Executive Summary
The State of Mexico spends about 25% of its budget in public procurement. Sixteen ministries of the state public administration can carry out procurement operations through their Administrative Units or through the General Directorate of Material Resources (Dirección General de Recursos Materiales, DGRM) of the Ministry of Finance, while 90 auxiliary bodies carry out their own procurement, unless they have signed an agreement with the Ministry of Finance to buy specific goods or services through DGRM. In practice, most of the procurement for the central administration (i.e., the ministries) is executed by the Ministry of Finance.
Contrasting perceptions between the DGRM and its users regarding the benefits of centralised procurement may undermine its logic of aggregating demand to access better prices. Therefore, one of the main challenges for the Government of the State of Mexico is to demonstrate that it is convenient for the ministries and auxiliary bodies to rely on the DGRM to carry out their procurement. Opportunities for greater centralisation are still available, and particularly significant given the amount of procurement of goods and services that takes place outside the centralisation scheme of the DGRM, particularly procurement by auxiliary bodies.
Enlarging the pool of suppliers is important for the DGRM to improve efficiency. The current supplier pool is relatively small. For 2018, the average number of bids received in a sample of purchases was 2.4 and 1.7 for goods and services, respectively. There is thus limited competitive pressure for a sizeable share of tenders. Several features of the State of Mexico’s normative framework also hinder the potential for efficiency. For example, international tenders are severely limited to specific circumstances and the number of exceptions allowing the use of non-competitive procurement procedures is relatively high. Furthermore, many of the suppliers who actually submit a tender are often disqualified along the way.
The Public Procurement Law of the State of Mexico and Municipalities (Ley de Contratación Pública del Estado de México y Municipios, LCPEMyM) promotes the gradual introduction of COMPRAMEX, the e-procurement system of the State of Mexico. However, the government has not carried out electronic tenders using COMPRAMEX, due to the limited transactional functions of the platform. There is no clear timeline or implementation plan to upgrade COMPRAMEX.
The State of Mexico is a leader among Mexico’s federal entities in the implementation of its own anticorruption system, as it was one of the first to fully establish the institutions mandated by law. However, the State of Mexico does not have an agenda or programme to promote business integrity.
There is a gradual, although still insufficient, appropriation of control by the staff responsible for management tasks in ministries and auxiliary bodies. An illustration of this problem is the active participation of internal control bodies (OICs) in managing the control of procurement procedures, which may affect their impartiality in their internal audit function.
Finally, the State of Mexico has a long history in its regulatory framework and strategy to improve the professionalisation and capacities of its civil servants. However, these regulatory frameworks and strategies focus on civil servants in general, and could be oriented to the professionalisation of the public procurement workforce specifically.
The Government of the State of Mexico should demonstrate the value added of the centralised procurement scheme to the different stakeholders.
The Co-ordination Committee of SAEMM, the Ministry of Finance and SECOGEM, should develop a framework for market engagement that delivers the benefits of such a practice, while mitigating the risks, particularly integrity risks.
The State of Mexico should introduce new transactional functions for e-procurement processes.
The State of Mexico should expand the scope of centralisation.
The DGRM could work actively to expand the scope of its centralised purchases to include new users, as well as to increase the share of centralisation of auxiliary bodies.
The DGRM could adapt its service to the needs of the contracting authorities, namely proposing voluntary framework agreements for standardised goods and services, which would require a legislative reform.
The State of Mexico should facilitate competition to deliver value for money with centralised procurement.
The DGRM should start by acquiring a precise understanding of the causes behind low levels of competition, including frequent disqualifications and void tenders.
Digitalisation through the expansion of e-procurement could offer an important course of action.
Where possible, the DGRM could consider advertising its tenders in other markets (at federal level or in neighbouring states).
The DGRM also needs to continue the trend to privilege the use of competitive procedures throughout its tenders, limiting direct awards only to strict exceptional circumstances.
The State of Mexico could engage the private sector and civil society to strengthen integrity in the procurement function.
The Government of the State of Mexico should partner with the business community to develop and advance an agenda for business integrity, particularly regarding procurement activities.
SECOGEM should advance the reform of the social witness programme applied in the State of Mexico to strengthen the independence, expertise and wider engagement of social witnesses throughout the procurement cycle and in the different modalities.
The State of Mexico should develop a competency framework and a certification framework to advance the professionalisation agenda by recognising public procurement as a professional task.
The State of Mexico could carry out a survey to assess the capability and needs of the public procurement workforce in order to identify its strengths and weaknesses.