Performance measurement of the procurement function

In reviewing the state of procurement services and practices in the United Nations system, the Inspector finds that the procurement function has evolved over the past ten years from a relatively obscure administrative activity to a financially high profile and high risk function.

A number of advantages could be derived from such a streamlined reorganization of the procurement function at Headquarters.

Procurement constitutes a strategic function of the United Nations and its funds and programmes, which in 2002, together accounted for 85 per cent of total procurement expenditure of the organizations.

Viewed in terms of cost effectiveness, if not of common sense, the need to outsource the procurement function to a sister agency, especially under common services arrangements discussed further on in the report, would seem crucial where procurement is a tactical rather than a strategic function.

Although procurement staff training has been one of the recurrent items in General Assembly resolutions on procurement reform in the United Nations, and notwithstanding some improvements by the United Nations Procurement Division, the procurement training function remains by and large a haphazard undertaking at cross organizational level.

Table 2 suggests that the organization of the procurement function within the United Nations system is far from optimal.

E procurement, discussed in chapter V, is seen by virtually all the organizations as offering potential benefits for the modernization of the procurement function and bringing it to world class standards.

There was widespread support for efforts that could be made to assist in measuring performance within an organization's procurement function as well as determining costs of procurement, thereby increasing efficiency and effectiveness.

To support the ongoing United Nations procurement reform initiatives and, in particular, to contribute in improving economy, efficiency, transparency and accountability of the procurement function in the United Nations system through dissemination of a system wide common procurement curricula and training, complemented by a professional certification scheme for United Nations procurement personnel.

As found in chapter III, the previously mentioned shortcomings in the modernization of the procurement function are also reflected in the infinitesimal amounts the organizations earmark for the training of their procurement staff, who account on average for over 95 per cent of total procurement overhead and are therefore the main factor driving procurement productivity and quality outcomes.

In addition, the Board of Auditors and the Office of Internal Oversight Services (OIOS), which identified the procurement function as a high risk area, periodically review the reform process and audit procurement practices of the funds and programmes.

Public procurement for projects financed by the multilateral financial institutions will remain outside the scope of the present report, nonetheless the above figures highlight the importance of the subject and of the procurement function within the United Nations system.

Thus the general assessment of the merits of e procurement left no doubt that it was considered as the indispensable way forward in modernizing the procurement function within the United Nations system and bringing it to world class standards.

In reviewing the state of procurement services and practices of the United Nations system, the report found that the procurement function had evolved over the past 10 years from a relatively obscure administrative activity to a financially high profile and high risk function, accounting in 2002 for about US 4.6 billion, or 37 per cent of the organizations' combined regular and extrabudgetary resources.

For organizations with centralized procurement services, the low procurement volume per staff member and relatively high overhead costs can be attributed to the fragmentation of the procurement function at different duty stations so much so that organizations located together in New York, Geneva, Vienna or Copenhagen are still to begin sharing procurement overhead services and costs, for example through common service arrangements discussed later in this report.

Staffing of the procurement function in the network of the organizations' country offices (over 130 of them for UNDP, UNHCR and UNICEF, for example) seems particularly blurred.

Information provided by the organizations on the topic of e procurement (meaning basically the use of ICT systems and tools to conduct the procurement function either partially or fully throughout the cycle), indicates some differences within the United Nations system in current e procurement practices and in the state of progress accomplished thus far.

1.182 To establish a quality assurance function aimed at enhancing customer satisfaction through effective communication, reliability, timeliness and cost effectiveness of the operational and support services in ICT, procurement and engineering.

The countries surveyed appear not to have developed specific regulation of the conduct of third party ERA service providers, apart from a general requirement that an external provider has to carry out the procurement function on behalf of a government agency in accordance with existing procurement procedures, process and requirements.

In the concluding chapter, the Inspector discusses the ways and means by which the organizations could use the procurement function as a development tool in the recipient countries, using a two track approach.

This function registers a completion function.

Form is function. Form is function.

The Inspector concurs with the above points of view, but observes that the method used to compare procurement staff productivity and cost addresses more specifically the important issue of the overhead structure and cost, which is essentially the staffing and cost of the procurement function within the United Nations system in 2002.

Call a user defined function given by the function parameter.

Function

Function

Procurement

Procurement

Procurement

Function arguments

Function arguments

Function Reference

Function Plotter

Monitoring function

Present function

At UNDP, procurement staff also receives training on legal aspects of procurement.

Procurement management

Government procurement

Procurement planning

Procurement reform

Procurement report

Procurement opportunities

It is what makes you function it is what makes every organism function.

Thirdly, it should considerably facilitate procurement reform and the pooling of procurement services.