Will Not Disclose Its No-Bid Lockheed Contract, But Summarizes, Toh Jam
Matthew Russell Lee of Inner City Press at the UN: News Analysis
October 17 -- A day after
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.
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.
on October 17, by the
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
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
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
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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