UN Budgeting Processes Limit OIOS’s Effectiveness

The ability of OIOS to carry out independent, effective oversight is  impeded by the UN’s budgeting processes for the regular budget and funds  from the assessed peacekeeping budget and voluntary contributions from  funds and programs subject to OIOS’s oversight, which are known as  extrabudgetary resources. The Secretariat’s budget office—over which  OIOS has oversight authority—exercises control over OIOS’s regular  budget, which may result in potential conflicts of interest. In addition, OIOS lacks  control over extrabudgetary resources from UN funds and programs. OIOS  negotiates its terms of work and payment for services with the manager of  the program it intends to examine. However, if the entity does not agree to  an OIOS examination or does not provide requested funding for OIOS to  perform its work, OIOS cannot adequately perform its oversight  responsibilities. OIOS’s Oversight Capacity Is Hindered by the UN’s Budgeting Processes for the Regular Budget

OIOS’s ability to carry out independent, effective oversight is hindered by  the UN’s budgeting processes for its regular budget. A General Assembly  resolution in the creation of OIOS stated that the new internal oversight  body shall exercise operational independence and that the Secretary- General, when preparing the budget proposal for OIOS, should take into  account the independence of the office. UN budgeting processes make it difficult for OIOS to reallocate its regular  budget resources among OIOS locations worldwide or among its three  divisions—internal audit; investigations; and monitoring, evaluation, and  consulting services—to meet changing priorities. OIOS officials have stated that the office is under resourced, but they do  not have a mechanism in place to determine appropriate staffing levels or  to justify budget requests, except for peacekeeping oversight services. Officials provided us with several examples of work funded through the  regular budget that they were unable to undertake due to resource  constraints. The United Nations Has Made Progress but Has Yet to Fully Address Previously Identified Procurement Concerns

The United Nations has improved the clarity of its procurement manual,  which now provides procurement staff with clearer guidance on UN  procurement regulations and policies. However, the United Nations has  yet to fully address several problems affecting the openness and  professionalism of its procurement system. Specifically, concerns remain  relating to an independent bid protest system, staff training and  professional certification, and ethics regulations. The UN Procurement Service Has Improved the Clarity of its Procurement Manual

The UN Procurement Service has improved the clarity of its procurement  manual. The manual now has detailed step-by-step instructions of the  procurement process for both field and headquarters staff, including  illustrative flow charts. The United Nations Has Not Established an Independent Bid Protest Process

The United Nations has not heeded a 1994 recommendation by a group of  independent experts to establish an independent vendor bid protest  process as soon as possible. As a result, UN vendors cannot protest the  Procurement Service’s handling of their bids to an independent official or  office. We reported in 1999 that such a process is an important aspect of  an open procurement system. The United Nations Has Not Fully Addressed Concerns Regarding Certification and Training of Its Staff

The United Nations has not fully addressed longstanding concerns  regarding the qualifications of its procurement staff. In addition, it has yet to determine  the extent to which its training budget may need to increase to pay for  these new programs. A June 2005 report by a UN contractor indicated that most UN  headquarters Procurement Service officers and assistants have not been  certified as to the level of their procurement experience and education. The contractor informed us  that the UN’s level of certification was low compared with the level at  other organizations. It has developed basic and  advanced training curricula and provided training to staff at headquarters  and in the field during 2004 and 2005. The Procurement Service has also begun developing a mandatory  certification program. The United Nations Has Yet to Finalize Procurement Ethics Regulations

The United Nations has not yet acted on several proposals forwarded by  the UN Procurement Service to clarify ethics regulations for procurement  staff.
Why GAO Did This Study

This testimony discusses internal oversight and procurement in the United Nations (UN). The findings of the Independent Inquiry Committee into the UN's Oil for Food Program have rekindled long-standing concerns about internal oversight and procurement at the United Nations. In addition, the UN's 2005 World Summit called for a host of reforms, from human rights, terrorism, and peace-building to economic development and management reform. Specifically, this testimony conveys our preliminary observations on the UN's budgeting processes as it relates to the ability of the UN's Office of Internal Oversight Services (OIOS) to perform independent and effective oversight. We will also discuss some of the UN's efforts to address problems affecting the openness and professionalism of its procurement system. We would like to emphasize that our comments reflect the preliminary results of two ongoing GAO engagements examining the UN's internal oversight and procurement services. We will issue reports covering a wide range of issues in both areas early next year.

What GAO Found

OIOS's ability to carry out independent, effective oversight over UN organizations is hindered by the UN's budgeting processes for its regular and extrabudgetary resources. In establishing OIOS in 1994, the General Assembly passed a resolution stating that OIOS should exercise operational independence in carrying out its oversight responsibilities and that the Secretary-General should take into account the independence of the office in preparing its budget. The Secretariat's budget office--over which OIOS has oversight authority--exercises control over OIOS's regular budget, which may result in conflicts of interest and infringe on OIOS's independence. In addition, UN budgeting processes make it difficult for OIOS to reallocate its regular budget resources among OIOS locations worldwide or among its three oversight divisions--internal audit; investigations; and monitoring, evaluation, and consulting services--to meet changing priorities. OIOS officials provided us with several examples of work funded through the regular budget that they were unable to undertake due to resource constraints. In addition, OIOS does not have a mechanism in place to identify or justify OIOS-wide staffing needs, except for peacekeeping oversight services. OIOS also lacks control over its extrabudgetary resources, which comprise 62 percent of its overall budget in fiscal biennium 2004-2005. The UN funds and programs that OIOS oversees maintain control over some of these resources since OIOS negotiates its terms of work and payment for services with the managers of the programs it intends to examine. If the entity does not agree to an OIOS examination or does not provide sufficient funding for OIOS to carry out its work, OIOS cannot adequately perform its oversight responsibilities. The United Nations has made progress in improving the clarity of its procurement manual but has yet to fully address previously identified concerns affecting the lack of openness and professionalism of its procurement system. Specifically, concerns remain relating to an independent bid protest system, staff training and professional certification, and ethics regulations. In 2002, the United Nations revised its procurement manual, which now provides staff with clearer guidance on UN procurement regulations and policies, including more detailed step-by-step instructions of the procurement process than it had when we reported in 1999. However, the Secretariat has yet to enhance the openness of the procurement system by heeding a 1994 recommendation by outside experts that it establish an independent bid protest process. At present, vendors cannot file complaints with an independent official or office if they believe that the UN Procurement Service has not handled their bids appropriately. As a result, senior UN officials may not be made aware of problems in the procurement process. In addition, the United Nations has not fully addressed longstanding concerns affecting the professional qualifications of its procurement workforce. The Procurement Service is developing a new training curriculum and a professional certification program. It has trained some procurement staff as instructors but has yet to complete training curricula. In addition, the United Nations still needs to develop the individual training profiles necessary to determine the extent of its training requirements. A June 2005 report by an independent contractor indicated that most headquarters procurement officers and procurement assistants do not possess professional procurement certifications. According to the contractor, the level of certification was low in comparison to other organizations. Further, the United Nations has yet to adopt several internal proposals to clarify UN ethics regulations for procurement staff and vendors, such as a code of conduct.