GAO

United States General Accounting Office

Report to the Chairman, Committee on 

International Relations, House of 

Representatives

April 1999 UNITED NATIONS

Progress of 

Procurement Reforms

GAO/NSIAD-99-71

United States

General Accounting Office

Washington, D.C. 20548 Letr

Page 1 GAO/NSIAD-99-71 United Nations

GAO

National Security and

International Affairs Division

B-281996 Letter

April 15, 1999

The Honorable Benjamin A. Gilman

Chairman, Committee on International Relations

House of Representatives

Dear Mr. Chairman:

Procurement at the United Nations Secretariat has been criticized for its 

lack of accountability, fairness, and competition as well as its failure to 

provide goods and services on time. In response to these criticisms, the 

U.N. Secretary-General established a High Level Expert Group on 

Procurement in 1994 to examine the Secretariat's procurement system. 

The Expert Group developed comprehensive recommendations to create a 

procurement system that ensured accountability, fairness, competition, and 

the economical and timely delivery of goods and services.1

 Altogether, its 

36 recommendations aimed at creating a dynamic system that could 

continuously improve its performance. While the U.N. Secretariat has 

responded to the Expert Group’s recommendations, allegations of 

procurement irregularities continued to come to your attention. 

As agreed with your office, this report discusses the U.N. Secretariat’s 

efforts to reform its procurement system, which annually purchases about 

$400 million of goods and services for U.N. headquarters in New York, field 

missions, and other offices. Specifically, we (1) identified the types of 

procurement problems that the Expert Group and U.N. audit and 

inspection organizations found, (2) assessed progress on the 

implementation of the Expert Group’s recommendations and other reforms 

to correct procurement-related problems, and (3) assessed whether these 

actions have succeeded in achieving the objectives of procurement reform.

As an agency of the United States, we do not have authority to audit 

directly the operations of the United Nations. For this report, our 

assessment is based on reports by the U.N.’s audit and oversight 

organizations, supplemented by publicly available documents, interviews 

with U.N. officials, and testing of some reforms. (See app. I for further 

details about our report’s scope and methodology.) 

1

High Level Expert Group Procurement Study Report (New York, N.Y.: United Nations, Dec. 1994).
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Results in Brief The U.N. Board of Auditors, the U.N. Office of Internal Oversight Services, 

and the High Level Group of Experts have pointed out numerous problems 

in the operations of the U.N. Secretariat’s procurement system. These 

problems involved issues concerning all elements of an effective 

procurement system, such as lack of competition, with over 50 percent of 

contracts not competed in the past, and accountability, with confusion over 

responsibility and authority leading to inconsistent application of rules. 

Many of these findings refer to the period prior to 1996, but some findings 

have been more recent. To correct these and other problems, the 

Secretariat established a High Level Expert Group on Procurement. In 

1995, the Secretariat adopted the Expert Group's recommendations as the 

framework for procurement reform and since then has made considerable 

progress in implementing the recommendations and taken other action to 

improve its procurement system. For example, evidence developed by 

U.N. audit and inspection organizations indicates that the Secretariat has 

strengthened accountability by designating clear lines of authority, 

improved competitive practices by increasing the percentage of contracts 

that are awarded through competitive bid, and strengthened the fairness of 

the process by publishing common specifications for goods procured by 

the U.N. system.

While the Secretariat has made progress in reforming its procurement 

system, action in several areas is incomplete, and the overall systemic 

objectives sought by the High Level Expert Group have not yet been 

achieved. For example, the Secretariat has not established formal 

procedures to address and adjudicate vendors' grievances, including 

appointment of an independent ombudsman to help ensure fairness and 

openness when issues about U.N. procurement procedures are raised. 

Also, while the Secretariat now competes most contracts, competition is 

still not completely open because sufficient time is sometimes not given for 

vendors to prepare bid proposals. Other steps recommended to help 

ensure transparency and accountability, such as developing a procurement 

manual for all to use, are partially completed. Also, the Expert Group’s 

overarching objective was to create a continuously improving procurement 

system. However, achieving this objective will be difficult until the 

Secretariat has developed performance measures to indicate whether it is 

reaching its targets on (1) timeliness in processing requisitions, (2) on-time 

delivery of goods and services, and (3) quality and cost of contract 

performance.
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Background Each organization within the U.N. system, such as the World Health 

Organization and the United Nations Development Program, procures 

goods and services in accordance with its own financial rules and 

regulations and procurement procedures. (See app. II for a diagram of the 

U.N. system.) More than 30 procurement offices procure approximately 

$2.9 billion of goods and services for these organizations annually. 

Procurements by the U.N. Secretariat are conducted by its Procurement 

Division, which in 1997 procured $310 million of goods and services while 

peacekeeping and other field missions procured about $120 million. 

Commonly Identified 

Characteristics of Effective 

Procurement Systems

Several organizations have identified characteristics of an effective 

procurement system. For example, the U.N. system organizations 

identified such characteristics, which were published by the U.N.'s 

Interagency Procurement Services Office (IAPSO)2 in The Common 

Guidelines for Procurement by U.N. Organizations. This publication states 

that the objective of procurement within the U.N. system is the timely 

acquisition of goods, works, and services while addressing (1) the objective 

of the U.N. organization concerned; (2) fairness, integrity, and transparency 

through competition; and (3) economy, effectiveness, and best value for 

money. The guidelines were intended to communicate basic principles for 

procurement by U.N. organizations and harmonize U.N. system 

procurement procedures. The Organization for Economic Cooperation and 

Development (OECD) identified similar characteristics for an effective 

public procurement system.3

 Its December 1997 policy brief states that a 

public procurement system should, among other things, (1) employ open 

competition; (2) ensure that the selection of bidders, tendering procedures, 

and the awarding of contracts are open to public examination and scrutiny 

by external audit authorities; (3) incorporate a legal and administrative 

framework that defines the financial and legal responsibilities of all 

2IAPSO is an office under the oversight of the U.N. Development Program's executive board and is 

funded by the development program and by the procurement services it offers. IAPSO's mandates are 

to conduct research and development activities in the area of procurement for U.N. organizations and 

to provide a wide range of procurement services, including advisory services on procurement, direct 

procurement, and procurement training for U.N. member states and organizations.

3

Support for Improvement in Governance and Management Policy Brief 3: Public Procurement (Paris, 

France: OECD, Dec. 1997). This publication is the result of an ongoing joint initiative of the OECD 

Center for Cooperation with Economies in Transition and the European Union’s PHARE Program. The 

OECD is a forum of industrialized democracies that studies and formulates policies in all economic and 

social spheres.
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participants in the procurement process; (4) employ well-trained staff; and 

(5) ensure that it achieves good value for money in public expenditure. 

The Expert Group also used a similar set of characteristics as the 

underlying objectives in developing its report and recommendations to 

reform the U.N. procurement system.4

 These characteristics, discussed in 

both the Expert Group report and in a report that was used by the Expert 

Group,5 included:

Integrity - public confidence earned by avoiding any conflict of interest, 

maintaining impartiality, avoiding preferential treatment for any group or 

individual, and dealing fairly and in good faith with all parties. (Aspects of 

this include development of a fair and impartial roster of qualified vendors 

and using standard procedures consistently in procurements.)

Openness - policies and procedures available to and understood by all 

sources and an acceptable procedure available to redress grievances of 

vendors. (Aspects of this include clear written policies, a procurement 

manual, standard operating procedures, and a formal clear bid protest 

process.)

Accountability - clear lines of procurement responsibility and authority, set 

with effective policy direction and audit capabilities established. (Aspects 

of this include clear and specific written authorities and delegations of 

authority and strengthened oversight.)

Professional workforce - competent workforce responsive to mission 

requirements, with continued review and training to improve individual 

and system performance. (Aspects of this include ensuring a competent 

and knowledgeable workforce through professional training programs and 

curriculums, keyed to a career procurement track.)

4The Expert Group was composed of senior officials from Brazil, France, Malaysia, South Africa, 

Sweden, the United Kingdom, and the United States who had expertise in and responsibility for 

managing procurement, finance, and logistics operations in their countries. Among the members were 

a senior logistics manager for Military Logistics, United Kingdom; the Inspector-General of Finance for 

Brazil; and the Director, Commodity Division, U.S. Agency for International Development.

5

Alan Burman, Constraining Costs and Improving the Efficiency of United Nations Peacekeeping 

Procurement Operations (Washington, D.C.: U.S. Office of Management and Budget, Sept. 9, 1994). 

This study contained the characteristics of an effective procurement system that the United States 

identified for the OECD and that the OECD subsequently adopted in its efforts to provide a framework 

for public procurement systems in emerging democracies.
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Competition - specifications that do not favor a single source and 

solicitations widely publicized to benefit from the efficiencies of the 

commercial marketplace. (Aspects of this include open competition for 

procurement as the norm and all contract activity and awards to be 

publicly advertised.) 

Value - quality, timeliness, and cost fairly considered to ensure contracts 

best meet needs. (Aspects of this include determining requirements and 

planning for the procurement to take advantage of economies of scale and 

measuring performance to ensure efficiency in processing purchases and 

contractor performance.)

We use these six characteristics as the organizing framework to report on 

the types of procurement problems the United Nations experienced, our 

assessment of the progress the Secretariat has made in carrying out the 

Expert Group recommendations and other reform actions, and our 

assessment of whether these actions have achieved the objectives of the 

Expert Group. (See app. I for further detail on the work we did to ensure 

these were commonly accepted characteristics of an effective procurement 

system.)

U.N. Oversight Bodies 

Have Identified 

Procurement System 

Problems 

The U.N. Board of Auditors (board), the U.N. Office of Internal Oversight 

Services (OIOS), and the High Level Group of Experts have pointed out 

numerous problems in the operations of the U.N. Secretariat’s procurement 

system. These problems involved issues concerning all elements of an 

effective procurement system. Many of these findings refer to the period 

prior to 1996, but some findings have been more recent.

Integrity The Expert Group and U.N. audit agencies found practices that 

undermined the fairness and impartiality of the procurement system. For 

example, OIOS reported that in some locations contracts were awarded to 

a limited number of vendors without evidence of a market survey, 

assessment of competitive quotations, or evaluation of vendor 

performance.6

 Further, the Expert Group concluded that problems with 

6

Audits of the Regional Commissions, OIOS (A/52/776) (New York, N.Y.: United Nations Jan. 27, 1998); 

Audit of Procurement Handled by the Contracts and Procurement Service of the United Nations 

Department for Development Support and Management Services, OIOS (A/50/945) (New York, N.Y.: 

United Nations, Apr. 30, 1996).
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the vendor roster undermined the integrity of the system. The roster, 

which lists vendors from whom U.N. officials solicit bids and quotations, is 

prepared by obtaining from member states and business groups the names 

of potential suppliers, reviewing their qualifications, and finalizing the list 

of qualified vendors for use by the Secretariat. The Expert Group found the 

roster was outdated, inaccurate, and not common to all locations and 

concluded that the inconsistent and nonstandardized list exposed the 

procurement system to abuse, self-interest, and fraud. Another problem 

the board reported was that offices requisitioning goods and services had 

too much influence on the selection of vendors.7

 This raised questions of 

conflicts of interest in the process, since the procurement office is charged 

with maintaining independence in the selection of vendors and is not to be 

pressured by other parties, including the requisitioning office.

Openness The Expert Group, the board, and OIOS also noted problems related to the 

openness and transparency of the system. The Expert Group found that 

policies and procedures were inconsistent, unclear, and not available to all 

involved in the bidding process, including both vendors and procurement 

officers. In 1995, the board and OIOS reported that policy and procedures 

statements and manuals on procurement were lacking and the available 

regulations were too cumbersome to be of practical use. For example, 

OIOS reported that guidance in the Department of Peacekeeping 

Operations did not provide information on procurement procedures for 

procurement staff to use on a day-to-day basis. OIOS also reported that

50 percent of the procurements they reviewed did not meet the 

requirements for sealed bids and public bid openings or were not 

communicated to vendors. (App. III contains a flowchart of the 

Secretariat’s procurement process.) At the same time, the procurement 

system lacked an ombudsman or impartial bureau to hear vendor 

complaints and ensure fair treatment.

Accountability According to the Expert Group, clear lines of authority and responsibility, 

as well as charts that clearly indicated which officials were responsible for 

specific tasks, were lacking. Similarly, the board’s 1994-95 biennial report 

stated that adequate lines of authority, supervision, and accountability had 

not been established and that appropriate internal control systems needed 

7

Financial Report and Audited Financial Statements for the Biennium Ended 31 December 1993 and 

Report of the Board of Auditors, Vol. I (A/49/5) (New York, N.Y.: United Nations, July 29, 1994).
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to be established within the Procurement Division. In addition, the 

Advisory Committee on Administrative and Budgetary Questions found 

that there were no guidelines on the composition and procedures for the 

Headquarters Committee on Contracts.8

 The Committee is supposed to 

review all contracts exceeding established thresholds to ensure rules and 

regulations are followed and there is consistency between the bid 

evaluations and the final decision. The board stated in its report on the 

1994-95 biennium that 57 percent of the contracts for the Department of 

Peacekeeping Operations and 23 percent of the contracts for the remaining 

Secretariat departments were reviewed only after they had been signed. In 

a 1996 audit, OIOS also found a lack of documentation on vendor 

qualifications, financial status, and past performance, making it difficult for 

auditors to determine whether vendors had been selected in accordance 

with U.N. financial rules and regulations.9

Professional Workforce The Expert Group and U.N. audit organizations found the procurement 

staff lacked the requisite knowledge of procurement procedures and 

regulations. For example, in its report on the 1992-93 biennium, the board 

found that although some training events had taken place, there were no 

formal training arrangements for staff involved in procurement activities 

and that very few staff in the procurement services had any recognized 

qualifications in procurement. Likewise, in its 1994 study, the Expert 

Group determined that U.N. staff assigned to procurement activities were 

largely ill-prepared, untrained or inadequately trained, and inexperienced. 

It stated that staff expertise was extremely low, staff roles and 

responsibilities were not aligned with mission requirements and staff job 

descriptions, and specific duties were unclear. Further, in 1995, OIOS 

identified as one of the general problems of the procurement function a 

lack of proper training and experience by some procurement officers.10

8 The Advisory Committee on Administrative and Budgetary Questions examines and reports on the 

regular and peacekeeping budgets and accounts of the United Nations and the administrative budgets 

of the specialized agencies (see app. II).

9Audit of Procurement Handled by the Contracts and Procurement Service of the Department for 

Development Support and Management Services. 

10Report of the Office of Internal Oversight Services for the Period 11/15/94 to 6/30/95, OIOS (A/50/459) 

(New York, N.Y.: United Nations, Oct. 2, 1985). 
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Competition The U.N. audit organizations found that the U.N. Secretariat did not 

effectively compete procurements in the early and mid 1990s. Similarly, a 

1996 OIOS report on the then-Contracts and Procurement Service of the 

Secretariat’s Department for Development Support and Management 

Services disclosed that in 46 percent of the cases, the technical 

specifications were either restrictive in nature or pointed toward a

sole-source vendor.11 Thus, the specifications precluded or otherwise 

made extremely difficult a valid, practical, competitive bidding process. 

The board outlined a pattern of poor competitive practices in its reports on 

the 1988-89, 1990-91, 1992-93, and 1994-95 bienniums. 

Value The Expert Group and U.N. audit organizations also discovered that U.N. 

Secretariat procurement practices frequently did not incorporate or 

emphasize quality, timeliness, and other aspects of value in their 

procurements. For example, the Expert Group said that having precise 

specifications for goods and services was the basis for ensuring best value. 

It found, however, that bid specifications were unclear and lacked 

specificity and quality measures, making bid proposals impossible to 

compare. The Expert Group also found that procurement planning was not 

done; thus, the Secretariat could not take advantage of bulk purchases and 

planned acquisitions. Other practices limited obtaining better value. For 

example, the board reported in its 1992-93 biennial report that the use of a 

relatively narrow range of suppliers created an environment where it was 

unlikely that the United Nations was achieving the best value for its 

money.12 Also, in 1997, an OIOS report found in one location that 

inadequate control over the hiring of consultants led to higher fees and 

insufficiently qualified personnel.13 

11Audit of Procurement Handled by the Contracts and Procurement Service of the Department for 

Development Support and Management Services. 

12Financial Report and Audited Financial Statements for the Biennium Ended 31 December 1997 and 

Report of the Board of Auditors, Vol. I (A/49/5). 

13Review of the Program and Administrative Practices of the U.N. Center for Human Settlements 

(Habitat), OIOS (A/51/884) (New York, N.Y.: United Nations, Apr. 23, 1997). 
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Reform Measures 

Taken to Improve the 

Procurement System

The Secretariat has made considerable progress in implementing the 

recommendations proposed by the High Level Expert Group and taken 

other steps to reform the procurement system. As the first step in 

addressing its procurement problems, the Secretariat accepted the

36 recommendations of the Expert Group as the framework for its reform 

efforts. These recommendations included designating clear lines of 

responsibility and authority for procurement functions, drafting a 

procurement manual available to all parties, and developing a training 

curriculum for procurement staff. In June 1995, the Secretariat reported 

that some actions had already been taken, and it listed additional future 

steps to implement the plan.14 In March 1996, the U.N. Advisory 

Committee on Administrative and Budgetary Questions endorsed the 

Expert Group’s recommendations and stated that procurement reform was 

of fundamental importance for reestablishing the confidence of the 

member states in the integrity of U.N. Secretariat procurement 

operations,15 and in December 1996 the Committee reported to the U.N. 

General Assembly on progress being made by the Secretariat.16 In 

November 1998, the Advisory Committee noted that information from the 

Secretary-General showed considerable progress in implementing the 

recommendations of the Board of Auditors and the High Level Expert 

Group. 

Integrity The Advisory Committee noted that in the area of strengthening the 

integrity of the system, the Secretariat had purged the old roster of vendors 

and was updating and expanding the new roster, had laid out the main 

criteria for evaluating suppliers, and had developed common specifications 

for goods used throughout the U.N. system. The Secretariat also took steps 

to ensure that requisitioning offices did not unduly influence the bid 

process, such as requiring the concurrence of the Chief of the Procurement 

14Review of the Efficiency of the Administrative and Financial Functioning of the United Nations: 

Progress in the Implementation of Procurement Reform in the U.N. Secretariat, Report of the

Secretary-General (A/C.5/49/67) (New York, N.Y.: United Nations, June 25, 1995).

15The Implementation of Procurement Reform in the U.N. Secretariat, Fourteenth Report of the 

Advisory Committee on Administrative and Budgetary Questions (A/50/7/Add. 13) (New York, N.Y.: 

United Nations, Mar. 8, 1996).

16Review of the Efficiency of the Administrative and Financial Functioning of the United Nations: 

Procurement Reform, Fourth Report of the Advisory Committee on Administrative and Budgetary 

Questions (A/51/7/Add. 3) (New York, N.Y.: United Nations, Dec. 4, 1996).
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Division to allow bids from vendors that had been recommended by the 

requisitioning office.

Accountability Steps taken in the area of increasing accountability included reorganizing 

the procurement function to eliminate overlapping responsibilities and to 

designate clear lines of authority for procurement. For example, prior to 

the reorganization, authority for procurement was not centralized within 

the Secretariat, but after reorganizing, all procurement is to be conducted 

under the authority of the Procurement Division. At headquarters, 

procurement is undertaken under the authority of the Assistant SecretaryGeneral for Central Support Services, who delegates this authority to the 

Procurement Division and the field. In the field, Directors-General of some 

offices have delegated this authority, and the Assistant Secretary-General 

clarified the authority and responsibility of field offices by specifying the 

field officials that could approve contracts and increasing the allowable 

contract amount field offices could approve from $70,000 to $200,000. 

Also, the committees required to review contracts before approval, both at 

headquarters and in the field, were strengthened by (1) selecting a full-time 

permanent chair for the headquarters committee and (2) specifying the 

committees’ working methods and policy guidelines for required reviews. 

The Secretary-General further reported that the requirements for contract 

approval were being followed more closely than in the past. For example, 

the number of contracts awarded before required review by the 

Headquarters Committee on Contracts decreased from 47 percent in 1995 

to 3.4 percent for the Secretariat and 2.8 percent for peacekeeping 

procurement in 1998.17 

Competition Competition has also been strengthened. In 1998, the scope for 

competitive contracting was significantly increased by adding professional 

services, medicines, medical supplies, and hospital or surgical supplies to 

the list of items subject to the open bidding process. Both invitations to bid 

and contract awards are publicized electronically on the internet, and the 

percentage of procurements that were competitively bid increased from

31 percent in 1994 to 73 percent in 1998.

17Procurement contracts that are awarded and then reviewed after the award are termed ex post facto 

contracts. Current regulations require that contracts equal to or greater than $200,000 be reviewed by 

the Headquarters Committee on Contracts before they are awarded.
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Other Areas of 

Improvement

The Secretariat has taken action on several of the other recommendations 

of the Expert Group. For example, the Secretariat has provided 

procurement staff, particularly at headquarters, training seminars on cost 

and price analysis, conflict resolution, and the new U.N. information 

system. There is some evidence the steps taken have improved the 

headquarters workforce. For example, in 1998, OIOS examined a sample of 

personnel files and found that following a period of high turnover,

90 percent of the headquarters procurement staff now had procurementrelated qualifications, including government and military procurement 

experience. OIOS also found that senior officers at headquarters had an 

average of 17 years of procurement experience, and it concluded that the 

vast majority were qualified to do their jobs. Also, according to board 

officials, the quality of the workforce at U.N. headquarters has improved 

due in part to the training. 

Outstanding 

Procurement Reform 

Issues

Although the Secretariat has taken some action on almost all 

recommendations of the Expert Group and improved the procurement 

system, several reform measures remain incomplete, and the objective of 

creating an effective procurement system with the capacity to continuously 

improve has not yet been achieved. Recommendations or reform actions 

that have been partially implemented fall in the areas of integrity and 

openness, professional workforce, competitive practices, and value. 

Integrity and Openness The Expert Group recommended that to help ensure the integrity and 

openness of the system, an independent complaints bureau/ombudsman be 

established to adjudicate vendor grievances. As of January 1999, formal 

procedures for the grievance process had not been developed. Since 

formal procedures were lacking, cases may be treated inconsistently, and 

vendors may be treated unequally. Also, the ombudsman function is not 

fully independent but is being carried out by the Under Secretary-General 

for Management and the Assistant Secretary-General for Central Support 

Services. The Secretariat has stated that one or the other official—the one 

who is not involved in a particular case for which a grievance arises—

would review the grievance. According to OIOS, it is questionable whether 

these officials can act as impartial judges. In this regard, there is a direct 

line of authority from the Chief of the Procurement Division to the 

Assistant Secretary-General, who reports to the Under Secretary-General. 

According to a private sector expert on procurement and the Deputy 

Assistant Administrator for Acquisition Policy for the U.S. government’s 
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General Services Administration, to avoid the appearance of a conflict of 

interest, the ombudsman should not be in the reporting chain of the 

officials potentially involved in the cases he or she reviews.

In providing openness and transparency, the procurement manual has 

shortcomings. The Secretariat developed a procurement manual in 

response to the Expert Group’s recommendations. However, the manual 

does not include a mission statement, clear explanations of policy, or 

detailed, step-by-step discussions of procedures required for field 

personnel to perform their duties, as recommended. According to the 

Expert Group and other procurement experts, a clear and complete 

procurement manual is essential to an open procurement system because 

policies, regulations, and the procurement process need to be available to 

all sources and must be sufficiently clear and detailed for all sources to 

understand them. Secretariat officials we spoke to acknowledged the 

weaknesses in the current manual and are considering revisions. They also 

stated that the manual is subject to regular review and revision.

Professional Workforce Although the Secretariat has provided training courses to procurement 

staff, these courses do not constitute a comprehensive curriculum to 

provide a continuum of basic to advanced skills for the development of 

procurement officers, as recommended by the Expert Group. A 1998 OIOS 

report further found a mixed level of professional experience among 

procurement personnel. While over 90 percent of a sample of headquarters 

procurement staff had procurement-related qualifications or experience, 

only 62 percent of a sample of field staff had U.N. or outside procurement 

experience.18 OIOS recommended that training needs be identified and a 

formal, procurement-specific training program be created. Also, in the 

view of board officials, training for peacekeeping staff in the field 

continues to be a problem. As a result, the board viewed field-level 

procurement practices as a high-risk area. Without a more systematic 

approach to training, the Secretariat cannot ensure that procurement is 

carried out by a competent workforce capable of meeting mission 

requirements.

 Secretariat officials told us in January 1999 that an effort was under way to 

improve the training and career path opportunities of U.N. system 

18Report of the Secretary-General on the Activities of the Office of Internal Oversight Services,

(A/52/813) (New York, N.Y.: United Nations, Mar. 5, 1998).
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procurement officials. The Secretariat and other U.N. organizations are 

developing a system to share and coordinate training resources. Likewise, 

procurement staff are expected to be rotated among U.N. organizations and 

field missions in an effort to share their knowledge, broaden their 

experiences, increase their proficiency, and provide them with a career 

path.

Competition Although the Secretariat has strengthened competitive practices in its 

procurements, there are still weaknesses in ensuring open competition. 

For example, in the 1996-97 biennial report, the board noted that no 

uniform pattern existed in the amount of time suppliers would be given to 

prepare and submit a bid.19 Nor could the board find any relationship 

between the size and complexity of contracts and the amount of time given 

for bid preparation. For example, some contracts valued over $200,000 

allowed only 4 weeks for bid preparation, while smaller contracts allowed 

a longer period. Board officials emphasized that the lack of guidelines 

setting out minimum times for the bidding period could lead to 

noncompetitive practices. The board also found that open tendering for 

major procurements above $500,000 was rarely used.

Recent OIOS audit reports found weaknesses in compliance with 

regulations on competition. A 1998 OIOS report covering a series of audits 

conducted between June 1996 and December 1997 on procurement in the 

U.N. Angola Verification Mission found that goods were procured from a 

restricted group of middlemen at higher prices under doubtful 

circumstances.20 OIOS also reported that in several instances, the 

Mission's procurement section interfered in the requisitioning process. As 

a result of this interference, requisitions were split and processing was 

delayed. The splitting of requisitions allowed the bypassing of normal 

procurement procedures and of scrutiny by the Local and Headquarters 

Committees on Contracts. The transactions were investigated from 1995 to 

1997 and OIOS reported in April 1998 that action to correct some of the 

issues had taken place but action on the remaining issues needed to be 

closely monitored for completion. In a January 1998 audit of the U.N. 

Regional Commissions, OIOS found that at one of the four commissions, 

19Financial Report and Audited Financial Statements for the Biennium Ended 31 December 1997 and 

Report of the Board of Auditors, Vol. I (A/53/5) (New York, N.Y.: United Nations, July 30, 1998).

20Report on the Audits of the Procurement Process in the U.N. Angola Verification Mission, OIOS

(A/52/881) (New York, N.Y.: United Nations, Apr. 28, 1998).
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purchase files contained no evidence of a market survey or an assessment 

of competitive quotations, except in a few major cases.21 Board officials 

told us in January 1999 that these infractions were issues of compliance 

rather than systemic internal control problems, since clear rules and 

regulations are in place.

Value Two key reform actions to ensure the Secretariat receives the best value for 

its money have not been implemented. First, the Expert Group called for 

the development of performance measures to monitor both the internal 

work processes, such as timeliness in preparing requisitions and vendor 

performance for quality, cost, and on-time delivery. However, as of January 

1999, Secretariat officials had not developed performance measures for the 

procurement system, except for procurement operating costs as a 

percentage of total procurement costs. Other measures of performance 

might include purchase order cycle time and average annual training hours 

per professional employee.22 According to procurement experts, such 

measures are fundamental to developing an effective procurement system 

and are used routinely in government and private sector organizations. 

Without such performance measures, the Secretariat will find it difficult to 

assess the effectiveness of its procurement system or to continuously 

improve its performance. 

A second reform action to enhance value was to introduce procurement 

planning so that purchases could be planned in advance. In August 1998, 

the Secretariat endorsed procurement planning—a requisite over the long 

term for ensuring best value for the money.23 Before that date, the 

Secretariat had taken the position that, particularly for peacekeeping 

missions, procurement planning was not feasible. In January 1999, OIOS 

officials said they had yet to see procurement planning occur. A senior 

Secretariat official said the Secretariat had taken initial steps to begin 

procurement planning, such as incorporating planned procurements in 

21Audits of the Regional Commissions, OIOS (A/52/776) (New York, N.Y.: United Nations, Jan. 27, 1998).

22Examples of benchmarking are contained in the following two publications: Cross-Industry

Comparison of Standard Benchmarks (Tempe, AZ: Center for Advanced Purchasing Studies, Winter 

1997-98); and Guide to a Balanced Scorecard: Performance Management Methodology

(Washington, D.C.: Procurement Executives’ Association, 1998).

23Report of the Secretary-General: Procurement Reform (A/53/271) (New York, N.Y.: United Nations, 

Aug. 18, 1998).
B-281996

Page 15 GAO/NSIAD-99-71 United Nations

future estimated budget submissions. However, a systemic planning 

process would not be in place until later in 1999.

Conclusions The Secretariat has responded to the challenge of reforming its 

procurement system and made improvements. However, the Secretariat 

has not fully implemented several reform measures that would help ensure 

the procurement system is open, fully competitive, and provides the best 

value for its money. The Secretariat also has not developed performance 

measures that would allow it to take corrective action and continuously 

improve.

Agency Comments and 

Our Evaluation

The Department of State and the United Nations provided written 

comments on a draft of this report. The Department of State agreed with 

our observations concerning the work that remains to be done in U.N. 

procurement reforms, such as formalization of procedures for handling bid 

protests. However, State and the United Nations believe that the U.N.’s 

progress should have been better highlighted in our report, that significant 

progress had been made in procurement reform, and that the structure and 

tone of the report downplayed the progress achieved. The United Nations 

commented that reform is an ongoing process and it would continue its 

procurement reforms. It further commented that the report 

overemphasized past problems rather than measures taken to address 

them and that we could have developed a more comprehensive review of 

the subject through more substantial research of publicly available 

documents such as those of the General Assembly, which reflected the 

discussions of the legislative bodies. In this regard, the United Nations. 

stated that it had made significant progress on the major system issues 

identified by the High Level Expert Group and that it was working on the 

few remaining operational issues to improve compliance.

Our report discusses examples of progress in the first paragraph of our 

Results in Brief and devotes a section of the report to progress that we 

could substantiate. We also state several times in the report that the U.N. 

Secretariat has made considerable progress in improving its procurement 

system. However, we balance the findings of progress against findings 

based on OIOS and other oversight organizations’ reports, as well as testing 

of our own, that some reform recommendations that affect the 

performance of the entire system have not been implemented or are 

incomplete. Our analysis, as well as interviews with U.N. officials, 
B-281996

Page 16 GAO/NSIAD-99-71 United Nations

indicates that the issues that have not been fully implemented are not 

merely compliance concerns but rather affect the procurement system. 

For example, the lack of performance measures, a training curriculum, 

formal grievance procedures, and a comprehensive planning process affect 

overall procurement system operations and indicate that the United 

Nations has yet to achieve the Expert Group’s baseline objective of creating 

a procurement system with the capacity to continuously improve and 

provide goods and services on time as cost-effectively as possible.

State and U.N. officials also provided technical comments, which we have 

incorporated in the report as appropriate. The comments of the 

Department of State and the U.N. Secretariat are reprinted in their entirety 

in appendixes IV and V, respectively.

We are sending copies of this report to the Honorable Madeleine K. 

Albright, the Secretary of State; the Honorable A. Peter Burleigh, the acting 

Permanent Representative of the United States to the United Nations, the 

Honorable Kofi Annan, the Secretary-General of the United Nations; and 

other interested congressional committees. Copies will be made available 

to others on request.

Please contact me at (202) 512-4128 if you or your staff have any questions 

about this report. Major contributors to this report are listed in

appendix VI.

Sincerely yours, 

Harold J. Johnson, Associate Director

International Relations and Trade Issues
Page 17 GAO/NSIAD-99-71 United Nations
Page 18 GAO/NSIAD-99-71 United Nations

Contents

Letter 1

Appendix I

Scope and 

Methodology

20

Appendix II

The U.N. System

23

Appendix III

The U.N. Secretariat’s 

Procurement Process

25

Appendix IV

Comments From the 

Department of State

28

Appendix V

Comments From the 

U.N. Secretariat

30

Appendix VI

Major Contributors to 

This Report

34

Tables Table III.1: Steps in the Secretariat’s Procurement Process 27

Figures Figure II.1: The U.N. System 24

Figure III.1: Flow Chart of the Secretariat’s Procurement Process 26
Contents

Page 19 GAO/NSIAD-99-71 United Nations

Abbreviations

IAPSO Inter-Agency Procurement Services Office

OECD Organization for Economic Cooperation and Development

OIOS Office of Internal Oversight Services
Page 20 GAO/NSIAD-99-71 United Nations

Appendix I

Scope and Methodology ApeInxdi

We conducted our work at the U.N. headquarters in New York City and at 

the Department of State in Washington, D.C., including the U.S. Mission to 

the United Nations in New York. Our scope was limited to examining the 

U.N. Secretariat’s procurement system, which includes procurements for 

U.N. peacekeeping missions; we did not examine procurement at the other 

agencies, funds, and programs of the U.N. system. We interviewed officials 

from and reviewed documents from the U.N. Secretariat, the U.N. Board of 

Auditors, the U.N. Office of Internal Oversight Services (OIOS), the General 

Assembly, and the U.S. Mission to the United Nations about the 

Secretariat’s procurement problems, reform history, and current status. 

We also reviewed a report issued by the U.S. government on problems in 

procurement for U.N. peacekeeping and reports by the U.N. Advisory 

Committee on Administrative and Budgetary Questions on measures taken 

to resolve weaknesses in the Secretariat’s procurement system. Our 

information on the extent to which the Secretariat has implemented reform 

measures was based on the findings of OIOS and the U.N. Board of 

Auditors, and interviews with U.N. officials.

To develop an organizing framework for reporting on U.N. procurement 

problems, the progress made in implementing reform actions, and our 

assessment of whether this progress has met the reform objectives of the 

High Level Expert Group on Procurement, we identified the objectives of 

the reform. To do this, we reviewed the Expert Group report, which 

contained a wide-ranging discussion of issues that needed to be addressed 

in the U.N.’s procurement system, including (1) integrity/fairness,

(2) openness/transparency, (3) accountability, (4) professional workforce, 

(5) competition, and (6) value. These six elements were most clearly 

discussed in a report used by the Expert Group entitled Constraining Costs 

and Improving the Efficiency of United Nations Peacekeeping Procurement 

Operations. This report explained that these were the characteristics the 

United States identified for the Organzation for Economic Cooperation and 

Development (OECD) as central to any well-structured procurement 

system. To ensure these characteristics were commonly recognized, we 

reviewed procurement policy documents of several other organizations 

and offices, such as the OECD (Support for Improvement in Governance 

and Management Policy Brief 3: Public Procurement), the United Nations 

(The Common Guidelines for Public Procurement by U.N. Organizations), 

the European Union (Application of European Procurement

Law–Communication Adopted by the Commission on 27 November 1996), 

and several national government agencies. These entities all used similar 

descriptions about the objectives and characteristics of their procurement 

systems. We also discussed these characteristics with the Deputy Assistant 
Appendix I

Scope and Methodology

Page 21 GAO/NSIAD-99-71 United Nations

Administrator for Acquisition Policy for the U.S. government’s General 

Services Administration and a private sector expert on procurement who 

was formerly the Administrator for Federal Procurement Policy for the U.S. 

government. Based on this work, we decided to use the six characteristics 

as the organizational framework for our reporting.

To identify the types of problems found by the High Level Expert Group on 

Procurement and U.N. oversight entities, we first reviewed the 1994-98 

reports of OIOS and the Board of Auditors’ Biennial Financial Reports 

covering the period 1988 through 1997. We found they had cited numerous 

problems, ranging from individual instances of noncompliance with 

procurement regulations to a systemwide failure to compete contracts. We 

summarized all the problems and entered them into a text query database. 

To organize the problems by type, we categorized each problem according 

to the definitions for the six elements of an effective procurement system—

integrity, openness, accountability, workforce, competition, and value. For 

example, the finding that open tendering for major procurements above 

$500,000 was rarely used was categorized as a problem in the area of 

competition. This provided us with concrete examples for each type of 

problem and gave us a sense of their nature and extent.

To identify the measures taken by the Secretariat to reform its procurement 

system, we examined the Secretariat's progress reports from 1995 to 1998 

outlining the steps it had taken in response to the recommendations in the 

1994 Expert Group report. The most recent Secretariat progress report 

was dated November 10, 1998. Where possible, we verified that these steps 

had been taken. For example, we obtained (1) a copy of the procurement 

manual to verify that it had been prepared and contained clearly defined 

policies and procedures, (2) policy documents on delegations of authority 

to verify that authority to field missions had been increased, and

(3) organization and management charts and documents to verify that 

offices had been consolidated. We also observed the computer operation 

and supporting data entry sheets for the field inventory system to verify 

that an inventory of existing assets had begun. In addition, we reviewed 

statistics on the number and amount of contracts awarded without 

competition, examined the electronic filing for contract bids and awards on 

the internet, and followed up on the extent of training provided to 

procurement officers and the content of the training classes offered.

We assessed the Expert Group’s report for its overall objectives, and we 

analyzed and classified many of its specific recommendations by the 

characteristics of an effective procurement system. We then analyzed 
Appendix I

Scope and Methodology

Page 22 GAO/NSIAD-99-71 United Nations

OIOS and other reports on the extent to which the Secretariat had 

implemented the recommendations. The latest OIOS report on 

implementation of the recommendations was dated March 5, 1998. We 

updated this information by interviewing OIOS and Board of Auditors 

officials on their assessment of whether the Secretariat had taken further 

steps. We supplemented this assessment by reviewing reports that 

included procurement issues published in 1998 by OIOS and the Board of 

Auditors and seeing if problems still occurred in the areas where the 

Secretariat had implemented reform measures. We interviewed officials 

from the U.N. Board of Auditors, OIOS, and Procurement Division staff as 

well as knowledgeable Secretariat officials, such as the Assistant 

Secretary-General for Central Support Services and the Under SecretaryGeneral for Management to discuss the steps that had been taken to reform 

the procurement system.

We performed our work from July 1998 to January 1999 in accordance with 

generally accepted government auditing practices.
Page 23 GAO/NSIAD-99-71 United Nations

Appendix II

The U.N. System ApeInxdi

The U.N. system of organizations covers a wide variety of organizational 

units, including offices, departments, centers, specialized agencies, funds, 

and programs that vary considerably in size and mission. The U.N. General 

Assembly, consisting of almost all nation states, is the major representative 

body of the U.N. system and works with the other principal components of 

the United Nations, such as the Security Council and the Economic and 

Social Council. The Specialized Agencies are also considered part of the 

U.N. system, although each has its own charter. (See fig. II.1.)
Appendix II

The U.N. System

Page 24 GAO/NSIAD-99-71 United Nations

Figure II.1: The U.N. System

Legend

ACABQ=Advisory Committee on Adminsitrative and Budgetary Questions

Source: U.N. Documents
Page 25 GAO/NSIAD-99-71 United Nations

Appendix III

The U.N. Secretariat’s Procurement Process ApIenxdi

Goods and services procured by the Secretariat through its normal process 

involves multiple steps depending on the size of the contract, including 

entering information about the procurement into a database. The process 

is outlined in figure III.1, which provides a flow chart of the process, and is 

described in table III.1, which lists the individual steps keyed to the flow 

chart.
Appendix III

The U.N. Secretariat’s Procurement Process

Page 26 GAO/NSIAD-99-71 United Nations

Figure III.1: Flow Chart of the Secretariat’s Procurement Process

Department/Office

originating the requisition

Certifying Officer

IMIS Goods inspection

ITB (equipment) or RFP (service) prepared ITQ

issued to vendors

REALITY

1 Automated roster list

2 Other agencies’ rosters

3 Catalog of common items

4 Generic specifications

ITB (equipment) or

RFP (service) prepared

ITB or RFP issued 

to vendors

Vendors provide

bids/proposals

Bid opening Bids evaluated Technical evaluation (Requisition office)

Commercial evaluation (Procurement Division)

Short list of

potential vendors

1

2

12

>$25,000<$200,000

4c Systems contract

in place?

4a

3a

4b

N Y

4

5

>$200,000

<$25,000

5c1

5a1

Lowest quote/best value

accepted

5a2

ITB or RFP issued to vendors 5c2

Vendors provide bids/proposals

5c3

Bid opening

5c4

5c5

Presentation to HCC 5c6

ASG approval

5c7

Purchase order (equipment) contract (service) prepared

Transportation Division receives items

6

7

9 8

10

9

Procurement Division

Receiving information

Receiving information

Commodity

procurement section 1

Commodity

procurement section 2

3

11

10

5b1

5b2

5b3

5b4

5b5

Winning vendor notified by Procurement Division

Bids evaluated

 Technical evaluation

(Requisition office)

Commercial evaluation 

(Procurement Division)
Appendix III

The U.N. Secretariat’s Procurement Process

Page 27 GAO/NSIAD-99-71 United Nations

Table III.1: Steps in the Secretariat’s Procurement Process

Source: GAO, based on U.N. procurement regulations and discussions with U.N. officials.

Step Action

1 Department/Office originates requisition in Integrated Management Information 

System (IMIS)

2 Department/Office certifying officer certifies requisition to ensure funds are 

available, item is needed, and account for item is available

3 Procurement Division pulls requisition from IMIS

3a Procurement Division assigns requisition to appropriate section

4 Check for existence of a systems contract

4a Systems contract in place (move to step 7, issue purchase order/contract)

4b No systems contract in place, check REALITY system for potential vendors

4c Short list of vendors prepared (goal: to include as many vendors as possible)

5 Establish value of the procurement

5a1 Value of procurement up to $25,000, issue request for quotes 

5a2 Accept lowest quote/best value (move to step 7, issue purchase order/contract)

5b1 Value of procurement greater than $25,000 and up to, but not more than, 

$200,000, prepare invitation to bid/request for proposals 

5b2 Issue invitation to bid/request for proposals to vendors

5b3 Vendors provide bids/proposals

5b4 Bid opening

5b5 Bids evaluated by requisitioning office and Procurement Division (move to step 6, 

select and notify winning vendor)

5c1 Value of procurement greater than $200,000, prepare invitation to bid 

(equipment), request for proposals (service)

5c2 Issue invitation to bid/request for proposals to vendors

5c3 Vendors provide bids/proposals

5c4 Bid opening

5c5 Bids evaluated by requisitioning office and Procurement Division 

5c6 Bids/proposals presented to the Headquarters Committee on Contracts

5c7 Assistant Secretary-General, Department of Central Support Services, issues 

approval of winning vendor

6 Winning vendor selected and notified

7 Purchase order (equipment)/contract (service) drafted, contract reviewed by 

Office of Legal Affairs

8 Transportation Division receives items purchased

9 Receiving information entered into REALITY system and IMIS

10 Goods delivered to requisitioning office

11 Requisitioning office inspects goods

12 Inspection report entered into IMIS
Page 28 GAO/NSIAD-99-71 United Nations

Appendix IV

Comments From the Department of State ApVenIxdi
Appendix IV

Comments From the Department of State

Page 29 GAO/NSIAD-99-71 United Nations
Page 30 GAO/NSIAD-99-71 United Nations

Appendix V

Comments From the U.N. Secretariat ApVendxi

Note: GAO comments 

supplementing those in

the report text appear at

the end of this appendix.

See comment 1.
Appendix V

Comments From the U.N. Secretariat

Page 31 GAO/NSIAD-99-71 United Nations

See comment 2.

See comment 3.

See comment 4.

See comment 5. 

See comment 6.
Appendix V

Comments From the U.N. Secretariat

Page 32 GAO/NSIAD-99-71 United Nations

The following are GAO’s comments on the U.N. letter dated March 25, 1999.

GAO Comments 1. Our report is based on a complete review of the debate on activities 

pertaining to the Secretariat’s procurement reform efforts, including 

documents from the General Assembly, Advisory Committee on 

Administrative and Budgetary Questions, and the oversight offices; testing 

of some reform implementation; and additional information provided by 

U.N. officials. Our review of this information demonstrated that while the 

Secretariat has taken action on most of the Expert Group’s 

recommendations, in some instances, these actions have not been fully 

implemented. 

2. We found that some steps had been taken to do procurement planning; 

however, as acknowledged by U.N. procurement officials, a comprehensive 

procurement planning process was not yet in place. Audit officials also 

said that although some peacekeeping procurement planning was 

occurring, they had not seen evidence that procurement planning had 

become a routine activity within the Secretariat. The report has been 

modified to recognize what has been accomplished in the area of 

procurement planning.

3. The report has been modified to reflect the progress that has been made 

to develop a performance measurement system. However, it is important 

to recognize that collecting information on one indicator does not mean a 

performance measurement system is in place.

4. Our draft report acknowledged that a new procurement manual had 

been issued. However, we reviewed the revised manual and found that 

certain elements recommended by the Expert Group, such as a mission 

statement and step-by-step discussions of procedures for field personnel to 

perform their duties, were not incorporated into the manual.

5. Our draft report acknowledged that the U.N. Secretariat had taken steps 

to improve the training of its procurement staff. However, at the time of 

our review, a formal and comprehensive training curriculum, as 

recommended by the Expert Group and U.N. audit organizations, had not 

been developed.

6. Although competitive practices have been strengthened, we agree with 

the Board of Auditors that the time period vendors have to bid on U.N. 

contracts needs to be clearly written into the financial regulations and that 
Appendix V

Comments From the U.N. Secretariat

Page 33 GAO/NSIAD-99-71 United Nations

open tendering for large contracts should be routinely used. We believe 

these shortcomings are systemic weaknesses and not simply matters of 

compliance. On the other hand, the audit findings about the failure in one 

location to conduct or document market surveys and assessments of 

quotes were issues of compliance, which we recognized.
Page 34 GAO/NSIAD-99-71 United Nations

Appendix VI

Major Contributors to This Report ApenVxdiI

National Security and 

International Affairs 

Division, Washington, 

D.C.

Tetsuo Miyabara

Richard J. Boudreau

David M. Bruno 

Lenora R. Fuller

Rona H. Mendelsohn

(711344) Lret
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