UN Procurement Dominated by Developed World, U.S. Grabs 25% Not Counting Lockheed Martin, France and Italy over 10%, Reports Misleading

Byline: Matthew Russell Lee of Inner City Press at UN
www.innercitypress.com/un3procure042108.html

UNITED NATIONS, April 21 -- Despite talk of increased diversity in the UN system's procurement, developed countries like the United States, France, Switzerland, Italy and even Monaco continue to hold most of the systems contracts for the UN's peacekeeping operations, an Inner City Press analysis has revealed. Of $2.3 billion spend on contracts for all peacekeeping missions in the past two years, U.S.-based firms grabbed $541 million or 23% of the business. While this includes for example a $90 million contract for Cisco Systems, it does not include Maryland-based Lockheed Martin's $250 million no-bid contract since it is only for Darfur and not other missions, nor does it include food supplies other than a $15 million joint venture with Esko, which is located for tax purposes in Monaco, and got 17.18% of the contracts.

While France got over 11% of the contracts, including a $115 million contract with Renault, and Italy over 10%, including Agmin's $100 million contract for pre-fabricated buildings, China received less than two percent, and South Africa less than half of one percent, for only two items, barbed wire and UN caps. India-based companies got even less: a single $1.5 million contract for sandbags.

The largest contract to a China-based firm, $34 million in generators from Zhejiang Kangle Group, is being contested within the UN, and may be re-awarded to Italy-based Intertrade International, which already has a $25 million contract with the UN.

The UN General Assembly in 2000 directed the Secretary-General to take steps to diversity contracting to the developing world. After some steps were taken in that direction, Inner City Press' sources in UN procurement say, the developed world contractors, and governments on their behalf, fought back. The UN stood steps that disfavored smaller bids, such as requiring pre-bid trips to New York and trips to Brindisi, Italy, both of which require visas, and requiring the posting of bonds, even though the UN pays three to six month after work is completed. Insiders describe a confidential report to UN on its air chartering business by an external consulting find that the UN's bidding and awards process is overly complex. But this complexity favors sophisticated developed world companies.

To deceive the General Assembly's interest member states that progress is being made, the Secretariat has filed a report on "UN Procurement Activities," A/62/525, which lumps together the UN Secretariat's purchasing, through its Procurement Division, with the purchases of funds, programs and agencies, which are donor-funded and sometimes required to go to specific contractors. Since the Secretariat and the funds and program have different procurement systems and vendor lists, there was no basis to lump them together, except to create misleading numbers, sources say. Whether in the upcoming May session of the General Assembly's Budget Committee these issues will be addressed remains to be seen.

While Australia receives only 0.73% of the UN's systems contracts, it was all in one $17 million deal for radio equipment, with Barrett Communications.

Austria-based Rosenbauer International got a $14 million contract for "Rapid Intervention Vehicles."

Canada's Newcon Optic sold night vision binoculars; Czech SVOS sold $26 million of armored "VIP vehicles."

Denmark's DAN Office is well known for dominating IT business at the UN, as Denmark wins UN sub-headquarters such as UNOPS slush-fund fuels move to Copenhagen.

France, which is said to be in line for a big Darfur contract, including by having the Request for Proposals changed at the thirteen hour (click here for that), had its Renault selling $115 million in heavy-duty trucks to the UN.

Germany's Fleischhacker GmGH sold $15 million in medical equipment, while India sold only $1.5 million of sandbags.

Ireland's MMI Group sold $2 million of medals -- not metals, but medals.

Israel's Odis sold water plants. Italy's Agmin sold over $100 million in pre-fabricated buildings.

Japan's biggest contract is with Nissan, for 4 by 4s which Toyota also sells.

South Africa's big items are UN Caps and concertina wire. Uganda made the list for a single contract, Entebbe (airport) Handling Services, a fraction of Lockheed Martin's PA&E contract in the Congo.

The UK's Jankel sold $27 million in armored VIP vehicles to the UN.

The U.S. makes out best: $93 million to Motorola, $90 million to Cisco Systems and, understated, the $15 million joint venture between Monaco-based Esko and Lockheed Martin.

Footnote: on the UN's no-bid $250 million Darfur infrastructure contract to Lockheed Martin, sources say that 28 new auditors have been brought in under a "Letter of Assist" with Spain. But as reported last week by Inner City Press, in Darfur the UN's international staff are living in containers far from toilets, click here for that. Where did the Lockheed money go? And what of the inquiry by the Office of Internal Oversight Services which the General Assembly demanded last December? Developing.

And see, www.innercitypress.com/un3procure042108.html