United Nations

 NEW YORK, 17 March (UN Headquarters) — The Fifth Committee (Administrative and Budgetary) met this morning to consider reports on ways the United Nations Secretariat could use outsourcing as a means of performing certain of its functions.

 Toshiyuki Niwa, Assistant Secretary-General for Central Support Services, introduced the Secretary-General’s report on outsourcing and answered delegates’ questions.  Written a year ago, the report sets forth the basic policy and guidelines to be followed in considering the use of outsourcing.

 Mr. Niwa explained that outsourcing should be one of the many options in the armory of programme managers.  The report was not an attempt to define which activities should be outsourced ?- a decision which should be made by programme managers on a case-by-case basis.  Rather, it addressed how outsourcing should be used.  Transparency in the process of awarding outsourcing contracts would be assured, he added.

 The representatives of Syria and Japan expressed concern about the use in the report of the concept of “core” and “non-core” United Nations activities and functions.  The Advisory Committee on Administrative and Budgetary Questions (ACABQ) shared this concern, stating that, as their use could lead to “endless debate and disagreement” among Member States, the terms should be discarded.

 Both in his opening address and in response to questions, Mr. Niwa stressed that the Secretariat agreed with this.

 Among matters raised by Member States were concerns about the possible use of outsourcing for interpretation and for recruitment.

 The representatives of Portugal (speaking for the European Union and associated States), Poland, United States, Cameroon, Turkey, Latvia, Morocco and India also spoke this morning.

 The Committee is next scheduled to meet at 10 a.m. on Tuesday, 21 March, to discuss its agenda items on review of efficiency, programme budget for 1998-1999 and programme planning.

Committee Work Programme

 The Fifth Committee (Administrative and Budgetary) met this morning to consider the question of United Nations outsourcing practices, under its agenda item, entitled review of the efficiency of the administrative and financial functioning of the United Nations.

 It had before it a report from the Secretary-General on outsourcing (document A/53/818).  The report states that the Secretary-General is now committed to viewing outsourcing as one option among many that programme managers should consider in seeking to provide or upgrade the quality or cost- effectiveness of non-core activities and services.   The report does not mandate that specific non-core activities and service be outsourced, only that the practice be considered in a meaningful manner as part of the Organization's regular management decision-making process.

 The report also establishes the policy and guidelines to be followed in considering the use of outsourcing.  For example, the guidelines set out mechanisms for defining the service, establishing preliminary cost estimates, identifying a vendor list, assessing quality and risk criteria and for the bid process.  The guidelines aim to ensure a transparent unbiased procedure, thereby reducing the risks and maximizing the benefits of outsourcing.

 The Secretary-General states that, although the United Nations has a long-standing practice of using outsourcing, it might not be well prepared or equipped to take on the added responsibility of managing a much larger number of outsourced contracts, and thus an incremental approach should be adopted.  That would involve continuing to concentrate on non-core, support-style activities and services, and of these, only activities that could be easily performed by an outside supplier.  As the Organization’s experience and confidence with outsourcing grows, consideration could then be given to increasing the potential field of outsourced activities and services, perhaps, over time, to non-core substantive activities and services.  But that decision should be taken later

 According to the policy section of the report, the four basic reasons for outsourcing are:  to acquire technical skills not readily available internally; to achieve cost-savings; to provide a source more effectively, efficiently or expeditiously; and to provide an activity or service not needed on a long-term basis.  The policy has five key features:  it is limited to non-core support activities or services; it provides criteria for determining when to consider outsourcing; it mandates a rigorous pre-bid process before making outsourcing decisions; it calls for strengthening the procurement process for outsourced goods or services; and it requires rigorous contract administration.

 The Committee also had before it a related report from the Advisory Committee on Administrative and Budgetary Questions (ACABQ) (document A/53/942) stating that the identification of those functions that could be contracted out were not specific and had not been based on experience within the Secretariat.  The report lacked any analysis of experience within the Secretariat and provided insufficient statistical data.  A decision on whether a function should be contracted out had to be made on a case-by-case basis; the primary responsibility rested with the programme manager.

 The Advisory Committee says the categorization of “core” and “non-core” functions should be dispensed with, as this classification had the potential for creating “endless debate and disagreement” among Member States and within the Secretariat as to whether an activity should be classified to be contracted out.

 In other comments, the ACABQ recommends that outsourcing should result in “significant” cost benefits, and not be simply “at least” as cost- effective as when the United Nations performed the functions itself.  Also, it stresses that there must be transparency through the budgetary process to maintain sustained support from Member States.  In the context of the proposed programme budget, the Secretariat should provide appropriate information on the extent to which budgetary provisions were being requested for activities that had been or would be contracted out.