Executive summary

This review of public procurement in Nuevo León is the first OECD Public Procurement Review conducted at the subnational level in any OECD country or non-member economy. This review thoroughly describes the role public procurement can play in enhancing good governance and public administration at the subnational level. This is important, because, on average, two-thirds of OECD spending related to public procurement occurs at this level.

Nuevo León is one of the most important federal states in Mexico. Highly industrialised, it is located in the northeast part of the country. The current administration of the State Government of Nuevo León (SGNL), elected for the 2015-2021 term, is reorganising the structure of the government. Importantly, the administration is working to centralise the procurement of goods and services under the Secretariat of Administration (Secretaría de Administración, SA). Changes to the procurement legislation in 2013 and the reorganisation of state secretariats in 2016 expanded the role of the central purchasing body in Nuevo León.

The administration could reap significant benefits by creating a strong procurement structure that would allow both for more consolidation and the uptake of framework agreements. This would significantly improve and simplify common purchases. In terms of further improving efficiency and effectiveness, the SGNL faces several challenges. First, it needs to establish an electronic procurement system. Second, it needs to determine how the SA will exercise its role and be empowered as a leading force within the public procurement system. The OECD policy recommendations underline the importance of the SGNL’s ability to advance to the next stage, while proposing concrete avenues for implementation.

Key recommendations

Set a strategy and a business model for the procurement function.

Centralisation of procurement operations may lead to significant benefits, but if not properly managed, centralisation can also entail risks. Many central purchasing bodies lack the experience and knowledge necessary to ensure procurement operations. It would be wise for the SA to develop a strategy that includes a business model for the procurement function.

Work towards a more efficient and fair solicitation process.

Procurement procedures are highly control oriented. Introducing framework agreements would simplify and accelerate the solicitation process for smaller and common purchases. The SGNL should also focus on improving its market research, looking beyond quotes and historical prices. The emphasis should be more on value for money, not just on the lowest price. Broadening the award criteria by applying points and percentages for public tenders could be of value.

Implement strategic public procurement by linking it to high-level policy goals.

Pursuing complementary policy objectives through public procurement could offer substantial benefits for the SGNL. At the general policy level, the administration has taken some steps towards a sustainable plan for the future by developing strategies such as the State Development Plan. To date, the targets of these overarching strategies have yet to be translated into the area of public procurement. That could be done by including environmental, social or innovative considerations into the public procurement process.

Enhance procurement capabilities.

Professionalising the procurement workforce should be a priority. Currently, public procurers are selected, trained and promoted according to the general public service rules. Specific profiles, a dedicated career path and targeted training would help professionalise the procurement workforce. These steps would also help the administration take into account the specific challenges associated with managing public procurement processes.

Better utilise the electronic public procurement system as a communication tool with stakeholders.

The use of electronic mechanisms for public procurement in the SGNL has led to increased transparency of the processes. However, this practice has focused mainly on publishing and storing information on the public procurement processes. In line with the growing international recognition of the efficiency benefits of e-procurement systems, the SGNL should consider implementing an e-procurement solution that would cover the whole public procurement cycle, including e-bidding and e-invoicing.

Ensure integrity in public procurement processes.

Despite many efforts to provide an institutional, legal and regulatory framework to prevent corruption and properly manage conflict of interest in government activities, public trust in government institutions and activities in Nuevo León remains low, while public perception of corruption remains high. The SGNL could benefit from building a coherent and efficient institutional and normative public procurement framework, including dedicated and tailored measures against corruption.

Strengthen, standardise and integrate internal control and risk management activities.

The SGNL has internal control normative provisions in place, and has established an internal control framework. However, further efforts are needed to strengthen, standardise and integrate its internal control and risk management activities. These efforts will help ensure the integrity of procurement processes. Coupled with a culture of integrity and a supportive and balanced internal control environment, such measures would promote good governance.

Encourage participation in the dispute resolution system.

The dispute resolution system is fragmented and untested, which can reduce the public trust in the system. This is problematic, given that many actors involved in the procurement process have expressed their desire to raise the issue of non-conformity through the system. The way the current system functions adds to the risk of corruption. SGNL needs to instil confidence in the system and ensure that those who do complain are not ostracized or retaliated against in future tendering opportunities.

Implement robust post-award contract management.

The SGNL has a rather elementary approach to contract management, whereby final users of goods and services certify that the delivered good meets the requirements established in their contracts. The SGNL should strengthen the framework for establishing relationships with suppliers, allowing for an appropriate follow-up of contracts. The management of contracts should not be a purely administrative activity, but a strategic task that allows the government to anticipate different types of situations and respond to them.