Public governance

Presentation of the Second Progress Report on Development of the New Mexico City International Airport: Adapting Practices to Address Emerging Challenges

 

Remarks by Ángel Gurría,

OECD Secretary-General

9 January, 2018

Mexico City, Mexico

(As prepared for delivery)

 

 


Mr Secretary of Communications and Transport; Madam Secretary of the Civil Service, Mr Director General of the Airport Group of Mexico City, Madam Permanent Representative of Mexico to the OECD, Under-Secretaries, Ladies and Gentlemen:


It is a great pleasure for me to be here with you to present the Second Progress Report on the Development of the New Mexico City International Airport: Adapting Practices to Address Emerging Challenges (pdf). In January 2015, the OECD and the Secretariat of Communications and Transport signed an agreement to promote integrity, transparency and good practices in public contracting for this project. Since that time we have been engaged in a process of analysis and collaboration, and I may say that we have already seen some significant progress.


In our initial assessment report, published in November 2015, the picture was not very encouraging. Governance of the project was weak, and the risks seemed overwhelming. Yet by working together we – the Airport Group, the Secretariat of Communications and Transport and the OECD – have been able to overcome some of these challenges, as documented in the First Progress Report issued in November 2016. Subsequently, in January 2017, the Secretariat of the Civil Service joined forces for strengthening the project.


Significant achievements

Above all, our review recognises the hard work that was performed in 2017, as well as the important achievements and advances that have been recorded. Let me highlight a few of these.


When it comes to governance, four independent members were added to the Board of Directors of the Airport Group, enriching discussion with their knowledge and experience. Following good international practices, a number of social consultations have been carried out, and others are being prepared, in order to identify and address the concerns of communities located near the construction site. In addition, the project's financing scheme has been recognised on more than 50 occasions by international publications such as Latin Finance and the Climate Bonds Initiative.


With respect to contracting, we should highlight the joint work with the Secretariat of the Civil Service on simplifying bidding documents, thereby reducing the rate of bids rejected for legal or administrative reasons from 56% to 18%. This has helped boost competition in the subsequent bidding phases. The Airport Group has also adopted better IT tools for managing the growing number of contracts that the project involves.


With respect to integrity and transparency, the Airport Group has developed a framework for managing conflicts of interest and it has prepared a protocol applicable to all its employees, both civil servants and subcontracted personnel. Risk management has also been strengthened, with the development of a strategy and a structure for this activity. In addition, through contractual clauses and an "integrity manifesto", the Airport Group has been able to extend its principles and values to its business partners. And of course we must recognise that the Airport Group is a pioneer in implementing the Open Contracts Data Standard, having published 321 contracts in observance of that rule.


These are highly important achievements. Nevertheless, a project of this size faces constant challenges. Our new review has helped to identify those challenges and it offers a series of recommendations in this respect.


Principal challenges

Let me highlight a few of the most important challenges. First, the Airport Group must persevere in reforming its corporate governance by giving itself greater management autonomy, establishing an internal audit function, and strengthening its board by including therein a larger contingent of independent members who are not public servants and who are therefore less exposed to political motivations. Scandinavian countries, for example, place formal limits on the participation of politicians and public servants in the boards of directors of public enterprises, in accordance with the OECD Guidelines on Corporate Governance of State-Owned Enterprises. These reforms must lead to a clearer vertical separation between the Secretariat of Communications and Transport and the Airport Group, so that the latter, as a corporate entity, can define its business strategy with full technical rigour, resolve operational problems and take investment decisions. The fact is that the organisational structure of the Airport Group has evolved, although not at the speed that the dynamics of the new airport project would require.


Coordination within the federal government and with its state and municipal counterparts needs to be strengthened by expanding the scope of the Inter-Ministerial Working Group. This will make it possible to address problems of varying kinds – environmental, urban development, public safety, employment and access to public services – so that the benefits of the new airport will be felt in the municipalities close to the construction site, and the conditions of social marginalisation that prevail in many of those municipalities can be addressed. Similarly, an immediate decision needs to be taken on how to guarantee financing for the project beyond 2019 as to rely too heavily on the public budget implies serious risks. This is a crucial matter for generating confidence in the project's viability and its continuity. It is an urgent issue.


In addition, the Airport Group must pursue its efforts to achieve greater effectiveness in the technical and economic stages of bid evaluation. This can be improved by enhancing market intelligence and refining the award criteria and weightings so that they are better aligned with market capacities. Greater and more robust competition would help to mitigate risks of collusion among suppliers, and could generate savings. Canada's experience in this area could be useful: in its Supply Manual, Public Works and Government Services Canada offers methodologies for gaining a better understanding of the market and adapting bidding processes to the characteristics of that market. As well, our report recommends creation of an advisory group on procurement, so as to facilitate the coordination of works headed by different offices, for example the hydraulic works led by the National Water Commission and the land access works that fall under the leadership of the Secretariat of Communications and Transport.


At the same time, the Airport Group needs to strengthen its framework for managing contracts, and it should consider whether current resources are adequate for the more intensive stages of construction. The cases of Avinor, the State-owned firm that manages the airport network in Norway, and Heathrow in the United Kingdom provide valuable experience on how to develop a comprehensive framework for managing contracts involving airport projects, including the human and technological resources needed for success.


When it comes to integrity and transparency, work is needed on implementing and institutionalising the reforms. For example, there must be a strategy for implementing the Protocol for the Management of Conflicts of Interest with a view to making a real impact on the behaviour of public officials.


Similarly, leadership of the Airport Group must make very it clear that public servants have the duty to report irregularities if these arise, and it must offer ironclad protection to whistle-blowers, not only in terms of their employment status but in all aspects. In fact, regimes for protecting whistle-blowers who report acts of corruption are widespread in OECD countries, such as Canada, Korea, New Zealand and the United Kingdom.


Ladies and Gentlemen,


Our commitment to the New Airport project is to make an exemplary international benchmark of this gigantic infrastructure undertaking. We cannot falter in this commitment. Mexico's image is on the line. The prestige of all projects is on the line; confidence in our authorities is on the line. Let us remember that construction of the new airport is the most important long-term project ever undertaken in our country, and it is going to be intensely analysed, audited and evaluated.


For this reason, the project demands impeccable planning, execution, governance and transparency. I invite you all to redouble your efforts to ensure the viability of the new airport, and to make a success of this project that is so crucial for our country’s competitiveness.


The OECD will continue to support Mexico so that it can move forward with modernising its national infrastructure, through better policies for better lives.


Thank you for your attention.

 

 

See also

OECD work with Mexico

 

Related Documents