UN Audit report slams internal Procurement and Contract Management practices

by Contract Lifecycle Management

A recent internal audit report written by the United Nations Joint Inspection Unit, and reported by Fox News,  provides damning evidence of the deep inefficiencies and unnecessary costs incurred by the various agencies and organisations of the United Nations.

The report is highly critical of the lack of control over internal procurement and contract management procedures, particularly when purchasing the services from external consultants and service providers.

The report’s key findings are listed below:

• Non-specialist line-of-business staff frequently undertake the management of procurement processes and contract drafting because Procurement staff often do not have the specialist skills or knowledge in certain technical or specialist areas
• Evidence of widespread disregard for enforcing existing contract rules and procedures
• Procurement of goods and services is in many cases uncontrolled due to a ‘lack of capacity and expertise’ in Procurement functions
• No formal provision of management information or reports to key managers, which has led to significant duplication of effort and cost in the procurement of products and services
• Staff do not have ready access to a repository of contracts, templates or clauses.  The report notes that ‘providing an automated contract management system would increase the quality of the procurement process’
• Certain UN organisations and agencies hire external consultants to provide procurement functions with the necessary knowledge, gathered from elsewhere in the organisation, to carry out the procurement of a product or service

Ouch!  So that is where our contributions to the UN are going.

Of course, even the UN themselves recognise that their procurement and contract management woes could be solved in part by deploying technology to address some of these issues.  The UN Joint Inspection Unit report notes that:

‘the integration of an electronic Contract Management system would significantly improve contract management by facilitiating the tracking of contracts and also provide transparency of contract information organisation-wide’ and that ‘UN organisations should establish systematic information flows for contracts, procurement documents and reports and develop systems to share them. This will:

• Improve effectiveness of contracting
• enhance efficiency
• improve controls and compliance’.

Although the UN’s situation is rather extreme and most organisations do not publicly make available the conclusions of internal process reviews, they are by no means alone.  Both public and private sector organisations are often beset by similar contract management issues.

Organisations looking to improve their contract management processes should look for the following five key attributes in a Contract Lifecycle Management solution:

1. Contract authoring tools to enable the efficient and rapid creation of contracts - involving both legal or procurement specialists as well as domain experts in the business
2. Electronic workflow tools to facilitate internal contract reviews and approvals
3. Secure document repository to save and archive contracts and associated documentation
4. Electronic workspaces to collaborate more effectively with contracted third parties
5. Management reports and alerts to allow managers to proactively manage contracted commitments and obligations

Remember though, that technology solutions are not a panacea.  Unless an organisation and its internal stakeholders are properly prepared for the implementation of a complex process-automation solution, like a Contract Management system, then the liklihood of the technology being adopted by end-users, and the organisation extracting the expected benefits from the system will be lessened.