UN Now Will Not Disclose Its No-Bid Lockheed Contract, But Summarizes, Toh Jam

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, October 17 -- A day after saying that the UN's no-bid $250 million contact with Lockheed Martin for infrastructure in Sudan's Darfur region would be made public, the UN on Wednesday reversed course and announced that the contract will not be disclosed, only a summary. An response subsequently provided by the UN to Inner City Press' asked and anticipated questions confirms that Lockheed can sub-contract out much of the work, calling into question whether it was the only qualified company, or whether the $250 million contract could or should have been separated into small contracts on which others could have bid.

    The sole-source contract award to Lockheed was presaged by an October 2 letter by Secretary-General Ban Ki-moon to the president of the General Assembly, claiming the powers to enter such contracts. Wednesday Inner City Press asked Pakistan's Ambassador Munir Akram, head of the Group of 77 and China, what the GA will do. He said, "It will have to be considered in the Fifth Committee" of the Assembly, which ostensibly controls the UN's budget.

            On October 16, as reflected by the UN's own transcript:

Inner City Press: And is the contract going to be made public?

Spokesperson:  Sure, yes, yes.

            And then on October 17, by the transcript:

Inner City Press: I also wanted to ask about this contract –- the infrastructure contract in Darfur, the $250 million, no-bid contract.  Yesterday at the stakeout, Mr. Ban said you were going to be totally transparent about it and yesterday your colleague, Ms. Montas, said the contract would be made public.  So first, I just sort of want to nail it down, if it’s now finalized, when will it be made public and also If I could get an explanation... Yesterday, a proponent of the contract, said the reason it shifted from $700 million to $250 million was that the terms were changed.  Some of the equipment that was part of it was moved out of it.  So, I don't know if you can describe that or someone can come brief us about the contract details?

Deputy Spokesperson:  Okay, the Secretary-General did answer your questions at the stakeout in regards to, and sorry I was going to mention this at the end of the briefing, but the guests were here, so I didn’t, but in terms of the contract question from yesterday:  As per the established procedures, summary information of the contract –- that is price, name of company, dates, etc. –- will be posted on the UN procurement website.  Actual copies of the contract are not posted for commercial, legal and security reasons.  So that’s the answer to your question on the contract.  And the answer to your question on the price –- you’re talking about the $700 million to $250 million reduction –- following negotiations with the vendor, the initial planning requirements were either clarified or better specified by the logisticians and experts in the Department of Field Support.  Therefore, much uncertainty was eliminated, thus, substantially reducing the price.  The contractual risk for the vendor and the UN was reviewed in depth, thus resulting in further savings.  Finally, additional savings had been achieved through the normal negotiating process using benchmarking, market survey, etc.  And it should be noted that the $250 million is a “not-to-exceed” amount.  The price is actually component-based type, meaning that the UN pays only for those goods and services it actually ordered, delivered and approved for payment.  I can give this to you in writing because it’s rather technical.

Inner City Press: Because of that briefing that was given to ACABQ (Advisory Committee on Administrative and Budgetary Questions) saying you negotiated the price down from $700 million to $250 million, if in fact parts of the work to be required were taken out, does the Secretary-General stand behind the negotiated down price…

Deputy Spokesperson:  Why don’t you take a look at what I just read to you and we’ll take it from there.

            Subsequently, this written explanation was provided, as a sort of "Is Asked" to Inner City Press' questions:

Date: 10/17/2007 4:28:52 PM Eastern Standard Time
From: Deputy Spokesperson [at] un.org
To: matthew.lee [at] innercitypress.com

1.    Why the sole source contract?

The nature and complexity of the requirements along with the challenging timeline  mandated by the  Security Council to have initial operations ready  by  October and a transfer of authority to UNAMID by 31 December, required the United Nations to enter into negotiations with a contractor with considerable experience and infrastructure in the  Darfur environment.  The search for a suitable short term solution has led to PAE, a contractor which has been in Darfur since 2004 constructing and maintaining  all  logistical  services  to the existing 34 African Union camps. Due to its presence in the country, PAE was deemed to be the only vendor able to mobilize large scale construction teams and assets within a short time due to its existing supply chain into Darfur.

2. What caused this to be an exigency? Has the mission not been under consideration for more than 1 year?

UNAMID was established by the Security Council in its resolution 1769 (2007) on 31 July  2007.  In  the  same  resolution,  the Council has requested  that  by October 2007, the mission shall establish an initial operational   capability for the  Headquarters  and  shall  complete preparation  to  assume  operational  command  authority  over the Light Support  Package,  personnel  currently  deployed  to African Mission In Sudan  (AMIS),  Heavy  Support  Package and hybrid personnel deployed by that  date.   The  transition  of  authority between AMIS and the UNAMID should be completed by 31  December  2007.   Although political negotiations for approval  of UNAMID have been undertaken for the past year,  there  was not legal basis to enter into procurement arrangements until  31  July  2007. In order to meet the Security Council timeline it was  necessary to enter into negotiation with the vendor already present in Darfur and which could meet the mobilization period.   As a result, the  requirement  had to be treated as an exigency.  Exigency is defined by  a GA document  as an  "...exceptional compelling and emergent need... that will lead to serious damage, loss or injury to property or persons if not addressed immediately..."

3. As per 5th Committee presentation, price was reduced from $700m to $250m.  Why the big difference?

Following negotiations with the vendor, the initial "planning" requirements were further clarified and better specified by the logisticians and experts from the Department of Field Support (DFS), therefore much uncertainty was eliminated thus substantial reduction in price.  The contractual risk for the vendor and the UN was reviewed in depth  thus resulting in further price savings.  Finally, additional savings have been achieved through the normal negotiation process using benchmarking, market survey, etc. It should also be noted that the $250 M is a "Not To Exceed (NTE)" amount.  The price is actually component based ("a catalog –type") , meaning that UN pays only for those goods and services actually ordered, delivered, and approved for payment.

4. Does it allow for subcontracting?

Yes, this is a critical component of this undertaking.  As PAE is already in Darfur this will help to procure through local suppliers thus building capacity in country. In addition, it is envisaged that PAE would employ over 600 local staff which is important to local economy.

5. Where is money coming from to pay for contract? Some funds will come from advance mission funding from UNAMID.  Some funding will be required to come from the Heavy Support Package under UNMIS.

6. Will the contract be made public?

   As per the established procedures, summary information of the contract (price, name of company, dates, etc.) will be posted on the UN Procurement website.  Actual copies of the contract are not posted for commercial, legal and security  reasons.

7. Who signed the contract?  Did DPKO sign contract?

 DPKO did not sign the contract.  DFS Logistics and Supply Division requisitioned the provision of a multi dimensional logistic services contract through the Department of Management as would be the case for any UN Department requiring goods or services.   Following negotiations with the vendor, the proposed contract was submitted to the Headquarters Committee on Contract (HCC) for review and recommendation to the ASG / Controller.  The Controller, following consultation with Senior Management, approved the recommendations of the HCC. The contract was subsequently signed by the Chief Procurement Division as usual.

            Strangely, the Secretariat's presentation to ACABQ referred to the USG for Management's role in signing the contract. As to DPKO, to which the Spokesperson referred Inner City Press, on October 17 at a screening at the UN of a film about Darfur, Inner City Press approached DPKO's Jack Christofides and asked about the no-bid Lockheed contract, and was referred to a DPKO spokesperson who has proved unwilling to answer any of Inner City Press' questions. So we are left with the above, and with a mere summary of the contract -- for now.

Andrew Toh and Louise Frechette at the UN

            In other UN procurement news, while questions swirl about the fate of Andrew Toh, Inner City Press has been told by multiple separate sources that the UN's resolution of the case is to demote Toh from ASG to a D-2 position and fine him two months salary -- based on not filing financial disclosure. Only at the UN....

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Clck here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army.  Click here for an earlier Reuters AlertNet piece by this correspondent about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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