Chapter 7. Enhancing integrity in public procurement in Mexico City

7.2.1. Enhancing the access to procurement opportunities and the efficiency of the system by reducing the use of exceptions to open and competitive tendering.

Integrity risks are also linked to the procurement method used by contracting authorities (CAs). The use of open and competitive tendering should be the standard method for conducting procurement as a means of driving efficiencies, fighting corruption, obtaining fair and reasonable pricing and ensuring a competitive outcome. If exceptional circumstances justify limitations to competitive tendering and the use of single-source procurement, they should be limited, pre-defined and when they are used, should require appropriate justification and adequate oversight, taking into account the increased risk of corruption, including by foreign suppliers (OECD, 2015[2]). Indeed, according to the Foreign Bribery Report, more than half of the foreign bribery cases occurred in obtaining a public procurement contract. Therefore, the inappropriate choice of the procurement procedure entails a high risk of corruption, particularly with a lack of proper justification for the use of non-competitive procedures and the abuse of non-competitive procedures on the basis of legal exceptions: contract splitting, abuse of extreme urgency and unsupported modifications (OECD, 2016[3]).

In Mexico City, the procurement regulatory framework provides the possibility to use three procurement methods: open tender (licitación pública), which is the general rule, restricted tender (invitación a cuando menos tres proveedores) and direct award (adjudicación directa). The exceptions to open tender are defined in Articles 54, 55 and 57 of the PPL and Article 63 of the PWL, which allow for various circumstances. Box ‎7.2 describes legal exceptions to open and competitive tender.

The heads of CAs authorise exceptions to open tender, based on justifications provided by the concerned departments. In 2016, more than 66% of Mexico City’s public procurement was performed through direct award and more than 19% through restricted tenders. In other OECD countries, open tenders are used much more frequently. In 2013, for instance, they represented 82% of total procedures in Spain, 72% in Germany and 88% in Sweden. In Mexico City, the use of exceptions has risen in the past three years: 82% in 2014, 83% in 2015 and 85% in 2016 (see Figure ‎7.3). Mexico City should consider reducing the cases of legal exceptions to open tender in the related articles of the PPL and PWL, to decrease the associated integrity risks.

Figure ‎7.3. Share of procurement method used in Mexico City

Source: Data provided by Mexico City.

7.2.2. Improving the monitoring of exceptions to competitive tenders.

In addition to the control system in place, Mexico City developed a specific control mechanism to ensure the integrity and the efficiency of the system: Procurement committees. This committee is a group of designated officials set up to independently review and assess procurement activities whose main goal is to ensure the efficiency and the integrity of the system. In a procurement process, this is considered the first line of defence in the three lines of defence model.

Procurement committees exist at the central level and at the delegation level and also at the level of the government entity (for this last, see Box ‎7.3). A key role of procurement committees is to issue an opinion on exceptions to competitive and open procedures. CAs are required to send a report on direct awards on a monthly basis to the Office of the Comptroller-General.

The composition of the procurement committee is more or less similar at all levels (central, delegation and government entity). All members can speak, however not all of them can vote. Table ‎7.1 provides a description of members of a procurement committee and their rights. Officials from the Office of the Comptroller do have not the right to vote in those committees which is in line with international best practices since they are also auditing the procurement procedures. For direct award, despite the fact that procurement committees might act as the first line of defence, no specific and deep controls are performed before the award of the contract. As noted, around 85% of procurement in Mexico City involved exceptions to competitive tenders in 2016. This high share of exceptions casts some doubt on the efficacy of the system. Mexico City should enhance the control on exceptions to competitive procedures and consider the possibility of publishing their justification.

7.2.3. Encouraging the digitalisation of the procurement system by developing a comprehensive e-procurement system.

E-procurement, the use of information and communication technologies in public procurement, can increase transparency, facilitate access to public tenders, reduce direct interaction between procurement officials and companies, increasing outreach and competition, and allow for easier detection of irregularities and corruption, such as bid- rigging schemes (OECD, 2016[4]). The digitalisation of procurement strengthens internal anti-corruption controls and detection of integrity breaches, and provides audit services trails that may facilitate investigation activities (see Box ‎7.4 for details on how Korea’s e-procurement system fostered transparency and integrity).

When using federal funds, contracting authorities (CAs) are subject to the LAASSP (the federal public procurement law) and are required to use the federal e-procurement platform, CompraNet. However, when CAs are using local funds (69% of the total funds), Mexico City has not yet developed an end-to-end e-procurement system, which is under development. Many provisions of the PPL and the PWL mention the possibility of using electronic means in the procurement process, but in practice, most of the communication between suppliers and contracting authorities is performed by mail and face-to-face meetings, which increases the risk of corruption in procurement activities.

The development of the E-procurement system is co-ordinated by the Ministry of Finance (Secretaría de Finanzas) and the Administrative Office of the Government of Mexico City (Oficialía Mayor), the administration Office of the Government of Mexico City in charge of the internal administration of the Public Administration (human and material resources). The main objective of the system is to have in place an automated, transparent and modern electronic tool to prevent corruption. According to the Office of the Comptroller-General, the E-procurement system of Mexico City will be implemented in seven phases: 1) publication of an agreement by the Head of the Government of Mexico City to oblige all CAs to use the E-procurement system; 2) Mexico City will procure the necessary hardware and software; 3) decision by a commission in charge of regulating prices of the goods and services that will be procured through the e-procurement system; 4) creating a registry of suppliers; 5) definition of the administrative units that will use the system; 6) training public officials on the new system; 7) operating the system.

However, during the fact-finding mission, the different stakeholders did not provide information on the timeline for the implementation of the system or on its functionality. Some functionalities, such as e-submission, are crucial for preserving the integrity of the system. Although the main goal of the system is to prevent corruption acts and integrity breaches, it seems that not all goods and services will have to be procured through the system, which could compromise the integrity of the system. Mexico City should consider developing an end-to-end e-procurement system used by all contracting authorities and for the procurement of all goods and services, but also for public works.

7.2.4. Mexico City could benefit from implementing and enhancing electronic tools such as electronic price catalogues and suppliers’ registries.

Electronic price catalogues of goods and services in common use are a powerful tool not only for avoiding mismanagement and waste of public funds but corruption. CAs will have to use the price established in the catalogue as a reference price for market analysis. Funds are then better accounted for and used for their intended purpose. This is a common practice in OECD countries, for instance, to fight corruption. In Italy, the National Anti-corruption Authority, ANAC, has been empowered to determine reference prices (G20, 2016[5]).

In Mexico City, Article 6 of the PPL stipulates that the Administrative Office of the Government of Mexico City (Oficialía Mayor) must establish an electronic price catalogue for goods and services in common use; this catalogue should be updated regularly to perform an efficient market analysis. However, a price catalogue has not yet been developed, despite the fact that this provision has been included in the legal framework since April 2010. To comply with the PPL and enhance the integrity of the system, the Administrative Office of the Government should make the price catalogue available without delay.

The Ministry of Public Works implemented a similar concept, known as the “Costs tab” (Tabulador de precios), a price catalogue for goods and services related to public works. This catalogue should be used by all CAs in Mexico City to evaluate project costs, but also for bid evaluations in a tender procedure. To set the reference price, the Ministry of Public Works sends requests for quotation (RFQs) only to suppliers located in Mexico City, although no restrictions prevent suppliers from other states to participate in procurement opportunities in the city. To establish an appropriate estimate of reference prices, the Ministry of Public Works should consider reviewing its methodology by sending RFQs not only to suppliers located in Mexico City but also to relevant ones in other states.

An additional electronic tool to avoid waste of public funds is the establishment of a suppliers’ registry. Usually this registry is used to compile and store legal and financial information on suppliers, together with their field of activity and the categories of goods and services they can supply. An efficient suppliers’ registry should be updated regularly and include information on suppliers’ performance on public contracts, including information on integrity breaches, so CAs can select only reliable suppliers complying with integrity standards (see Box ‎7.5 for an example of the suppliers registry in the United States).

In Mexico City, Articles 14.2 to 14.7 of the PPL provide for the development by the Administrative Office of the Government of Mexico City (Oficialía Mayor) of a suppliers’ registry (padrón de proveedores) for goods and services (www.proveedores.cdmx.gob.mx). The pilot phase started with the participation of few suppliers. Suppliers can register online by sending all information electronically. They will be then “pre-registered” and a disciplinary body composed of accountants and lawyers will be responsible for analysing the information and authorising the final registration of suppliers. To be registered, suppliers must submit documents including a written declaration under oath that they do not fall into any of the categories described in Article 39 of the PPL concerning breaches of integrity (see section 7.4).

The Ministry of Public Works has already implemented such a registry. However, it is not considered an electronic registry for two reasons: 1) suppliers must send their documents by mail, meaning that it is not possible to register online; 2) the registry is not managed electronically; the Ministry uploads the new list of suppliers with whom CAs can enter into contract every month, adding the recently registered suppliers and deleting the ones whose registration was cancelled. The list published online carries only the registration number and name of each supplier. The Ministry of Public works could benefit from implementing a full electronic suppliers’ registry with constantly updated information; and adding additional information on the list of suppliers such as the field of work, the identification number provided by the Ministry of Finance and Public Credit and the names of the managers. Indeed, adding information can enable procurement officials find out whether they are in a potential conflict of interest situation.

7.2.5. Enforcing the provisions of the Transparency Law to access procurement information.

Transparency is critical for minimising the risks inherent in public procurement. It is also a key mechanism to enhance integrity by helping to hold all stakeholders accountable for their actions. In addition to the OECD Recommendation on Public Procurement (OECD, 2015[2]), the OECD Recommendation of the Council on Public Integrity also promotes “transparency and an open government, including ensuring access to information and open data, along with timely responses to requests for information” (OECD, 2017[7]). A timely degree of transparency should be observed in each phase of the public procurement cycle from procurement planning to payment of the contract. It includes publishing information on procurement plans, tender documentation, award decisions, contract amendments and completion of the contract.

In May 2016, in line with the OECD Recommendation on Public Procurement, Mexico City adopted the Law on Transparency, Access to Public Information and Accountability (Ley de Transparencia, Acceso a la Información Pública y Rendición de Cuentas de la Ciudad de México, or LTAIPRC). This contains provisions governing transparency in public procurement, in particular Articles 121 and 141 mandating contracting authorities (CAs) to publish procurement information on their website (see Box ‎7.6 for information all CAs are required to make available on their website).

The institute in charge of monitoring compliance with the LTAIPRC is INFODF (Instituto de Acceso a la Información Pública y Protección de los Datos Personales de la Ciudad de Mexico). This autonomous entity supervises access to information, guaranteeing the fundamental right of all citizens to share, investigate and request public information and participate in the policy-making process. It opens up public organisations’ information to citizens by publishing timely, verifiable, comprehensive, accessible, updated and complete information in an appropriate format.

Each government entity should have a “Transparency” section on its website, where information is published and classified by article of the LTAIPRC. When looking for procurement information, users need to know the articles of the LTAIPRC related to procurement and then search for the information needed. The system currently in place is not user-friendly, since it requires knowing the LTAIPRC or entails extra research to understand under which articles the information can be found. Furthermore, after several verifications, it seems that the Law on Transparency, Access to Public Information and Accountability is not applied in its entirety, since information is missing and not published online, reducing the transparency and the efficiency of the system in all the procurement phases. This also holds for the tender preparation phase, since CAs do not publish information on their procurement plans which is crucial for engaging suppliers and ensuring the perfect match between demand and supply but also in ensuring that all suppliers have the same level of information. Mexico City should consider enforcing the Transparency Law and implementing a user-friendly website where potential suppliers, civil society and other stakeholders can access the information.

7.2.6. Encouraging the use of the open contracting portal by all contracting authorities

Another initiative implemented in Mexico City is the Open Contracting Partnership, which is about publishing and using open, accessible and timely information on public procurement. The publication of information and its use enables a better engagement, participation and also allows for monitoring of public spending by civil society and other stakeholders (Box ‎7.7 describes the benefits of open contracting and provides concrete evidence-based examples).

Mexico City is the first city in the world where some contracting authorities publish contracting information on the planning, tendering, awarding and implementation stages using the Open Contracting Data Standard through the open contracting portal (http://www.contratosabiertos.cdmx.gob.mx/contratos) which was launched in 2016. In the first semester of 2017, only three CAs were registered in the platform: The Ministry of Finance (Secretaría de Finanzas), the Oficialía Mayor and the Ministry of Public Works (Secretaría de Obras). The Ministry of Public Works was using an accounting and budgeting system SICOP (Sistema de Contabilidad y Presupuesto) which had functions similar to the open contracting portal, allowing for monitoring of the physical and financial progress of public works. Users, such as officials from the Office of the Comptroller (Contraloría de la Ciudad de Mexico), found this system very useful for conducting their activities. However the system was ended recently, which might be explained by the fact that the Ministry of Public Works joined the open contracting portal.

An effective enforcement of the LTAIPRC is key to enhance the transparency of the system at the CAs’ level, but the Open Contracting platform could have a greater impact. It would make procurement information centralised, publicly available and reusable, which is crucial for policy makers, civil society and the private sector. Mexico City should then encourage the use of the open contracting portal by all CAs of the city.

7.2.7. Extending deadlines for economic operators to submit their bids.

Enhancing the access to public procurement opportunities by potential economic operators of all sizes is crucial to get the best value for money through fair competition. In addition to the publication of procurement information, including procurement plans and tender opportunities, another key factor influencing the participation of economic operators in public procurement is the deadline set by contracting authorities for potential suppliers to submit their bid. Longer deadlines enhance the competition among bidders and can reduce opportunities for corruption. Indeed, with longer deadlines: 1) more economic operators will be aware of procurement opportunities and 2) suppliers may have more time to prepare their bids and thus to submit them.

The public procurement regulatory framework of Mexico City foresees tight deadlines that can limit the participation of suppliers to tender opportunities. For instance, Article 43 of the PPL mentions that tender documents should be available only for a minimum of three days after the publication of the tender notice; Article 44 foresees that in the event of changes to the tender documents occurring after the bid opening session, suppliers have up to three days to adjust their economic proposal. No data is publicly available, and none was provided to assess the real time offered to suppliers to submit their bids; however, to enhance competition and the integrity of the system, Mexico City should consider extending the deadlines set in its regulatory framework to enhance the participation of suppliers in procurement opportunities (see Box ‎7.8 for examples of time limits to submit bids in Mexico at the federal level and in the European Union).

7.2.8. Introducing pre-publication for tender documents, to enhance competition and the integrity of the system.

A crucial tool for enhancing access to procurement opportunities is the publication of a prior information notice and the pre-publication of tender documents. This is generally regarded as a best practice: 1) to make the maximum number of suppliers aware of upcoming procurement opportunities, and 2) to give potential suppliers opportunities to provide comments on tender documents before they are formally published. This ensures efficient competition and avoids such integrity breaches as tailored technical specifications. There is no specific rule or timeline for the pre-publication of tender documents or the publication of pre-information notices. However, the sooner the contracting authority (CA) acts, the greater the impact will be for competition and for integrity.

The legal framework of Mexico City does not include provisions regulating the publication of a pre-information notice or the pre-publication of tender documents. CAs in the city therefore do not use them. The city’s legal framework only includes provisions regulating clarification meetings, where potential bidders can ask the CA to clarify specific aspects of the tender documents. This can lead to changes to the tender documentation. Introducing tools such as the pre-information notice or the pre-publication of tender documents could enhance the integrity of Mexico City’s procurement system and access to procurement opportunities.

7.3.1. Developing a tailored anti-corruption strategy for public procurement.

After the adoption of the new constitution of Mexico City on January 2017, which granted greater political autonomy to the city, a series of anti-corruption and integrity reforms together with a Local Anti-corruption System are being implemented. On May 2015, a Decree was published in Mexico’s Federal Official Gazette by which several provisions of the Constitution were amended, added or repealed, to prevent and detect corruption and, to sanction administrative responsibility, but also to control public resources with the final goal of eradicating corrupt practices (see Chapter 1).

Given that public procurement is a high-risk area for corruption and integrity breaches, many countries have developed a targeted anti-corruption strategy or law for procurement. Both Austria (see Box ‎7.9) and Mexico at the federal level have instituted one, although Mexico’s was abrogated when the General Law of Administrative Responsibilities (Ley General de Responsabilidades Administrativas) took effect (see Box ‎7.10). However in Mexico City, public procurement was not addressed directly in the anti-corruption system. During the fact-finding mission, it was noted that the PPL and PWL will be revised at a later stage, after the integrity reforms are adopted. Mexico City could then benefit from drafting an anti-corruption strategy for public procurement, in line with the anti-corruption system and integrity reforms and after reviewing its regulatory framework for procurement.

The integrity of the procurement system is ensured by several provisions in the PPL and PWL, such as the establishment of procurement committees and Citizen Comptrollers, the blacklisting of suppliers and also oversight of procurement plans and budgets by Mexico City’s Ministry of Finance (Secretaría de Finanzas). However, the procurement regulatory framework also includes provisions threatening the integrity of the system, such as giving suppliers short deadlines for submitting their bids (see Section 7.2) and also provisions increasing the risk of collusion: 1) clarification meetings with written and oral questions; 2) public meetings to present tender results, offering suppliers the possibility of presenting a better offer during the meeting; 3) allowing bidders to attend the bid opening meeting; 4) organising of joint site visits for bidders when required in the tender. The OECD Guidelines for Fighting Bid Rigging in Public Procurement (OECD, 2009[9]) recommends avoiding bringing potential suppliers together by holding regularly scheduled pre-bid meetings. Mexico City could benefit from reviewing its procurement framework in the light of international best practices and integrity reforms.

Many other laws govern the integrity of the public procurement system (see Chapter 3). They include Article 47 of the Federal Law of Public Servants’ Responsibilities (abrogated) (Ley Federal de Responsabilidades de los Servidores Públicos, or LFRSP), Articles 7 and 8 of the Federal Law of Public Servants’ Administrative Responsibilities (Ley Federal de Responsabilidades Administrativas de los Servidores Públicos, or LFRASP) and Articles 21, 43, 44, 45, 59 and 70 of the General Law of Administrative Responsibilities (Ley General de Responsabilidades Administrativas, or LGRA).

• Article 47 (abrogated) of the LFRSP determines obligations and duties of public servants, including public procurement officials.

• Article 7 of the LFRASP mentions the responsibility of public officials to perform their duties in compliance with the LFRSP, and following the principles of lawfulness, honesty, loyalty impartiality and efficiency of the public service.

• Article 8-XII of the LFRASP describes the “gift policy”, prohibiting public officials to receive and accept gifts, favours, jobs.

• Article 57 (abrogated) of LFRSP stipulates that every public official may report, in writing to the internal control department of each CA, any breaches entailing the administrative responsibility of other public officials.

• Article 49 (abrogated) of LFRSP stipulates that every government entity should have a unit where everyone can report breaches (including integrity breaches) by public officials for their obligations.

• Article 43 of LGRA and LRA of Mexico City creates the regime for public servants participating in public procurement.

• Article 44 of the LGRA and LRA of Mexico City established the obligation to issue and implement a protocol for public procurement by the Co-ordination Committee of the national and local Anti-corruption System.

• Article 59 of the LGRA and the LRA of Mexico City establishes open-term contracting as a serious offence.

• Article 70 of the LGRA and LRA of Mexico City establishes collusion in public procurement as individual act and as a serious offence.

All procurement officials must comply with all the provisions of the LFRSP, but many provisions are directly linked to public procurement (see Box ‎7.11).

7.3.2. Encouraging integrity among procurement officials through tailored training programmes and developing a clear integrity capacity strategy.

Public procurement is increasingly recognised as a strategic profession, playing a key role in preventing mismanagement, waste and potential corruption. The OECD Recommendation on Public Procurement recommends that adherents to ensure that procurement officials meet high professional standards for knowledge, practical implementation and integrity by providing a dedicated and regularly updated set of tools to require high standards of integrity for all stakeholders in the procurement cycle. All actors involved in the procurement process should demonstrate high standards of integrity, to cultivate integrity in the procurement process (OECD, 2015[2]).

A prerequisite for any institution is the clear identification of officials working in public procurement. Mexico City could not provide information on the size of the public procurement workforce. However, the Oficialía is conducting a diagnostic evaluation of public procurement officials, collecting detailed information on their background. As a first step, Mexico City should clearly identify all officials involved in the procurement process, so strategies can be formulated to enhance the system’s integrity and efficiency.

The Administrative Office of the Government of Mexico City (Oficialía Mayor) and the Office of the Comptroller-General (Contraloría de la Ciudad de México) have been providing training on public procurement to enhance understanding of public procurement processes. The Office of the Comptroller-General organised those training sessions with Mexico City’s School of Public Administration (Escuela de Administración pública de la ciudad de Mexico). However, information gathered in the fact-finding mission suggests that integrity issues are not directly covered in the training.

In 2014, in addition to those courses, at the request of the Administrative Office of the Government of Mexico City (Oficialía Mayor), a certification programme for public procurement officials was established in the School of Public Administration to ensure that the officials have the knowledge, experience and capacity for their duties. This certification also covered integrity issues, but was intended only for directors (strategic level) and heads of units (operational level), not for all public procurement officials. Mexico City should generalise the certification to all levels of officials working on public procurement, tailoring the programme to their responsibilities, with a focus on integrity.

In the capacity-building area, developing e-learning tools is a relatively cost-efficient way to increase capacity. The Office of the Comptroller-General runs online courses covering topics including public procurement, public ethics, and public works. The courses are intended for the general public and civil society, but can also be undertaken by public officials. However, the courses are not accessible online, which undercuts the efforts of the Office of the Comptroller-General to develop the training. For this initiative to bear fruit, the Office of the Comptroller-General should leverage its IT system to ensure the constant availability online of e-learning courses. Moreover the city’s Public Administration School provides online courses covering integrity issues. It seems from information provided during the fact-finding mission that their content was theoretical rather than relevant to the daily work situations public officials encounter in exercising their duties. E-learning courses tailored to public procurement officials’ daily work situations could be helpful.

7.3.3. Promoting transparency and a merit-based approach to hiring, and generalising use of the EPI to all the city’s procurement officials.

In addition to the OECD Recommendation of the Council on Public Procurement, the OECD Recommendation of the Council on Public Integrity promotes a merit-based approach by employing professional, qualified people with a deep commitment to integrity in public service. For transparency, all vacant positions of public officials should be published online and a competitive process should be instituted, to ensure a merit-based approach. Mexico City does not have a civil service career in the public sector (see Chapter 3) and thus, except for unionised officials, public officials have contracts of limited duration. The law stipulates that any posts vacant be published on the government entities’ website and a competitive selection process be carried out, but not all entities apply the law. This holds true for public procurement officials. Mexico City should then consider promoting transparency and a merit-based approach in its hiring procedures.

In July 2016, Mexico City introduced a new recruitment evaluation mechanism: the Integral and Preventing Evaluation, EPI (Evaluación Preventiva Integral). The EPI (see Box 3.11) is intended to evaluate public officials’ behaviour starting at the recruitment stage, and continuing to the termination of employment. It consists of four evaluations seeking to measure public officials’ level of trust, reliability, integrity and professional competences: with a psychometric test, psychological test, socio-economic investigations and polygraph examinations.

The EPI is not used for all procurement officials, however. It is not applicable either 1) for unionised officials, officials working in ministries, territorial demarcations (delegaciones), deconcentrated administrative bodies and other government entities of Mexico City public administration, or 2) for officials moving from one organisation to another without a salary increase. This is intended to ensure the hiring of officials of integrity, but no action is planned for officials already working as procurement officials. Mexico City should consider generalising the use of EPI for procurement officials of all CAs of the city and develop a dedicated mechanism for officials already working as public procurement officials.

7.3.4. Raising awareness in the private sector about the risk of corruption.

Public procurement contracts should contain “no corruption” warranties and measures should be implemented to verify the truthfulness of suppliers’ guarantees that they have not and will not engage in corruption in connection with the contract. One possibility is to include Integrity Pacts for every procurement procedure. These are agreements between the contracting authority offering a contract and the potential suppliers willing to submit a bid. The agreement provides that potential suppliers abstain from bribery, collusion and other corrupt practices for the extent of the contract. The legal representatives of firms are then aware and directly accountable for the unlawful behaviour. In some OECD countries, integrity pacts have been used as an effective tool in fighting corruption.

Article 33 XXI of the PPL foresees that legal representatives of bidders should submit a declaration under oath that they are not under one of the restrictive cases provided for in Article 39 of the PPL and Article 37 of the PWL. These include cases associated with the poor performance of suppliers and their compliance with the PPL, but also cases related to the integrity of the system. If a potential supplier falls in such a case, CAs are prohibited from entering into contract with it (see Box ‎7.12, describing cases related to integrity breaches). In addition to the declaration under oath, bidders have to submit a declaration that they have no conflict of interest (see section ‎7.4).

Despite these measures, it is still necessary to increase awareness of corruption risks in the private sector. Indeed, raising awareness only for the public sector is not the most efficient approach for ensuring high integrity standards. The public sector can play a key role in fostering the awareness of the private sector by organising trainings and capacity building activities on integrity issues.

In Mexico City, no specific actions have been developed with the private sector to enhance the integrity of the system. In addition to targeting suppliers and potential suppliers directly, by organising awareness- raising sessions and trainings on integrity issues, Mexico City could also benefit from developing measures with chambers of commerce and federations that play a key role in reaching suppliers and raising their awareness.

Potential suppliers should also be encouraged to take voluntary steps to reinforce integrity in their relationship with the government. These include codes of conduct, integrity training programmes for employees, corporate procedures to report fraud and corruption, internal controls, certification and audits by a third independent party. In Mexico, at the federal level, the Ministry of Public Administration (SFP) developed the Business Integrity Programme Model in 2017 (see Box ‎7.13).

7.4.1. Complementing the general Code of Ethics with a specific code of conduct/code of ethics for procurement officials

The OECD Recommendation of the Council on Public Procurement and the OECD Recommendation of the Council on Public Integrity recommend requiring high standards of integrity for all stakeholders in the procurement cycle. Those standards can be reflected in integrity frameworks or codes of conduct applicable to public-sector employees. The codes of conduct should clarify expectations and serve as a basis for disciplinary, administrative, civil and/or criminal investigation and sanctions, as appropriate. They can also set out in broad terms the values and principles that define the professional role of the civil service or they can focus on the application of such principles in practice.

In some high-risk areas, officials need specific guidance and standards to mitigate the risks associated with the complexity of the area. Public procurement is one concrete example of such a high-risk area; so developing standards for procurement officials, and in particular, specific restrictions and prohibitions, aim to ensure that officials’ private interests (see Chapter 3) do not improperly influence the performance of their public duties and responsibilities (see Box ‎7.14 on Canada’s procurement Code of Conduct).

To safeguard the integrity and ethics in Mexico City, the city has three main instruments (see Chapter 3): the Federal Law of Public Servants’ Responsibilities (Ley Federal de Responsabilidades de los Servidores Públicos, or LFRSP), the Ethics Code (Código de Ética de los servidores públicos para el Distrito Federal, or CESPDF) adopted in 2014 and a Charter of Duties of Public Officials (Carta de Obligaciones de los servidores públicos, or COSP). All public officials in Mexico City should follow the provisions specified in those instruments. However, given that public procurement is a high-risk area, Mexico City could benefit from developing a specific code of conduct for public officials working in procurement activities, given that at the federal level, specific guidelines are to be implemented in the context of the National Anti-corruption System.

7.4.2. Generalising conflict of interest policies to all officials working on public procurement and monitoring them effectively.

A conflict of interest arises when individuals or corporations (either in the government or private) is in a position to exploit their professional or official capacity in some way for personal or corporate benefit. Most common conflicts of interest are related to personal, family or business interests and activities, gifts and hospitality, disclosure of confidential information, and future employment. Public procurement positions are thus considered high-risk positions.

The regulatory framework of Mexico City to safeguard the integrity of the system is fragmented (see Chapter 3). Provisions related to conflicts of interest are disseminated in the Law on Administrative Responsibilities, the Ethics Code, and the Charter of Duties of Public Officials. In 2014, complementing its regulatory framework related to integrity, Mexico City developed a conflict of interest policy based on four types of declarations:

1. 1. asset declaration

2. 2. declaration of conflict of interest

3. 3. tax declaration

4. 4. declaration of no conflict of interest.

This preventive system aims to reduce significantly integrity breaches in both the public and the private sector. While the three first declarations should be submitted by public officials, the last one (declaration of no conflict of interest) should be submitted by public officials but also by bidders. The three first declarations should be submitted on a yearly basis; but a declaration of non-conflict of interest should be submitted by public officials participating in the procurement activity and the bidders for every tender/ procurement activity.

A first step is to determine which public officials are subject to the different declarations. Table 3.6 in Chapter 3 of this review provides a description of public officials subject to public disclosure in the current conflict of interest legal framework. However, the fact-finding mission suggested that implementation of the different declarations in terms of targeted audience is inconsistent. In some cases, only heads of units submit the declarations, and in other cases, they are submitted by other officials participating in the tender procedure.

From the information collected during the fact-finding mission, five categories of officials are directly involved in the procurement process:

1. 1. heads of CAs

2. 2. officials in charge of the tender procedure

3. 3. officials in the technical area

4. 4. officials assisting in the preparation of the procurement procedure (personal de base- unionised)

5. 5. members of the procurement committee.

All those officials can have access to information related to a specific procurement procedure and could potentially have an influence in the decision-making process. Mexico City should require all public officials intervening in the procurement process to fill all declarations (when applicable), and in particular a declaration of non-conflict of interest.

The management of conflict of interest in Mexico City consists basically in monitoring public officials’ compliance to submit their declarations of assets, tax and interests rather than implementing within the organisation effective preventing mechanisms to avoid exposing public officials to a conflict of interest.

The Office of the Comptroller performs random checks on some declarations submitted by public officials. However, it has limited staff capacity to conduct checks, and has not developed a strategy targeting in priority high-risk areas such a public procurement and specific procurement procedures. Mexico City should grant the control body access to the information submitted in the different declarations, to monitor the data submitted.

7.5.1. Strengthening the review system by introducing alternative mechanisms and enhancing the system’s transparency.

Any stakeholder, including unsuccessful tenderers, who believes that the public procurement process was conducted in violation of relevant laws, must have access to an effective review and remedy mechanism. Those mechanisms help build confidence among businesses and increase the overall fairness, lawfulness and transparency of the procurement procedure. The OECD recommends that complaints be handled in a fair, timely and transparent way, by setting up an effective course of action to challenge procurement decisions to correct defects, prevent wrongdoing and build the confidence of bidders, including foreign competitors, in the integrity and fairness of the public procurement system (OECD, 2015[2]).

In Mexico City, bidders may challenge a public procurement procedure by submitting a written request to the Office of the Comptroller five days after the issuance of a decision. The Office of the Comptroller-General must then issue a decision within ten days of an audience. No alternative mechanisms are in effect in Mexico City. The Office of the Comptroller-General did not provide information on the number of challenges to procurement decisions. However, during the fact-finding mission, members of civil society noted that very few challenges are attempted, given the lack of trust in the system. Mexico City should consider introducing alternative mechanisms to improve its remedies system.

Decisions issued by the Office of the Comptroller-General are not published online; but the information can be accessed on request. To improve the transparency of the remedies system, Mexico City would benefit from publishing those decisions.

In many OECD countries, decisions can be challenged by all stakeholders, including civil society and potential suppliers not participating in the procurement procedure. However, in Mexico City, only bidders participating in a procurement procedure can challenge decisions. To enhance trust in the system, Mexico City should consider the possibility of enabling all stakeholders to challenge procurement decisions.

7.5.2. Updating procedure manuals and enhancing the capacity of officials in charge of controlling public procurement activities.

The oversight of procurement activities is essential in supporting accountability and promoting integrity and efficiency in the public procurement process. Without an adequate control system, an environment is created in which assets are not protected against loss or misuse; good practices are not followed; goals and objectives may not be accomplished; and individuals are not deterred from engaging in dishonest, illegal or unethical acts. It is particularly important to have functioning internal controls in procurement, including financial control, internal audit and management control (OECD, 2007[11]). The Office of the Comptroller is the government entity in charge of performing those controls and thus safeguarding the integrity of the system.

In Mexico City, every contracting authority (CA) has a procedural manual approved by the General Co-ordination of Administrative Modernisation (CGMA) which is responsible for determining whether each manual meets basic requirements. When performing controls, officials from the Office of the Comptroller have to verify that procurement activities are in line with requirements set in the manual. However, interviews with stakeholders suggest that the manuals are not always updated and do not take into account external parameters and processes that do not depend on the CAs. Mexico City should consider updating procedure manuals and aligning them with current processes.

Public procurement is no longer considered an administrative activity. To perform controls on procurement activities, officials need to understand the procurement framework and the systems and processes in place. It is crucial for countries and institutions to assess not only the capacity of public procurement officials but of officials in charge of procurement oversight (see Box ‎7.15).

Interviews with internal controllers and auditors from the Office of the Comptroller-General in charge of controlling public procurement activities suggest that they face two main challenges. The first concerns their capacity, since they have not been specifically trained on public procurement and perform their tasks without a thorough knowledge of the specific risks of public procurement activities. The second main issue concerns the number of officials assigned to perform these controls. Given the number of procedures, different stakeholders called for increasing the number of officials in charge of controlling public procurement activities, and thus the number of controls. Mexico City could benefit not only from enhancing the capacity of internal controllers on public procurement but from increasing the number of officials working in this field.

7.5.3. Publishing reports of citizen comptrollers to add transparency to the public procurement system

The OECD Recommendation on Public Procurement recommends the provision of direct opportunities for direct involvement of relevant external stakeholders in the procurement system. The goal is to increase transparency and integrity while ensuring adequate scrutiny. Meanwhile, confidentiality, equal treatment and other legal obligations in the procurement process must be maintained (OECD, 2015[2]). A new control mechanism Mexico City introduced in 2007 was the involvement of Citizens Comptrollers in the procurement process. Mexico is one of the first OECD countries to introduce the concept of “Social Witnesses” or “Citizen Comptrollers” in public procurement activities at the national and federal level (see Box ‎7.16).

A Citizen Comptroller is an honorific and volunteer position. They receive accreditation from the Office of the Comptroller-General after being trained on public procurement and other topics. Unlike Social Witnesses, Citizen Comptrollers are not paid to perform their duties. In 2016, Mexico City had 892Citizen Comptrollers; the city is willing to increase their number and has recently published a call for new Citizen Comptrollers. Their main role is to oversee public procurement activities at all phases of the procurement process. In the tender preparation phase, they should review tender documentation and participate in procurement committees; in the tendering process, they should attend the bid opening session and the clarification meeting; in the contract management phase, they are entitled to control the performance of the contract by suppliers. Citizen Comptrollers should submit their reports to the Office of the Comptroller-General, signalling any infringement on the procurement regulatory framework. However, the reports are not published online, unlike Social Witness reports in the national system. To add transparency to public procurement, Mexico City could benefit from publishing the reports of Citizen Comptrollers online.

7.5.4. Providing officials from the Office of the Comptroller-General and Citizen Comptrollers documents and sharing information on the related procurement events they should attend in advance.

The public procurement regulatory framework mentions that participants to the procurement committee should receive the documentation and be informed at least two days in advance for ordinary sessions and one day in advance for extraordinary sessions. In line with the regulatory framework, in practice officials from the Office of the Comptroller-General and Citizen Comptrollers receive documents in general two days before the meeting.

However, given the size of the documents, the timeline allowed by the legal framework is not sufficient to review in depth all the tender documentation to ensure the compliance with the legal framework and detect breaches of integrity. Neither do the timelines ensure the availability of officials from the Office of the Comptroller and Citizens Comptrollers to attend the different events. Better planning and review of timelines in the procurement regulatory framework will enhance the efficiency of the control system.

7.5.5. Implementing performance audit by developing indicators.

The essential role of external audit in detecting and investigating fraud and corruption in procurement is now generally recognised, as well as that of suggesting systemic improvements. External audit institutions have the key task of identifying strengths and weaknesses in the execution of public procurement operations at the level of contracting authorities. These ex post audits aim to determine the extent of compliance or non-compliance with laws and regulations, as well as the performance and achievements in relation to the objectives and targets set for a procurement activity (OECD-SIGMA, 2011).

The OECD recommends to have an independent and professional Supreme Audit Institution (SAI) supported by a legal framework, which allows for high-quality audits that have an impact on public sector operation. In Mexico City, the local Supreme Audit Institution plays a key role in controlling and ensuring the integrity of the procurement system. The SAI performs its controls based on four criteria: 1) funds allocated 2) relevance, 3) coverage and 4) citizens’ interest. The Office of the Comptroller-General and the SAI co-ordinate their compliance audit which is considered a good practice.

As for performance audit, the clear lack of indicators at the contracting authority level makes it nearly impossible to perform such audits. Mexico City should consider developing key performance indicators to conduct performance audits and enhance the efficiency and integrity of the system.

7.5.6. A risk-mapping strategy could enhance the efficiency and integrity of the procurement process

The basis for an adequate oversight and control system is a risk analysis of the processes. Public procurement activities need a comprehensive assessment of all types of risks: corruption, fraud, supply disruption, etc. A proper risk assessment exercise will require defining the risks associated with public procurement procedures, identifying the controls in place to mitigate these risks, and adding other controls necessary to address any existing gaps.

The identification of integrity risks throughout the procurement process is crucial to safeguard the integrity and efficiency of the system. A holistic approach for risk mitigation and corruption prevention is needed. Focusing integrity measures solely on one step in the process may increase risks in other stages (see Table ‎7.2).

Although risks listed in Table ‎7.2 may exist in all government entities, their probability depends on the measures implemented at the country/state or at the entity level, including the type and frequency of controls performed by the relevant government entities.

Mexico City did not develop a risk-mapping strategy for procurement activities, enabling each government entity to identify the existing risks and then to implement mitigation measures to counter those risks. Many OECD countries have developed a specific risk mapping strategy for procurement procedures, including a risk evaluation (see Box ‎7.17 for an example of risk mapping strategies developed in Tasmania, Australia). After developing a risk mapping strategy, Mexico City will have to raise public officials’ awareness of the issue, in particular of those working on public procurement, of the different risks they face.

7.5.7. Ensuring a system of effective and enforceable sanctions for procurement officials.

A proportional and effective sanctioning system in detecting illicit behaviour can act as an effective deterrent to engaging in corrupt behaviour. The OECD recommends developing a system of effective and enforceable sanctions for government and private-sector procurement participants, in proportion to the degree of wrongdoing, to provide adequate deterrence without creating undue fear of consequences or risk-aversion in the procurement workforce or supplier community (OECD, 2015[2]).

For integrity breaches and depending on their severity (see Chapter 2), three types of sanctions can be imposed on public officials: criminal sanctions, administrative sanctions and financial sanctions. Administrative sanctions range from public and private warnings, suspensions, dismissal and disqualification from occupying a position, but also pecuniary sanctions based on the severity of the breach. Mexico City did not provide the number of procurement officials who have been subject to those sanctions. The only information available is that in 2016-2017, 2 001 public officials were subject to administrative sanctions (see Box 3.8 in Chapter 3).

The current integrity framework does not provide clear guidelines on how to define the severity of the sanctions. This means that two procurement officials committing the same infraction might be subject to different sanctions if judged by two different officials from the Office of the Comptroller-General. Mexico City should thus consider providing more consistency in applying sanctions depending on their severity.

7.5.8. Enhancing the management of punished and blacklisted suppliers

As for sanctions for private sector procurement participants, in addition to criminal sanctions, Mexico City has developed a system for blacklisting suppliers. Article 39 of the PPL and 37 of the PWL define restrictive cases to enter into contract with potential suppliers (see Section ‎7.2). Those cases concern the poor performance of suppliers and their failure to abide by the regulatory framework, but also to integrity breaches. When a supplier falls in one of those cases, before the Office of the Comptroller excludes him from public procurement activities, a clear process described in Article 81 of the PPL and 37 of the PWL must be followed, which includes an audience with the concerned supplier. The final decision must be published in the Official Gazette and online.

Economic operators falling in those cases are listed in the anti-corruption portal in three categories, with information on their name, company’s registration number, type of breach/infringement, duration of the sanction, etc. However the anti-corruption portal does not contain a search engine or offer the possibility of filtering by supplier name, type of infraction, duration of the sanction, etc. , which would make the use of the information simpler for procurement officials. Mexico City could benefit from a more user-friendly webpage for blacklisted suppliers by adding a search engine and the possibility of adding filters.

In addition to the list of blacklisted suppliers published on the anti-corruption portal, a list of suppliers of public works who did not complete the contract within the stipulated timeframe is published on the website of the Office of the Comptroller-General (http://cgservicios.df.gob.mx/contratistas/). Currently, only one supplier appears on the list, which calls into question how reliable the information published is.

Before awarding a contract, public procurement officials are required to check the two lists mentioned above as well as the list of blacklisted suppliers published by the Ministry of Public Administration. To increase efficiency, Mexico City could aggregate the information available in the different locations on a single webpage.

Enhancing transparency and access to information on public procurement processes and activities

• Mexico City could benefit from enhancing the access to procurement opportunities and the efficiency of the system by reducing the cases of legal exceptions to open and competitive tendering.

• Mexico City should consider strengthening controls on public procurement by enhancing the monitoring of exceptions to competitive tenders.

• Mexico City should encourage the transparency and the digitalisation of the procurement system by developing a comprehensive e-procurement system.

• Mexico City could benefit from implementing and enhancing electronic tools such as electronic price catalogues and suppliers’ registries.

• Mexico City should consider providing an adequate and timely degree of transparency in each phase of the procurement cycle by enforcing the provisions of the Transparency Law, to access procurement information.

• Mexico City could benefit from encouraging the use of the open contracting portal by all contracting authorities.

• Mexico City should consider extending deadlines for economic operators to submit their bids.

• Mexico City could benefit from introducing the prepublication of tender documents in its procurement legal framework.

Preserving integrity and promoting a culture of integrity among public procurement officials, potential suppliers and civil society

• Mexico City could benefit from developing a tailored anti-corruption strategy for public procurement in line with the anti-corruption system and integrity reforms and reviewing its procurement regulatory framework.

• Mexico City should further encourage a culture of integrity among procurement officials by introducing tailored training programmes and by developing a clear integrity capacity strategy.

• Mexico City should further promote transparency and a merit-based approach in its hiring procedures, and generalise the use of the EPI to all procurement officials of the city.

• Mexico City should further engage with the private sector to reduce risks of corruption in the framework of public procurement, by organising awareness-raising sessions and training for the private sector.

Encouraging public integrity through an effective management of conflict of interest in the procurement process

• Complementing the general Code of Ethics, Mexico City should consider developing a specific code of conduct/code of ethics for procurement officials.

• Mexico City should generalise the implementation of conflict of interest policies to all officials participating in the public procurement process and ensure their effective monitoring.

Strengthening the accountability, control and risk management system for public procurement

• Mexico City could consider strengthening its review system by introducing alternative mechanisms enhancing the transparency of the system by publishing decisions on complaints and enabling all stakeholders to challenge procurement decisions.

• Mexico City could benefit from updating the procedure manuals, enhancing the capacity of officials in charge of overseeing public procurement and increasing the number of officials working in the field.

• To increase transparency in the public procurement system, Mexico City could benefit from publishing the reports of Citizen Comptrollers online.

• Mexico City could enhance the efficiency of its control system by sharing well in advance information with officials from the Office of the Comptroller and Citizen Comptrollers and informing them of procurement events they should attend.

• Mexico City could benefit from implementing performance audits by developing new indicators.

• Mexico City should develop a risk-mapping strategy to enhance the efficiency and integrity of the procurement process.

• Mexico City should ensure a system of effective and enforceable sanctions for procurement officials, providing more accurate information on the application of sanctions depending on their severity.

• Mexico City could benefit from a more user-friendly webpage for blacklisted suppliers and centralising the information data on sanctioned suppliers on a single webpage.