The Peacekeeping Department employs  about 270 field procurement staff at its field missions. 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. 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 has not established a career path for professional advancement for  Procurement Service and peacekeeping procurement staff. Because of the fiduciary responsibilities held  by procurement staff, the lack of specific ethics guidance increases the risk  of fraud, waste and abuse. 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. 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. 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. 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. 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.
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 UN's 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 UN's 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. 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.