To assess procurement monitoring, we reviewed the structure and 
mandates of OIOS, the UN Board of Auditors, and the UN Joint Inspection 
Unit (JIU). We also reviewed their roles in monitoring UN procurement 
activities. We also reviewed the board's audited financial statements 
and reports for Secretariat and peacekeeping operations, which includes 
procurement findings and recommendations; OIOS and JIU reports 
containing procurement findings and recommendations; annual reports of 
the monitoring entities covering the status of implementation of their 
recommendations, as well as the process they have in place to track 
their recommendations; resolutions and reports on the UN Secretariat 
Accountability Panel, the Management Performance Board, and the 
Oversight Committee. We discussed OIOS's process for monitoring and 
reporting on its recommendations with relevant officials. While the 
evidence these officials have obtained indicates that the data are 
generally reliable, the officials said they would like to perform more 
testing of recommendations that have been implemented but lack the 
resources to do so. We obtained the recommendations data set from OIOS 
and performed basic reliability checks. Based on our interviews and 
checks, we determined the data were sufficiently reliable for the 
purposes of this report. 

In addition, to assess the control environment and other standards, we 
prepared an interview instrument and conducted a series of structured 
interviews with the principal procurement officers at each of the 
Peacekeeping Department's 19 missions in Africa, Asia, Europe, and the 
Americas (see fig. 5). We developed the interview questions based on 
our audit work, discussions with UN officials, and review of 
questionnaires conducted of headquarters staff. The structured 
interview instrument included open-and closed-ended questions, and 
covered various topics, including the background of procurement staff 
at each mission, such as experience, training, and certification; 
information on the types and volume of procurement at each mission; and 
questions regarding integrity, openness, competitiveness, and 
accountability. We conducted pretests of the instrument to provide 
reasonable assurance that our questions were clear and would be 
interpreted correctly. We addressed possible interviewer bias by 
ensuring that all respondents received copies of the instrument ahead 
of time and had them available when we conducted our interviews by 
telephone. 

To examine U.S. government efforts to support reform of UN procurement, 
we reviewed position statements and various program documents. We also 
met with senior Department of State officials in Washington, D.C., and 
senior officials with the U.S. Permanent Mission to the UN in New York. 

In addition, we reviewed reports prepared in 2005 by consulting firms 
hired by the UN to assess its procurement process.[Footnote 36] In 
addition, we reviewed reports by the Oil for Food Independent Inquiry 
Committee,[Footnote 37] the UN Panel on United Nations Peace 
Operations, and the UN High-Level Expert Procurement Group.[Footnote 
38] We interviewed officials of the Department of Management, the 
Department of Peacekeeping Operations, the Headquarters Committee on 
Contracts, the UN Procurement Service, OIOS, and the Board of Auditors 
in New York. 

We performed our work from April 2005 through March 2006 in accordance 
with generally accepted government auditing standards. 

Figure 5: Peacekeeping and Other Missions Administered by the 
Department of Peacekeeping Operations: 

[See PDF for image] 

Notes: Dollars in millions.

We contacted the 19 missions shown above. They consist of all 15 of the 
UN's current peacekeeping operations, one logistics base (UNLB), and 
three other missions administratively supported by the Peacekeeping 
Department (UNAMA, UNAMI, and UNIOSIL). 

[End of figure] 

[End of section] 

Appendix II: UN Procurement Processes: 

Figure 6: Procurement Process in the Field: 

[See PDF for image] 

Note: In cases of certain defined core requirements, peacekeeping field 
offices may award up to $1 million without prior review by the 
Headquarters Committee on Contracts or the approval of the Department 
of Management. 

[End of figure] 

Figure 7: Procurement Process in UN Headquarters for Contracts Greater 
Than $200,000: 

[See PDF for image]

[End of figure]

[End of section] 

Appendix III: Comments from the Department of State: 

United States Department of State: 
Assistant Secretary and Chief Financial Officer: 
Washington, D.C. 20520: 

Ms. Jacquelyn Williams-Bridgers: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548-0001: 

April 18 2006: 

Dear Ms. Williams-Bridgers: 

We appreciate the opportunity to review your draft report, 

"UNITED NATIONS: Procurement Internal Controls Are Weak," GAO Job Code 
320345. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact 
Heather Ward, Program Analyst, Bureau of International Organization 
Affairs, at (202) 647-6279. 

Sincerely, 

Signed by: 

Bradford R. Higgins:

cc: GAO - Pierre Toureille: 
IO - Kristen Silverberg: 
State/OIG - Mark Duda: 

Department of State Comments on GAO Draft Report United Nations: 
Procurement Internal Controls are Weak (GAO-06-577, GAO Code --320345): 

Thank you for the opportunity to comment on your draft report entitled 
United Nations: Procurement Internal Controls are Weak. The Department 
of State welcomes the GAO report and endorses its recommendations. The 
Department has actively supported procurement reform in the UN. Our 
efforts have been reflected, among other places, in relevant General 
Assembly resolutions (e.g., A/RES/59/288, A/RES/57/279, and A/RES/55/ 
247), where we have joined other Member States in acknowledging the 
Secretary-General's efforts to reform procurement practices and, more 
importantly, called on the Secretary-General to improve training for 
procurement staff, purchasing practices, and implement ethics 
guidelines. 

We are pleased that GAO highlights the Department of State's most 
recent actions to advocate procurement reform. The U.S. Permanent 
Representative to the UN has stressed the urgent need to address 
management weaknesses in procurement. During the U.S. Presidency of the 
Security Council in February 2006, the U.S. Permanent Representative 
raised the profile of procurement weaknesses by chairing a historic 
Security Council review of the Department of Peacekeeping Operation's 
(DPKO) problems. The session highlighted the institutional weaknesses, 
in the Department of Management and DPKO, including the lack of 
effective internal controls that led to the procurement problems. 

As the GAO report notes, the U.S. Mission to the UN has actively 
advocated management reforms aimed at achieving a more efficient, 
effective, accountable, and transparent UN, including by pressing for 
the establishment of an Ethics Office, strengthened auditing and 
oversight systems, and creation of an Independent Audit Advisory 
Committee (IAAC). We believe these measures, in addition to an overhaul 
of the procurement system, will strengthen internal controls and 
thereby create a more transparent and accountable organization. 

The Department of State concurs that institutional weaknesses, 
leadership failures, lack of accountability and the growth of 
peacekeeping operations have caused UN procurement operations to be 
vulnerable to fraud, waste, abuse, and mismanagement. We found GAO's 
conclusions to be thoughtful and note that they echo the conclusions 
reached in previous reports in this subject area, including the 
Deloitte report entitled Assessment of Internal Controls in the UN 
Secretariat Procurement Operations, the OIOS's report entitled 
Comprehensive Management: 

Review of the Department of Peacekeeping Operations - Procurement, and 
the reports of the Independent Inquiry Committee into the Oil for Food 
Program. 

We recognize that since the last GAO report on UN procurement in 1999, 
the UN has taken concrete measures to increase training for field and 
headquarter personnel, harmonize procurement practices and cooperation 
among UN entities, promote procurement manual effectiveness, and adopt 
and implement the procurement principle of the "best value for money." 
However, these reforms and proactive efforts have to date been 
insufficient to address adequately system-wide problems, including 
resource shortfalls and the lack of oversight and internal controls 
noted in various reports and by procurement officials themselves. 

We will work with other Member States to encourage the Secretary- 
General to follow through on the recommendations contained in the 
report. In the recent report, Investing in the UN: for a stronger 
Organization Worldwide (A/60/692), the Secretary-General recognized 
that procurement must be strengthened and made proposals that address 
many of the concerns raised by the GAO. The Secretary-General's report 
includes proposals on concluding investigations quickly, updating 
procedures, implementing a risk-management framework, improving 
training, reprofiling procurement staff, and increasing information 
sharing. 

The necessity of procurement reform is undeniable given the problems 
already exposed and the increasing number of peacekeeping missions. 
Indeed, it is a time for wholesale change in procurement. Our ultimate 
goal must be effective, efficient, responsible and accountable 
management of this billion dollar-plus operation. The United States has 
established several partnerships with other like-minded UN members 
towards that goal.

[End of section] 

Appendix IV GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Thomas Melito, (202) 512-9601 or melitot@gao.gov: 

Staff Acknowledgments: 

In addition to the person named above, Phyllis Anderson, Assistant 
Director; Pierre Toureille; Kristy Kennedy; Clarette Kim; Barbara 
Shields; and Lynn Cothern made key contributions to this report. Jaime 
Allentuck, Martin De Alteriis, Bonnie Derby, Timothy DiNapoli, Mark 
Dowling, Etana Finkler, and John Krump also provided technical 
assistance. 

[End of Section]

Related GAO Products: 

United Nations: Funding Arrangements Impede Independence of Internal 
Auditors. GAO-06-575. Washington, D.C.: April 25, 2006. 

United Nations: Lessons Learned from Oil for Food Program Indicate the 
Need to Strengthen UN Internal Controls and Oversight. GAO-06-330. 
Washington, D.C.: April 25, 2006. 

Peacekeeping: Cost Comparison of Actual UN and Hypothetical U.S. 
Operations in Haiti. GAO-06-331. Washington, D.C.: February 21, 2006. 

United Nations: Preliminary Observations on Internal Oversight and 
Procurement Practices. GAO-06-226T. Washington, D.C.: October 31, 2005. 

United Nations: Sustained Oversight Is Needed for Reforms to Achieve 
Lasting Results. GAO-05-392T. Washington, D.C.: March 2, 2005. 

United Nations: Oil for Food Program Audits. GAO-05-346T. Washington, 
D.C.: February 15, 2005. 

United Nations: Reforms Progressing, but Comprehensive Assessments 
Needed to Measure Impact. GAO-04-339. Washington, D.C.: February 13, 
2004. 

United Nations: Progress of Procurement Reforms. GAO/NSIAD-99-71. 
Washington, D.C.: April 15, 1999. 

(320345): 

FOOTNOTES 

[1] This report focuses solely on the procurement activities of the UN 
Secretariat. It does not address the procurement activities of other UN 
entities, funds, and programs, such as the World Food Program or the UN 
Development Program. For the purposes of this report, the term "UN" 
refers to the UN Secretariat. 

[2] GAO, Internal Control: Standards for Internal Control in the 
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 
1999). 

[3] Committee of Sponsoring Organizations of the Treadway Commission, 
Internal Control--Integrated Framework (September 1992). 

[4] For example, Deloitte, Assessment of Internal Controls in the 
United Nations Secretariat Procurement Operations-Final Report (Nov. 
30, 2005). 

[5] The 19 missions we contacted are identified in figure 5, in 
appendix 1. They consist of all 15 of the UN's current peacekeeping 
operations, one logistics base, and three other missions 
administratively supported by the Peacekeeping Department. 

[6] The UN has not yet released detailed data regarding the allocation 
of its 2005 procurement funds. 

[7] The UN Financial Regulations and Rules outline the following 
general principles for UN procurement: best value for money; fairness, 
integrity and transparency; effective international competition; and 
the interest of the United Nations. 

[8] Peacekeeping missions may award contracts of up to $1 million 
without prior approval by the Department of Management and the 
Headquarters Committee on Contracts for fresh food, waste disposal 
services, building materials, and other defined "core requirements" 
that lend themselves to local procurement. 

[9] As of February 2006, the Peacekeeping Department's field 
procurement staff consisted of 147 international staff and 120 local 
staff. 

[10] Financial Regulations and Rules of the United Nations, ST/SGB/ 
2003/7, Rule 105.13. According to the Financial Regulations and Rules, 
the under-secretary-general for management is responsible for all 
procurement functions of the UN and is to establish all UN procurement 
systems and designate the officials responsible for performing 
procurement functions. The Financial Regulations and Rules allow the 
under-secretary-general for management to authorize UN officials to act 
on the under-secretary-general's behalf to contract for purchases of 
services, products, or equipment. 

[11] The Panel on United Nations Peace Operations was convened by the 
Secretary-General of the UN to assess the UN's ability to effectively 
conduct peace operations and to recommend ways to enhance that ability. 
The Secretary-General transmitted the panel's findings to the UN 
General Assembly and Security Council on August 21, 2000, in UN 
document A/55/305-S2000/809. 

[12] According to UN officials, prior to 2005 the Department of 
Management delegated procurement authority directly to the Peacekeeping 
Department's field missions and not to the Peacekeeping Department's 
headquarters. 

[13] Deloitte, Assessment of Internal Controls in the United Nations 
Secretariat Procurement Operations (Nov. 30, 2005). 

[14] The Peacekeeping Department indicated that expedient steps had 
been warranted and that appropriate action was later taken to 
regularize the contracts. 

[15] The Inter-Agency Procurement Working Group is composed of 
procurement officials drawn from across the UN system. The group is 
developing a common certification program that would define a body of 
knowledge and competency framework for assessing procurement staff. 
Certification at the basic level has not yet begun, and the advanced 
level program has not yet been developed. 

[16] By contrast, other organizations have recognized the role of a 
career path in maintaining a qualified professional procurement 
workforce and preventing fraud. For example, the U.S. Department of 
Defense has established career paths for its procurement workforce that 
includes career development opportunities linked to progressive 
attainment of training, education, and experience. (Public Law 101-510, 
National Defense Authorization Act for Fiscal Year 1991, Title XII, 
Defense Acquisition Workforce Improvement Act, Nov. 5, 1990.) 

[17] General Assembly Res. 52/252, UN Doc. A/RES/52/252, at para.10. 

[18] See Secretary-General Bulletin 2002/13, UN Doc. ST/SGB/2002/13, 
Status, Basic Rights and Duties of United Nations Staff Members. 

[19] General Assembly Res. 59/288, UN Doc. A/RES/59/288, at para. 12. 

[20] The UN has recently adopted new whistleblower protection policies 
and established a new ethics office for all UN staff. See General 
Assembly UN Doc. A/60/568. Also, 11 of 19 peacekeeping procurement 
chiefs in the field have acknowledged receiving some form of ethics 
training. 

[21] GAO, United Nations: Preliminary Observations on Internal 
Oversight and Procurement Practices, GAO-06-226T (Washington, D.C.: 
Oct. 31, 2005). 

[22] According to a UN official, the UN Ethics Office has been 
participating in the effort, largely in an advisory role, by reviewing 
and commenting on the draft declaration of ethics responsibilities for 
procurement staff. 

[23] In 2005, the committee reviewed 881 contracts valued at $3 billion 
(including long-term contracts), while in 2003 it reviewed 558 
contracts valued at about $2.3 billion. 

[24] A November 2005 study by a consultant for the UN concluded that 
the committee was not effective in preventing all forms of corruption 
and sometimes delayed procurement of items. 

[25] Office of Internal Oversight Services, Comprehensive Management 
Review of the Department of Peacekeeping Operations--Procurement, 
AP2005/600/20 (Jan. 20, 2006). 

[26] United Nations, High Level Expert Group Procurement Study Report 
(New York, December 1994). 

[27] See GA Res. 49/54, UN Doc. A/Res/49/54; UN Commission on 
International Trade Law (UNCITRAL), Model Law on Procurement of Goods, 
Construction and Services (1994), ch. 6. 

[28] In the United States, vendors may protest to the involved 
agencies, the U.S. Court of Federal Claims, or GAO. GAO receives more 
than 1,100 such protests annually. 

[29] GAO, United Nations: Progress of Procurement Reforms, GAO/NSIAD- 
99-71 (Washington, D.C.: Apr. 15, 1999). 

[30] National Institute of Governmental Purchasing Inc., Assessment of 
UNPS Procurement Processes (Herndon, Va., June 30, 2005). 

[31] The interagency procurement vendor roster is known as the Global 
Marketplace. It is maintained by the UN Development Programme's Inter- 
Agency Procurement Services Office. 

[32] We analyzed procurement recommendations from the Procurement 
Service and the Peacekeeping Department (18 missions in total) from 
July 2000 to June 2005; the recommendations were extracted from OIOS's 
recommendations-tracking database. 

[33] The U.S. Mission to the UN has advocated management reforms aimed 
at achieving a more effective and accountable UN, including an 
adequately resourced ethics office, stronger UN auditing and oversight 
systems, and a new Independent Audit Advisory Committee. 

[34] Committee of Sponsoring Organizations of the Treadway Commission, 
Internal Control--Integrated Framework (September 1992). 

[35] Office of Internal Oversight Services, Comprehensive Management 
Review of the Department of Peacekeeping Operations--Procurement, 
AP2005/600/20 (Jan. 20, 2006). 

[36] Deloitte, Assessment of Internal Controls in the United Nations 
Secretariat Procurement Operations-Final Report (Nov. 30, 2005); and 
the National Institute of Governmental Purchasing, Assessment of UNPS 
Procurement Processes (Herndon, Va., June 2005). 

[37] Independent Inquiry Committee into the Oil-for-Food Programme, 
Third Interim Report (Aug. 8, 2005). 

[38] United Nations, Procurement Study Report (New York, December 
1994). 

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