OECD Public Governance Reviews

English
ISSN: 
2219-0414 (online)
ISSN: 
2219-0406 (print)
http://dx.doi.org/10.1787/22190414
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This series includes international studies and country-specific reviews of government efforts to make the public sector more efficient, effective, innovative and responsive to citizens’ needs and expectations. Publications in this series look at topics such as open government, preventing corruption and promoting integrity in the public service, risk management, illicit trade, audit institutions, and civil service reform. Country-specific reviews assess a public administration’s ability to achieve  government objectives and preparedness to address current and future challenges. In analysing how a country's public administration works, reviews focus on cross-departmental co-operation, the relationships between levels of government and with citizens and businesses, innovation and quality of public services, and the impact of information technology on the work of government and its interaction with businesses and citizens.

 

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Public Procurement Review of Mexico's PEMEX

Public Procurement Review of Mexico's PEMEX

Adapting to Change in the Oil Industry You do not have access to this content

English
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Author(s):
OECD
19 July 2017
Pages:
350
ISBN:
9789264268555 (PDF) ;9789264268548(print)
http://dx.doi.org/10.1787/9789264268555-en

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This report on Mexico’s state-owned oil company PEMEX is part of a series of OECD reviews of Mexico’s procurement institutions. PEMEX’s procurement system was overhauled after Mexico’s 2013 Energy Reform opened up the sector to private participation, requiring PEMEX to compete in an open market. Using the 2015 Recommendation of the OECD Council on Public Procurement as a benchmark, the review assesses the effectiveness and integrity of PEMEX’s entire procurement system while identifying a series of actions for improvement. A state-of-the art procurement system can not only help PEMEX achieve value for money on a sustainable basis, but also support other social and environmental policy objectives in Mexico.

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  • Foreword and acknowledgements

    In an economic environment characterised by historically low oil prices, oil and gas companies such as Petróleos Mexicanos (PEMEX) face tremendous challenges in maintaining and improving their productivity. In a sector where 40 cents of every dollar earned is spent on raw materials and services, procurement systems are central to a company’s competitiveness. Alongside strategies to maximise value creation, procurement frameworks are needed to safeguard the company from mismanagement and corruption. Furthermore, fierce competition among international oil companies requires flexible and agile frameworks to unlock the innovation potential of the market and develop sustainable and strategic alliances.

  • Acronyms and abbreviations
  • Executive summary

    Since the 2013 Energy Reform, which opened up Mexico’s energy sector to private investment, Petróleos Mexicanos (PEMEX) has become a state productive enterprise with the core mission of creating value. This new legislative framework granted PEMEX greater autonomy for its administration, organisation, management and budget, as well as a new corporate structure. At the same time, it changed PEMEX’s organisational structure and resulted in a series of reforms in different fields, including procurement, acquisitions, leasing, services and works, in order to give PEMEX the tools required to compete in international markets. This OECD review identifies the strengths of PEMEX procurement function and the potential options for improvement to achieve its new institutional mission and compete successfully.

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  • Expand / Collapse Hide / Show all Abstracts Implementing the right procurement framework in Petróleos Mexicanos (PEMEX)

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    • Strengthening the structure and governance of Petróleos Mexicanos' procurement function

      Mexico undertook a significant reform package for its energy sector in 2013. This chapter analyses the corporate governance of PEMEX, after such reforms, its organisational structure, the normative framework applicable to procurement activities, the governance and co-ordination of the procurement function, and the benefits from centralisation of its procurement activities. It will discuss the implications of the greater autonomy granted to the company for its administration, organisation, management and budget, mainly the fact that opening up Mexico’s energy sector to private investment meant that PEMEX has to compete in the marketplace. Finally, this chapter assesses the core change in PEMEX’s procurement structure after these reforms, which consists on the critical mission of creating value.

    • Implementing strong organisational procurement strategies at Petróleos Mexicanos

      This chapter assesses how the revisited procurement organisation in PEMEX is aligned with the company’s business objectives and creates economic value for the Mexican state. It further suggests actions reinforcing the strategic role of the procurement function in the company, from increased oversight on procurement activities to strengthened relations with suppliers.

    • Promoting complementary policy objectives through Petróleos Mexicanos' procurement

      This chapter assesses how PEMEX is promoting complementary policy objectives such as supporting the participation of small and medium sized enterprises, promoting environmental considerations and social responsibility. It further suggests what PEMEX can do to foster improvements in the field of green policy and social objectives.

    • Enhancing procurement capabilities in Petróleos Mexicanos

      This chapter analyses how Petroleos Mexicanos, or PEMEX, could transform the procurement function into a strategic activity for value creation, including by making use of strategic workforce planning, change management, a skills framework, recruitment and promotion processes, training and performance management. It assesses the institutional model for human resources management in PEMEX, including processes such as recruitment, development and retention. Since it is critical for the company to be endowed with the right number of procurement officials with a fit-for-purpose set of competencies and skills, this chapter provides recommendations to improve the management of the procurement workforce in order to fulfil the company objectives and quickly evolve bearing in mind the company’s new institutional mission focused on creating value.

    • Ensuring clarity and minimising procurement risks in Petróleos Mexicanos through strong tender documents and model contracts

      This chapter assesses the strengths and weaknesses of the template tendering documents and contracts used by PEMEX. It further explores the novelties of the new generic model contracts and whether PEMEX has been able to streamline the development process for solicitation documents and model contracts according the legislative reforms. Potential improvements to the template contracts are proposed to increase certainty and reduce risks in PEMEX procurement activities.

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  • Expand / Collapse Hide / Show all Abstracts Ensuring integrity, transparency and accountability in Petróleos Mexicanos’ procurement function

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    • Ensuring integrity throughout Petróleos Mexicanos' procurement cycle

      Public procurement operations in the extractive sector present a high risk of corruption throughout OECD countries because of the significant level of expenditure involved and the complexity of the whole procurement cycle. Petróleos Mexicanos (PEMEX) is not immune to such risks and although it is developing initiatives and mechanisms to promote integrity in its activities and within the organisation, it still faces a number of challenges in building a coherent and comprehensive integrity system and in creating a culture of integrity. This chapter analyses PEMEX’s integrity policy and legal framework, highlighting recent developments and emphasising areas where further efforts are needed, which include: corruption risk-mapping, disclosure and management of conflict of interest, integrity training and awareness programmes and whistleblowing protection. The chapter also addresses the key role of the private sector and the importance of setting high standards of integrity for all stakeholders in the procurement cycle.

    • Ensuring Petróleos Mexicanos' accountability through transparency and stronger engagement with civil society

      Ensuring an open and transparent procurement system in all stages of the procurement cycle is a fundamental element to guarantee fair and equitable treatment for PEMEX’s potential suppliers and to promote accountability of its activities toward all stakeholders. The Mexican legal framework on transparency and access to information has improved in recent years due a federal reform which introduced several changes at the institutional and substantial level. Further obligations apply to all public entities working in the energy sector and provide for enhanced transparency for PEMEX procurement information. This Chapter assesses the impact of the latter changes and elaborates recommendations on how to further ensure that transparency measures and mechanisms for stakeholder participation lead to effective accountability of PEMEX’s activity. Such assessment does not only consider the accessibility and the format of public procurement information, but it also addresses the balance between transparency and confidentiality, as well as the participation of social witnesses and the engagement with the private sector.

    • Ensuring effective internal control and risk management in Petróleos Mexicanos' procurement activities

      A robust internal control system, including risk management and independent internal audit functions, is the bedrock for improving governance and management systems, enhancing integrity, and strengthening accountability. This chapter highlights how a preemptive and risk-based approach is the best way for PEMEX to improve the efficiency, effectiveness and economy of operations while putting in place the proper controls and mitigating strategies to prevent, detect and respond to fraud and corruption schemes in the procurement cycle.

    • Petróleos Mexicanos' review and remedy system on procurement decisions

      This chapter provides an overview of the review and remedy system that applies to Petróleos Mexicanos’ (PEMEX’s) procurement procedures, which has evolved over time. It focuses on the current system, following amendments in 2014 to the PEMEX Law, which create a special procurement regime for the company. While it recognises that it is still early days to make an assessment on the effectiveness of the challenge mechanisms anticipated under the special procurement regime of PEMEX, this chapter provides an overview of the trends found in challenges to award decisions. Furthermore, this chapter suggests alternatives and proposes specific actions to improve the effectiveness, timeliness and accessibility of challenge mechanisms available to PEMEX bidders.

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  • Expand / Collapse Hide / Show all Abstracts Connecting Petróleos Mexicanos’ competencies with suppliers’ capabilities for a new procurement

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    • E-procurement: Implementing a strong information technology environment to support Petróleos Mexicanos' procurement activities

      This chapter describes Petróleos Mexicanos’ (PEMEX’s) current information technology (IT) environment and assesses the recent development of the e-procurement system. The importance of a point-to-point platform that PEMEX is trying to achieve cannot be understated in terms of the potential benefits, i.e. more efficiency and standardisation of processes. While the company is going through a transitional period, so is the procurement system. PEMEX realises the potential of the system, but needs to fully commit to transforming it in order to reap the benefits, which include more efficient use of time and resources in a competitive environment.

    • Revising Petróleos Mexicanos' pre-solicitation activities for a stronger procurement function

      This chapter assesses the alignment of Petróleos Mexicanos (PEMEX) pre-solicitation activities with the mandate of its procurement directorate, which is maximising value creation. Pre-tendering activities support and often shape how procurement operations are carried out and have the potential to transform the positioning of the PEMEX procurement unit, from an intermediary to a strategic enabler. This chapter suggests actions in the collection and analysis of users’ procurement needs and strategic interactions with suppliers to further reinforce the competitiveness of PEMEX procurement processes and their overall attractiveness.

    • Increasing efficiency and fairness in Petróleos Mexicanos' solicitation and contract award process

      This chapter discusses the path Petróleos Mexicanos (PEMEX) has paved for making the procurement system, processes, and procedures more efficient. Furthermore it discusses how PEMEX is engaging with stakeholders and the processes in place for supplier engagement. While PEMEX has improved the process for evaluations of bids, the company has been slower in adopting new techniques such as the debriefing of suppliers or applying standstill periods.

    • Procurement data and performance management systems: Towards evidence-based decision making in Petróleos Mexicanos' public procurement

      This chapter provides an overview of the evaluation process of the procurement function and the indicators being considered in the evaluation methodology, although its design is still incomplete. An adequate monitoring of supplier performance is also critical to facilitate the effectiveness of procurement strategies, allowing for the anticipation, identification, and correction of failures before relationships with suppliers suffer and before the optimal use of resources is jeopardised. This chapter analyses the strategies and methodologies used by Petróleos Mexicanos (PEMEX) to monitor the performance of its suppliers and suggests specific actions to use previous performance as an award criterion. Finally, this chapter puts forward proposals for action in order to upgrade the evaluation of PEMEX’s procurement function and make the assessment and monitoring of suppliers’ performance more systematic.

    • Ensuring results for Petróleos Mexicanos: Implementing robust post-award contract management

      This chapter evaluates the current contract management system developed in PEMEX and suggests actions to shift from ensuring contract compliance to promoting contract performance. Strategic contract management provides additional assurances towards the effective delivery of suppliers’ contractual commitments. It also contributes to strengthen PEMEX relationships with its suppliers, being a stepping stone for the development of more strategic alliances creating additional value.

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