Public governance

Fighting Bid Rigging in Public Procurement in Mexico - The CFE Report 2015

 

Date of publication:
7 January 2015

 

DOCUMENTS AND LINKS

All other competition reports on Mexico

OECD Guidelines for Fighting Bid Rigging in Public Procurement 

Mexico-OECD partnership for fighting bid rigging in government contracts   

Strengthening the competition and regulation framework in Mexico

OECD Mexico Centre website (in Spanish only)

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OFFICIAL LAUNCH - Mexico City, 07/01/2015

The Report was officially launched in Mexico City on 7 January 2015. OECD Secretary-General Angel Gurría was present together with other prestigious stakeholders.  [See the speech transcript in Spanish]

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The Mexican electricity company, Comisión Federal de Electricidad (CFE), is one of the largest public entities in Mexico and the second largest public entity in terms of procurement budget, with over 300 purchasing units throughout the country. Its procurement budget represents almost 20% of all Federal procurement.

CFE is at a key juncture in its long history. A 2013 reform of the energy sector opened the activities of generation and distribution of electricity to private investments, pushing CFE to seek further efficiencies and cost savings to respond to the increasing competition that it will be facing in the near future from domestic and foreign competitors.

In 2013, CFE thus asked the OECD and the Mexican Competition Agency (COFECE) to review its procurement practices in light of the 2012 OECD Recommendation on Fighting Bid Rigging in Public Procurement and related Guidelines.

The report includes an overview of public procurement in Mexico and at CFE, and a summary of the legal framework that applies to public procurement in the country. It also develops policy recommendations that will help CFE improve its procurement practices and achieve the savings and efficiencies necessary to ensure its continued success in an increasingly more competitive environment.

Key findings and recommendations

The report recognises that CFE has always been an innovator in this area and has always strived to improve its procurement methods more than any other public institutions in the country. It identifies, however, important areas for improvement:

  • CFE procurement officials should design better purchasing strategies, collect and gather more and better information, and acquire an understanding of how collusion can be detected by identifying warning signs during the tender process

  • CFE should to prioritise efforts to improve market studies and to make this information more accessible to procurement officials. For this purpose, CFE should create a robust database on past procurement and sets up a dedicated market study unit to supervise and co-ordinate this important phase of the procurement process

  • CFE should carry out cost-benefit analyses of its past procurement to determine the best purchasing strategies for different goods and services

  • CFE is also encouraged to increase dialogue with providers, without however sharing sensitive and strategic information, as this information could be used by bidders to coordinate their bidding behaviour and facilitate collusive agreements

Other important recommendations include: a better management of the information flow towards third parties to avoid sensitive information being disclosed unnecessarily; expanding the efforts of CFE to consolidate purchases and take better advantage of framework agreements; adopting practices to increase the number of bidders; implementing a strict unconditional approach to deal with joint bids; limiting the use of split awards; and deterring the use of sub-contracting.

The report was released in Mexico City on 7 January 2015 at a launch ceremony attended by OECD Secretary-General Angel Gurría.

 

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