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Lockheed Shifts Risks to UN in its No-Bid Darfur Contract, Yet To Be Disclosed

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

UNITED NATIONS, October 25 -- As questions continue to multiply about the UN's no-bid $250 million contract with Lockheed Martin for infrastructure for the peacekeeping mission in Darfur, UN Controller Warren Sach on Thursday said that Lockheed's initial $700 million demand was only reduced because a change in "where risks would be placed between us and the contractor." With the contract itself still being withheld, it is unclear what these risks are, and how much they might cost the UN and its donors.

            Meanwhile a memo has surfaced in which "flexibility in the application of administrative procedures" was recommended, signed by UN officials Jan Beagle, who has since been transferred to Geneva, Jane Holl Lute and Mr. Sach. On Thursday Sach responded to Inner City Press' questions about why the Lockheed Darfur contract was done on a no-bid basis, while now for a still-speculative Somalia peacekeeping mission, Expressions of Interest are being solicited from bidders, and about the claim that in the non-competitive negotiations with Lockheed, the price was knocked down from $700 million to $250 million. Video here, from Minute 13:56.

            Mr. Sach acknowledged that the claimed reduction in cost "could be misunderstood." He said obliquely that it involved the "specification of requirements" and changing "where risks would be placed between us and the contractor." One wonders what financial risks the UN has taken on, apparently worth $450 million, at least to Lockhead Martin. That the contract itself should be disclosed, as was initially promised, becomes clearer by the day.

UN's Warren Sach, competition for $250 million contract not shown

    Mr. Sach did not explain the Somalia comparison, saying instead that the solicitation of Expressions of Interest is with a view to belatedly bidding-out the Darfur contract. He said if it cannot be done in six months -- no explanation was given of why, given a deadline for submissions of November 15, the process could take that long -- then Lockheed's contract, and money-making, could be extended for two additional three month periods. That would bring the contract's value to $500 million. For comparison's stake, the UN Secretariat's two-year budget, unveiled Thursday, is $4.4 billion, or $2.2 billion a year. Click here for that story. The Darfur peacekeeping mission, which is separately accounted for, will cost $1.5 billion a year. One-third of that goes to Lockheed Martin.

            Sach's explanation of the lack of competition is that until the Security Council resolution on Darfur, the numbers of troops (19,550) and of police (six to seven thousand) were not known. But that is true of any potential UN peacekeeping mission in Somalia, yet Expressions of Interest are being sought. Could it be that Lockheed Martin is not interested in that contract? What other UN contracts does Lockheed's PAE unit have? Inquiries are being made.

            Documents have surfaced which show that earlier in the process, the Secretariat was planning to seek "General Assembly approval" for its "exceptional waivers" of contract bid-out rules. An e-mail from UN Procurement Service chief Paul Buades told staff that "requests for exceptional waivers are currently under preparation and should be ready shortly for General Assembly approval." Soon after that e-mail, the Secretariat merely informed the GA president that the waivers had been made. Less than two weeks after that, the sole source contract with Lockheed Martin was signed. And, as Controller Sach said on Thursday, in two weeks the General Assembly will get a chance to review the sole-source contract. We'll be there.

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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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UN Office: S-453A, UN, NY 10017 USA Tel: 212-963-1439

Reporter's mobile (and weekends): 718-716-3540