South African Paul van Essche, who heads a $330-million (about R2.1-billion) project to overhaul the United Nation’s computer system, has been accused by the UN’s inspector general of breaking UN regulations to help favour an American accounting firm win a multi-million-dollar consultant contract.
Van Essche also manipulated the rules in hiring staff for the project, according to an internal audit report by the UN’s Office of Internal Oversights Services obtained by The Sunday Independent.
Referred to in the report as the “project director” or “requisitioner”, Van Essche and UN procurement officials committed “serious breaches” of UN rules to favour PwC over other bidders, the report says.
The report says PwC’s approximately $16m contract bid was nearly $11m higher than the lowest bid and exceeded the $11m the UN had allocated for the project, a redesign of the UN procurement, human resources and financial management computer systems.
PwC wasn’t awarded the contract on its overall financial bid but on a proposed day rate. But PwC procurement files do not show the final agreed number of days needed to complete the project, making it impossible to determine the estimated cost to the UN, the report says.
“It is inconceivable that the estimated duration of a project should not be factored into the commercial evaluation of a proposal to determine the projected cost,” says the report.
In violation of UN rules, PwC was given more time to study the proposal request than other bidders, including one with a higher technical score than PwC. This resulted in a “material alteration” of the UN’s proposal request that favoured PwC, according to the audit.
UN auditors said that after unauthorised intervention by Van Essche, best and final offers were never sought from PwC and another bidder with an almost identical bid. PwC has already billed the UN at a 42 percent cost overrun on the project, known as Umoja, the report say.
PwC also billed the UN $135 660 for office space it rented to UN employees on the project, but its invoice stated it was for 95 person-days worked, not for rent, the audit says. UN officials also did not ensure they received the best market rate on the rent, it says.
PwC was chosen though only one of six members of the UN’s selection committee, selected by Van Essche, had the expertise to do so, the report says. And while the UN prefers to hire only one consultant for every UN employee on a project, there are twice as many PwC consultants than UN staff on this one, it adds.
“PwC is serving as the design consultant to the Umoja project and was engaged through the UN’s standard procurement process,” the company said.
“The firm complied with the UN procurement process and is not aware of any violations.” The spokeswoman said she could not go into more detail because of client privilege.
Van Essche and Dmitri Dovgoply, director of the procurement division, declined to comment.
But the report provided responses from procurement officials, who said the selection committee had the required experience and that requesting a best final offer would have limited its ability to negotiate with a bidder. They also said no spending ceiling was put in the contract to keep PwC from knowing how much funds the UN had available.
Van Essche is also accused of filling several UN positions on the project without proper background checks. He hired one official, who had been turned down for a lower post, to a more senior position when he took over the project, the report said.
This official was hired after he changed his CV to remove Van Essche’s name as his supervisor in three previous jobs, the report says. - Sunday independent
United Nations officials made "serious breaches" of U.N. rules in awarding PricewaterhouseCoopers with a multimillion-dollar consultant contract on a project to overhaul the U.N.'s computer system, according to a U.N. audit reviewed by The Wall Street Journal.
The audit report from the U.N.'s Office of Internal Oversight Services contends there were numerous ways in which the U.N. procurement department and the U.N.'s project director skirted U.N. regulations to favor PwC over other bidders.
The report argues that PwC's approximately $16 million contract bid was nearly $11 million higher than the lowest bid and exceeded the $11 million the U.N. had allocated for the project. The project, known as Umoja, involves a redesign of the U.N. procurement, human resources and financial management computer systems.
The project's director, Paul van Essche, and the U.N.'s procurement department declined a request for comment.
PwC wasn't awarded the contract on its overall financial bid but on a proposed day rate, the report says. But U.N. procurement files do not show the final agreed number of days needed for the project, making it impossible to determine the estimated cost to the U.N., the report alleges.
"PwC is serving as the design consultant to the Umoja project and was engaged through the U.N.'s standard procurement process," a PwC spokeswoman said. "The firm complied with the U.N. procurement process and is not aware of any violations." The spokeswoman said she could not go into more detail because of client privilege.
The report provided responses from procurement officials, who said the selection panel had the required experience needed to choose PwC and that requesting a best final offer would limit its ability to negotiate with a bidder. They also said no spending ceiling—required by U.N. regulations—was put in the contract to keep PwC from knowing how much funds the U.N. had available.
The U.N. has hired PwC numerous times in past years. In 2007, the firm was employed to confidentially review the financial disclosure statements submitted by U.N. staff. In 2005, the company donated 8,000 hours of staff time to investigate any abuse of donor aid following the Indian Ocean tsunami of the previous year.
The U.N. procurement department has been hit with a series of scandals in recent years. One procurement official was convicted in 2007 on bribery and fraud charges for giving contracts worth millions of dollars to a friend for money and a sweetheart deal on two luxury apartments. Another pled guilty in 2005 to taking $1 million dollars in bribes from foreign companies seeking U.N. contracts.
Write to Joe Lauria at newseditor@wsj.com
Joe Torsella 
undpwatch 