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UN Controller Called No-Bid Darfur Contracts a "Troubling Pattern," PAE in Congo

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

UNITED NATIONS, November 12 -- The UN's award of a $250 million no-bid contract to Lockheed Martin for Darfur peacekeeping infrastructure, which the UN has said was the work of its Procurement Division, was in fact heavily criticized by the UN's own Controller, as head of the Procurement Division, documents show. In a July 20, 2007 memo to Jane Holl Lute, chief of the UN's Department of Field Support (DFS), Mr. Sach wrote under the headings "Darfur Sole Source negotiations with PAE for Multifunctional Logistics Services" and "Fuel Contract for Darfur" that

"With regard to the Darfur Planning Team of DPKO, I understand that it has been tackling this project for over 18 months. Regrettably, this effort failed to yield the expected result in a Scope of Requirement, the basis for competitive procurement action to take place... I sincerely hope that you are aware that those actions constitute a pattern, to which Oversight bodies of the UN may be less charitable toward and may well find the pattern as troubling." Memo online here, exclusive.

            The UN's "sole source" contract with Lockheed Martin's Pacific Architects & Engineers (PAE) subsidiary has given rise to several rounds of questions, and ever-shifting defenses of the lack of competition. These defenses have in effect tried to shift responsibility for the decision to seek to suspend normal bidding away from Jane Holl Lute, the official who, available documents show, first requested sole source to PAE on April 19, to the more amorphous Procurement Division, a side-stepping which the memo published today appears to refute.

            Repeatedly UN spokespeople have said that the Security Council's July 31, 2007 resolution triggered the need to contract with Lockheed on a no-bid basis, to move quickly. But Inner City Press has obtained and published an April 19 memo from Jane Holl Lute arguing even then, more than three months before the Security Council resolution, for "a sole source contract with PAE." Click here for the memo, and here for the Headquarters Committee on Contracts minutes, which recite that the U.S. Department of State, after its own sole source deal with Lockheed's PAE, had finally put the contract out to bid, with DynCorp also a finalist. Only then did the UN take over (or "inherit," as Mr. Guehenno put it) the AMIS contract, also on a sole source basis with Lockheed's' PAE.

            But Warren Sach's just-released memo -- click here to view -- says clearly that "AMIS' contract may not represent the best value for the UN." Jane Holl Lute, the memo at under the heading AMIS says, was "suggesti[ng] to assume AMIS support contracts without renegotiation."

Warren Sach, no-bid Darfur contracts not shown

            Jane Holl Lute has yet to answer any questions about the no-bid contract for U.S.-based Lockheed Martin's PAE. In fact, UN spokespeople have repeatedly sought to divert the questions from the role of DFS and Jane Holl Lute onto the lower profile (and less involved) UN Procurement Department, which was circumvented by the no-bid contract pushed by Jane Holl Lute since, at latest, April 19, 2007.

  At the UN noon briefing of November 6, asked UN Deputy Spokesperson Marie Okabe to explain how the previous defense of the no-bid contract, that competition was not possible after the July 31 Security Council resolution, with the April 19 date of Ms. Lute's request to go sole source to PAE. Ms. Okabe, as best as Inner City Press could make out, and contrary to Ms. Lute's April 19 memo, maintained that the July 31 Security Council resolution was the answer. Video here.  More specifically, Ms. Okabe said that the no-bid contract to Lockheed "was a procurement decision and as you know the action was taken by the procurement department.  You're referring to something from another department.  I'm not aware of that." From the transcript:

Inner  City Press:  Maybe you'll get back to it.  There seems to be an authenticated document from Jane Holl Lute to Warren Sach, dated 19 April, saying, quote, "We request your approval for sole-source contract, with the same company, PAE."

Spokesperson:  As I mentioned, this was a decision taken by procurement and not by the department that you mentioned, so the information that we have is that our procurement operation went ahead with this decision based on all the reasonings that we've given you up to this date.  I have nothing further than that. 

            But in the memo being published today, Warren Sach speaking for the Procurement Division expressed deep reservations to Jane Holl Lute about the "patterns" of Peacekeeping and Field Support, stating that "those actions constitute a pattern, to which Oversight bodies of the UN may be less charitable toward and may well find the pattern as troubling."

            The harm caused by jamming through the no-bid contract with Lockheed Martin extends, UN sources requesting anonymity from fear of retaliation say, to providing yet another basis for skepticism about, and delay of, the long-promised Darfur peacekeeping mission. While to date the Office of Internal Oversight Services has been notably silent, the General Assembly's budget (5th) committee will soon, albeit after-the-fact, consider the Darfur mission budget, including the no-bid contract.  In the run-up, one further pertinent fact: PAE being selected despite its inflated prices was already subject to criticism, including by the GA's Advisory Committee on Administrative and Budgetary Questions. In a March 11, 2002 session on UN's peacekeeping mission in the Congo

"Speakers also expressed concern at the decision to award a contract for air services to a company that was not the lowest bidder.  The representative of Ghana was seriously concerned by the reports of an overrun of outsourcing policies and procurement procedures carefully laid down for tendering and selecting bids.  At a time when the international community was asking for more resources for United Nations peacekeeping operations, it was a sad commentary to witness such a gross dissipation of resources."

   To which company was this contract awarded? PAE. The transcript  continues about

a contract for provision of airfield services to MONUC.  In March 2001, the Field Administrative and Logistics Division conducted two technical evaluations of bidders and recommended award of the contract to Pacific Architects and Engineers Inc./Daher.  The ACABQ finds that the role played by FALD (FALD) in awarding the contract contradicts the basic "conflict of interest" principle, by which departments that prepare requisitions for services are barred from recommending providers of those services.  The contract, which is valid until 30 June 2002, was awarded owing to "operational necessity" for an amount not to exceed $34.22 million for one year.

 The choice of PAE/Daher over the lowest bidder raises troubling questions, the report continues.  The lowest bidder appears to have been rejected because of several factual and interpretation errors made during the technical evaluation.  The Advisory Committee understands that MONUC had serious reservations regarding the contract, indicating that works costing up to $14.8 million were not needed since MONUC staff and a South African service provider were providing airfield services.  After consulting with the Department of Peacekeeping Operations, however, MONUC withdrew its reservations.  It appears that the role of MONUC officials in monitoring and controlling expenditures may have been undermined.

            There is a pattern here, as even Warren Sach put it. If in 2002, PAE's non-competitive $34.22 million contract was of "concern" as involving a "conflict of interest," how about PAE's no-bid $250 million contract in 2007? Given that this is the very same company being favored by the UN, "those actions constitute a pattern," as Warren Sach's memo puts it, "to which Oversight bodies of the UN may be less charitable toward and may well find the pattern as troubling."

            Notably, permanent Security Council member the United Kingdom still does not believe it has any responsibility for the no-bid Darfur contract. On October 24, Inner City Press asked UK Amb. John Sawers if he thought there should have been a competitive process -- some argue that the sole-source award to U.S.-based Lockheed Martin has needlessly handed Sudan an issue. Amb. Sawers said, video here at Minute 4:54, "I don't have a particularly strong view on that. The Secretary-General was asked a question on that and he responded. I think it's a matter for the UN."

            Who is "the UN," if not the UK, permanent member of the Security Council and drafter of the Council's Presidential Statement on Darfur? Does Amb. Sawers mean that the UK feels it has nothing to say about the propriety of UN procurement and contracting? Having asked the Mission if it wished to reconsider it defense of the contract in light of the Jane Holl Lute April memorandum which pressed for sole source contracting to PAE three months before the Council resolution, the UK Mission said they stand by their statement. "I think it's a matter for the UN"? Some oversight...

            There is also an incomplete U.S. General Accounting Office study of Darfur, which says among other things that the U.S.

"Department of State's Contracting Officer's Technical Representative in Darfur is the principal U.S. government official responsible for oversight of PAE's activities in Darfur. State Department officials told us that it can be difficult to determine whether PAE's costs are appropriate and reasonable... During our visit to Darfur, the Technical Representative told us that he reviewed PAE invoices over $15,000 and had imposed a freeze on increases in employment and vehicle numbers."

      So the UN took over, for the U.S. State Department's convenience, the AMIS arrangements, about which the U.S. GAO said that it can be "difficult to determine whether PAE's costs are appropriate and reasonable." How much more difficult now? While the UN has repeatedly said that only PAE is present in Darfur, the GAO report at footnote 57 says:

"DynCorp, won bids to provide troop equipment and strategic transport for U.S. efforts to build AMIS camps. According to a State official, DynCorp has received approximately $23.5 million of the total funding that has gone to support AMIS."

            To the degree that the switch of the PAE contract from the U.S. State Department to the UN is viewed as the UN taking on the State Department's problem, this evasion of inquiry into irregularities surrounding Lockheed Martin's PAE, there is interest on Capitol Hill. From which we hope to report on this soon. Watch this site.

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Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece 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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