Budget Committee Approves Resolution Asking for More Internal Oversight of Fraud, Examines Progress in Completing United Nations Headquarters Renovation

Approving a draft resolution stressing the need for the United Nations internal oversight body to focus more on investigating fraud, the Fifth Committee (Administrative and Budgetary) today also took stock of progress in completing the United Nations multi-billion dollar Headquarters renovation project known as the Capital Master Plan.

Through the text on the activities of the Office of Internal Oversight Services (OIOS), the General Assembly - recognizing the Office's role in helping the Organization to assess, analyse and act upon all fraud risks - would ask the Secretary-General to ensure that the annual reports of the Office continued to include descriptions of any impairment of its independence, and to promote effective coordination of its audit, evaluation and investigation functions.

Assessing the fourteenth year of the Capital Master Plan, the Committee was informed by the Secretariat that total costs had tallied $2.3 billion, with project costs encompassing $2.15 billion and $154.7 million attributable to non-project costs. Introducing the Secretary-General's progress report on the subject, Andrew Nye, Officer-in Charge of the Facilities and Commercial Services Division of the Office of Central Support Services, provided a breakdown of funding sources for the project costs portion, with appropriations for the original project scope constituting $1.88 billion; donations $14.3 million; interest income and the Plan's working capital reserve $159.4 million and $100 million of funding for enhanced security upgrades.

Thailand's representative, speaking on behalf of the "Group of 77" developing countries and China, stressed that the original Plan had intended to renovate five buildings at a cost of $1.88 billion, but had instead included the renovation of three buildings for a higher cost of $2.31 billion. While the Group was satisfied with the demolition of the temporary North Lawn Building, it was not fully content with the relocation of functions previously housed in the Dag Hammarskjold Library Building and the South Annex Building. The Group also recalled the Board of Auditors' recommendation on the need to report in full any savings that would arise from the closure of existing contracts.

Indeed, the Board of Auditors' report on the renovation plan, presented by Salhina Mkumba, Director of External Audit of the United Republic of Tanzania and Chair of the Audit Operations Committee, underscored that sufficient savings could be obtained from existing contracts. However, the main risk to project completion related to the delayed closure of those contracts and the need to manage the costs of further support from expert consultants.

The Group of 77 also expressed concern about the low rate at which the Secretariat had implemented the Board of Auditors' recommendations, emphasizing that the Administration had to work closely with the Board to ensure that outstanding recommendation were implemented.

The Administration had accepted all the Board's recommendations, Mario Baez, Chief of the Policy and Oversight Coordination Service of the Office of the Under-Secretary-General of the Department of Management, said, underscoring that while all those would be implemented in a timely manner, the most important ones would be given high priority.

Also speaking today was Carlos Ruiz Massieu, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), who introduced that body's report on the Capital Master Plan.

The Fifth Committee will reconvene at 10 a.m. on Thursday, 20 October, to discuss a request for a subvention to the Extraordinary Chambers in the Courts of Cambodia and conditions of service and compensation for tribunal judges.

Capital Master Plan

ANDREW NYE, Officer-in Charge, Facilities and Commercial Services Division, Office of Central Support Services, introduced the Secretary-General's fourteenth annual progress report on the Capital Master Plan (document A/71/309) and said the project's objectives had been successfully achieved. The renovated United Nations Headquarters met the highest standards with respect to fire safety, security, energy conservation and accessibility and applied the Host City's building, safety and fire codes. "The campus provides a modernized and safe environment to delegates, employees and visitors," he said. Major efforts were made regarding asbestos abatement, enhancement of security infrastructure and equipment, installation of sprinkler systems and complete fire alarm systems, replacement of the heating, ventilating and air conditioning systems, lighting and ceilings, and upgrading of the electrical wiring and panels.

All works, including commissioning and punch-list corrective work, undertaken by the construction management company under 24 guaranteed maximum price contracts was completed, except for two on-going activities: landscaping of the North Lawn and security-related work at the 42nd and 48th Street entrances, he said.

The demolition and removal of the temporary North Lawn Building was completed and the landscaping works were being wrapped up with final completion expected by 31 December 2016. The remaining security-related work at the 42nd and 48th Street entrances to the Service Drive were being undertaken by vendors selected through the standard procurement process and managed directly by the Secretariat. Substantial completion of those on-going works was expected by 31 December 2016 with final completion by 1 April 2017. Some close-out activities related to several contracts with the construction and management company remained to reconcile final payments and accounts as well as with the architects, engineer and consultants.

The project's financial position was consistent with the Secretary-General's last progress report, he said. As of 30 June 2016, the total approved funding for the Capital Master Plan project and the final completion cost tallied $2.15 billion. The total included appropriations for the original project scope of $1.88 billion, donations of $14.3 million, interest income and the Plan's working capital reserve of $159.4 million and $100 million in funding for the enhanced security upgrade. The costs of all interim arrangements, post-renovation construction and close-out activities were met with the project's existing approved resources, he said.

SALHINA MKUMBA, Director of External Audit of the Republic of Tanzania and Chair of the Audit Operations Committee, Board of Auditors, introduced the Board's report on the Capital Master Plan (document A/71/5(Vol.5)), which stated that the Plan was in its final phase after nearly 14 years and an investment of $2.3 billion, including project costs of $2.15 billion and non-project costs of $154.7 million.

All major works had been finalized and residual works were in progress, while the administrative close out of completed contracts continued, he said, underscoring that the Administration must manage residual risks in order to ensure the Plan was completed within the current timetable and budget. As sufficient savings could be obtained from existing contracts, the Board deemed the Administration's goal to complete the project within existing resources was feasible. The main risk to completion related to the delayed closure of contracts and the need to control the costs of consultancy support. As of March 2016, the programme management consultancy contract had been amended 36 times, increasing the total not-to-exceed value from $15.9 million to $59 million, he said, adding that it was highly likely that figure would continue to rise in 2017.

He also noted that the main contractor had filed a notice of arbitration against the United Nations seeking indemnification in the event it had to settle claims from sub-contractors. The Administration had considered it had no liability and that any potential action against the United Nations would not succeed. However, he said, in the event that any claims against the Organization were upheld, the final project cost would increase. Furthermore, the revised plan to finalize main construction works had proved unrealistic, prompting the re-introduction of earlier project management disciplines. A smaller project team, in combination with the additional workload due to implementation of Umoja - the United Nations enterprise resource planning project - had resulted in a reduced level of project management discipline in 2015. The Administration was unlikely to achieve the administrative closure of the project until 2017, but all residual works should be completed by December 2016, and there had been no new proposals for the renovation of the Library and South Annex buildings.

In addition, the Administration had not yet assessed whether the renovated campus had achieved its energy efficiency targets, but that appeared likely, he said, noting that the Secretariat would be able to demonstrate any energy efficiency benefits once it had accumulated 12 months of data from the environmental reporting system in January 2017. To optimise the use of the renovated campus, the Administration had suggested accommodating an extra 800 staff in the Secretariat Building by introducing a flexible workplace. The Board noted that despite recent increases in the anticipated costs of such a project, "it was still a compelling business case for Member States to consider and offers a payback period of around five years".

In conclusion, he said that the Board had in the past three biennia made 42 recommendations intended to improve the management of the Capital Master Plan project. Of the 11 outstanding recommendations, three had been implemented, four were being implemented, three had not been implemented and one had been closed by the Board and superseded by a new recommendation. In addition, the Board had made an additional five recommendations to help complete the project.

MARIO BAEZ, Chief, Policy and Oversight Coordination Service, Office of the Under-Secretary-General, Department of Management, presented the Secretary-General's report on implementation of the Board of Auditors' recommendations contained in its report on the Capital Master Plan for the year ended 31 December 2015 (document A/71/331). The Secretariat had made every effort to ensure compliance with the implementation of oversight recommendations, he said, including prioritizing and setting timeframes for implementing the Board's recommendations, identifying and approaching those office holders responsible for implementation and for providing explanations for delays in implementation.

The Administration had accepted all the Board's recommendations, he said, underscoring that while they all would be implemented in a timely manner, the most important recommendations would be given high priority. Of the five new recommendations issued by the Board as of August 2016, two had been implemented and three were in progress, he said. With regard to the 11 recommendations which had been issued previously, three had been fully implemented, seven were in progress and one had been closed by the Board.

CARLOS RUIZ MASSIEU, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced that body's report (document A/71/541), which covered four main areas. The Advisory Committee was satisfied with the progress in demolishing the temporary North Lawn building and trusted the remaining landscaping work would be completed in a timely manner by year end. Informed by the Secretariat that the final completion of the remaining activities was 1 April 2017, the Advisory Committee trusted that the next progress report would lay out full details of the completion's actual timetable. Turning to benefits realization, particularly in the energy efficiency area, the Advisory Committee recommended the General Assembly ask the Secretary-General to closely monitor, and keep improving, energy usages and report on actual efficiency gains in upcoming progress reports.

Regarding the maintenance and managements of the campus, the Advisory Committee recommended the Assembly ask the Secretary-General to provide an update on the current arrangements and all related costs. Finally, regarding the project's financial status, the Advisory Committee noted that the Secretariat did not anticipate any potential increases in costs or changes in the volume or scope of the work. It recommended that the Assembly ask the Secretary-General to list the full details of the closure of existing contracts, including any savings, in the next progress report. It also asked the Secretary-General to give the Assembly an update on developments relating to arbitration proceedings and additional details on the sports facility.

SIRITHON WAIRATPANIJ (Thailand), speaking on behalf of the "Group of 77" developing countries and China, said the Plan was a priority for the Group as it strongly supported the modernisation and proper maintenance of all facilities across the United Nations system and wanted to improve the working conditions and safety of Member State representatives and United Nations staff. Noting that the Office of the Capital Master Plan had been closed, the Group said the Office of Central Support Services was fully responsible for the project's remaining activities and it looked forward to their final completion by April 2017. The Group was satisfied with the demolition of the temporary North Lawn Building despite the delays. Yet, it was not fully satisfied with the interim solutions relating to the relocation of functions formerly housed in the Dag Hammarskjold Library Building and the South Annex Building, owing to the suspension of the renovation. The Group would follow up on that issue during the informal consultations. The Group also was concerned with the difficulties Member States faced in accessing the garage using the 42nd Street entrance. It questioned why that entrance had been chosen as the main entry as it was in a high security risk area. The Group would ask specific questions during the information consultations.

Regarding the Dag Hammarskjold Library Building and South Annex Building, the Group was seriously concerned that the Assembly still did not have a new renovation proposal for the buildings, which were removed from the scope of the Capital Master Plan in 2015, she said. Concerning the maintenance and management of the campus, the Group failed to understand why the Secretariat lacked the personnel that could provide those services to the systems installed during the Plan.

The Group stressed that the Plan projected an anticipated final cost for a construction project to renovate five buildings at nearly $1.88 billion, yet the cost ended higher, at $2.31 billion, for a reduced project scope of three buildings, she said. The Group recalled the Board of Auditors' recommendation to report fully on any savings stemming from contract closings. It was important that the next progress report provided full details on the closure of existing contracts. The Group also was concerned by the low implementation rate of the Board's recommendations issued over the past three biennium periods. The Secretariat had to work closely with the Board to ensure the outstanding recommendations were implemented. Taking note of the proposal for the construction of a recreation facility at United Nations Headquarters, the Group would pay close attention to the Advisory Committee's concerns. Any initiative would require the consideration and approval of the Assembly.

Action on Draft: Activities of Office of Internal Oversight Services

The Fifth Committee then approved by consensus a draft resolution on the activities of the Office of Internal Oversight Services and the Independent Audit Advisory Committee (document A/C.5/71/L.4) following deliberations on their activities at the Fifth Committee's second formal meeting on 30 September 2016.

By the terms of the draft, the General Assembly would request the Secretary-General to ensure that the annual reports of the Office continued to include descriptions of any impairment of its independence, and to continue to promote effective coordination with regard to the audit, evaluation and investigation functions of the Office. The Secretary-General would also be asked to ensure resolutions pertaining to the work of the Office would be brought to the attention of the relevant managers, and to safeguard the full implementation of the accepted recommendations issued by the Office. The text stressed the need for the Office to increase emphasis on investigations involving cases of fraud and to recognize its role in supporting the Organization as it assessed, analysed and acted upon all fraud risks.

The Assembly would also request the Secretary-General to make every effort to fill vacant posts, particularly in the Investigations Division and in the field.

Noting the Fifth Committee's review of the report of the Independent Audit Advisory Committee for the year-long period between 1 August 2015 and 31 July 2016, the Assembly would endorse the observations, comments, and recommendations contained in paragraphs 19, 22, 27, 30, 33, 39, 40, 45, 50, 51, 56, 57, 62, 69, 71, 75, 78, 82, 85, 88, 91, 94, 96, 99 and 102 of the report.

Source: United Nations.