copy the linklink copied!5. Towards Strategic Public Procurement and Enhancing the Competency Framework of ISSSTESON’s Public Procurement Workforce

This chapter assesses to what extent ISSSTESON utilises public procurement strategically to support complementary policy objectives, such as developing SMEs, social and green objectives, as well as innovation. It also highlights pathways ISSSTESON can explore to achieve the maximum impact for strategic public procurement and the support for complementary policy objectives. This chapter also analyses the competency of the public procurement workforce at ISSSTESON, identifying skills gaps and opportunities for improvement. Part of this analysis is focused on strategic human resource management of the public procurement function.

    

The Institute of Security and Social Services for the Workers of the State of Sonora (Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado de Sonora, or ISSSTESON) can trace its roots back almost 70 years. A decentralised public body with its own legal framework and assets, it is responsible for granting social security benefits and services, mainly pensions and health services, to the public servants of the State Government of Sonora, its municipalities and affiliated organisations. The institute is divided into departments located at the central offices in the state capital, Hermosillo, and in hospital units, which are distributed around the state (see Figure ‎5.1 for the institute’s organisational structure).

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Figure ‎5.1. The organisational structure of ISSSTESON
Figure ‎5.1. The organisational structure of ISSSTESON

Source: (ISSSTESON, 2015[1]), Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado de Sonora, http://transparencia.esonora.gob.mx/NR/rdonlyres/3FF4F43E-5292-4D7D-B260-ECE3BE9C0720/146442/ORGANIGRAMAGENERALAC TUALIZADOJUNIO2015.pdf, accessed on 5 October 2017.

The purpose of this chapter is to analyse two key elements of the 2015 OECD Recommendation of the Council on Public Procurement (hereafter the “OECD Recommendation”) (OECD, 2015[2]): strategic public procurement and capacity building. Public procurement is becoming more complex, shifting from an administrative task to a strategic function, and this will require that the procurement workforce develop multidisciplinary capacities. It is thus highly relevant to address both topics in this chapter.

The OECD Recommendation calls on adherents to develop a procurement workforce that can continually deliver efficient and effective value for money (see Box ‎5.1). If the procurement function is to be strategic, professionals will need to master a wide set of skills and competencies, including negotiation, project and risk management. The procurement function must specify, provide access to and manage the external resources and assets that an organisation will need to fulfil its strategic objectives. Adequate capacity in the procurement workforce is thus a crucial component of a sound public procurement system and will lay the foundation for successful development of all other elements.

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Box ‎5.1. The OECD Recommendation of the Council on Public Procurement (procurement workforce)

IX. RECOMMENDS that Adherents develop a procurement workforce with the capacity to continually deliver value for money efficiently and effectively.

To this end, Adherents should:

i) ensure that procurement officials meet high professional standards for knowledge, practical implementation and integrity by providing a dedicated and regularly updated set of tools, for example, sufficient staff in terms of numbers and skills, recognition of public procurement as a specific profession, certification and regular trainings, integrity standards for public procurement officials and the existence of a unit or team analysing public procurement information and monitoring the performance of the public procurement system.

ii) provide attractive, competitive and merit-based career options for procurement officials, through the provision of clear means of advancement, protection from political interference in the procurement process and the promotion of national and international good practices in career development, to enhance the performance of the procurement workforce.

iii) promote collaborative approaches with knowledge centres such as universities, think tanks or policy centres to improve skills and competences of the procurement workforce. The expertise and pedagogical experience of knowledge centres should be enlisted as a valuable means of expanding procurement knowledge and upholding a two-way channel between theory and practice, capable of boosting application of innovation to public procurement systems.

Source: (OECD, 2015[2]), OECD Recommendation of the Council on Public Procurement, http://www.oecd.org/gov/ethics/OECD-Recommendation-on-Public-Procurement.pdf.

The OECD Recommendation encourages balancing use of the public procurement system to pursue secondary policy objectives with the primary procurement objective, which refers to delivering the goods and services necessary to accomplish government functions in a timely, economic and efficient manner (OECD, 2015[2]). To ensure a competitive and effective awarding process, the OECD recommends that institutions facilitate access to procurement opportunities by pursuing secondary policy objectives (also known as “strategic public procurement”). The policy choice whether to pursue secondary objectives will vary depending on the government and citizens’ needs, but the Recommendation identifies steps that should be taken whenever such objectives are pursued (see Box ‎5.2).

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Box ‎5.2. The OECD Recommendation of the Council on Public Procurement (secondary policy objectives)

V. RECOMMENDS that Adherents recognise that any use of the public procurement system to pursue secondary policy objectives should be balanced against the primary procurement objective.

To this end, Adherents should:

i) evaluate the use of public procurement as one method of pursuing secondary policy objectives in accordance with clear national priorities, balancing the potential benefits against the need to achieve value for money. Both the capacity of the procurement workforce to support secondary policy objectives and the burden associated with monitoring progress in promoting such objectives should be considered.

ii) develop an appropriate strategy for integrating secondary policy objectives in public procurement systems. For secondary policy objectives that will be supported by public procurement, appropriate planning, baseline analysis, risk assessment and target outcomes should be established as the basis for developing action plans or guidelines for implementation.

iii) employ appropriate impact-assessment methodology to measure the effectiveness of procurement in achieving secondary policy objectives. The results of any use of the public procurement system to support secondary policy objectives should be measured according to appropriate milestones, to provide policy makers with the necessary information about the benefits and costs of such use. Effectiveness should be measured both at the level of individual procurements, and against policy target objective outcomes. Additionally, the aggregate effect of pursuing secondary policy objectives on the public procurement system should be periodically assessed to address potential objective overload.

Source: (OECD, 2015[2]), OECD Recommendation of the Council on Public Procurement, http://www.oecd.org/gov/ethics/OECD-Recommendation-on-Public-Procurement.pdf.

copy the linklink copied!5.1. The institutional setup for human resource management at ISSSTESON

The department of Administrative Services (Subdirección de Servicios Administrativos) monitors the proper dissemination and implementation of policies and procedures for the administration of human, material and service resources. It proposes and applies the basic policies on recruitment, selection, remuneration, promotion, training and development of workers in the service of the institute. The administrative department has a dual role. Not only is it responsible for human resources (HR), but it also organises the drug supply system, in the acquisition, storage and distribution processes. The administrative area schedules the execution of the projects of public tendering.

The HR department of ISSSTESON headquarters has 11 divisions, according to the organisational chart. How they function is defined in the manuals developed by the institute.1 Additionally, there are three HR departments within hospitals that function in an administrative manner (i.e. sorting payrolls). The main HR department is located at the central offices, and its main roles include:

  • optimising the administrative processes of contracting, induction, training, development and evaluation of institute staff.

  • assisting in the identification of the institute’s HR needs, implementing training programmes and informing staff.

  • preparing and keeping up to date job descriptions, manuals and profiles of the areas that make up the institute, for application in recruitment, induction, training and promotion of staff.

The responsibilities of ISSSTESON employees are set up in the internal regulations; including procedure manuals for each of the administrative units involved in the procurement process, where activities and responsibilities for all public officials are set up. There are internal systems for the procurement process itself where officials interact with each other in order to approve the acquisitions process. Manuals have been developed for the following procurement procedures:

  • Award of public works and related services (Adjudicación de obra pública y servicios relacionados con la misma, 2017)

    • Objective: following up on requests for direct awards and provision of public works and services relating to it.

  • Procedures for the purchase of medicines, equipment and supplies through direct awards (Asignación de claves por proveedor para la adquisición de medicamentos, bienes y suministros a través de adjudicación directa, 2017)

    • Objective: Carrying out timely procurement procedures for medical goods and supplies through direct procurement, using the Electronic Procurement System (Sistema Electrónico de Compras, or SIEC).

  • Integration of the Annual Procurement Programme (Integración del Programa Anual de Adquisiciones, 2015)

    • Objective: making purchases in a timely manner based on the needs of the institute and the authorised budget, ensuring the proper integration of the annual procurement programme.

  • Public Tendering Procedure (Trámite de Licitación Pública, 2017)

    • Objective: guaranteeing the award of goods and services in a transparent and impartial way while ensuring quality and seeking the best conditions for the State.

Approximately 3 300 employees work for ISSSTESON, including its four hospitals. Information provided by the institute shows that 90% of the employees are unionised and 10% non-unionised (empleados de confianza) (see Table ‎5.1). Some employees are unionised, i.e. affiliated with a labour union, and some are not. ISSSTESON reports a very low turnover rate among employees working in public procurement. Changes typically occur every six years, as new senior management takes over when a new state government administration is sworn in. Management positions are political appointments, not filled through competitive procedures. The planning area, however, has developed certain criteria, such as job profiles for all positions in ISSSTESON, which include the main functions, a general description of the work and the desired skills, salary and remuneration.

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Table ‎5.1. ISSSTESON personnel, by type of appointment (2016)

Administrative units

Unionised

Non-unionised

Temporary contracts

Scholars

Medical residents/ interns

TOTAL

ISSSTESON – administrative offices

523

131

92

16

1

763

Medical Centre Dr. Ignacio Chávez

1 032

36

226

55

5

1 354

CIAS Norte

21

3

16

0

0

40

CIAS Centro

46

2

18

0

0

66

CIAS Sur

88

7

41

13

0

149

Hospital Lic. Adolfo López Mateos and Clinic

283

26

34

12

1

356

Hospital ISSSTESON Guaymas

132

7

23

6

0

168

Hospital ISSSTESON Nogales

24

10

102

1

0

137

Other areas in the state

128

56

84

4

0

272

TOTAL

2 277

278

636

107

7

3 305

Source: Information provided by ISSSTESON.

Thirty employees are exclusively assigned to procurement matters on a daily basis. As noted in Chapter 2, procurement employees work in two separate departments. Six public officials work at the Tenders Department, which manages public procurement processes such as tenders, and 12 officials work at the Acquisitions Department, which centrally manages procurement through direct awards. ISSSTESON has an Acquisitions, Leasing and Services Committee (Acquisitions Committee), which authorises centralised procurement for the different areas and hospital units; four hospitals have a procurement unit in charge of purchasing input and materials considered as urgent needs that their warehouses lack (see Table ‎5.2).

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Table ‎5.2. ISSSTESON procurement units

Procurement Unit

Location

City

Procurement General Offices

ISSSTESON building

Hermosillo

Procurement Hospital Guaymas

Hospital Clinic Guaymas

Guaymas

Procurement Medical Centre Dr. Ignacio Chávez

Hospital Medical Centre Dr. Ignacio Chávez

Hermosillo

Procurement Adolfo López Mateos

Hospital Lic. Adolfo López Mateos

Obregon City

Procurement Clínica Nogales

Clinic Hospital ISSSTESON Nogales

Nogales

Source: Information provided by ISSSTESON.

copy the linklink copied!5.2. Foundations for enhancing the competency of the workforce

Recent OECD surveys suggest that the workforce is a major weakness of many procurement systems (OECD, 2017[3]). In OECD countries, procurement practitioners face challenges in the transition from an administrative to a strategic function, with the increasingly complex rules, the multidisciplinary nature of the profession and the lack of professionalisation. The OECD’s experience working with countries suggests that capacity is a key element in a sound public procurement system. An efficient system usually includes:

  1. 1. procurement rules and procedures that are simple, clear and that ensure access to procurement opportunities;

  2. 2. effective institutions for executing procurement plans and procedures; and for producing, managing and monitoring contracts;

  3. 3. appropriate electronic tools;

  4. 4. suitable human resources, in numbers and skills, for planning and carrying out procurement processes;

  5. 5. competent contract management.

The quality of public procurement is highly dependent on the competencies of the individual procurer. In day-to-day procurement processes, the desk officer makes the crucial decisions that make the difference between effective and efficient procurements and wasteful ones. While smaller, less complex purchases require little specialised skill, complex procurement cases can only be negotiated for the public good if the official handling the case has the requisite professional knowledge.

ISSSTESON has not established any specific requirements for procurement officials in terms of working skills, competencies or job profiles, and there are no specific entry requirements procurement employees must satisfy prior to recruitment. ISSTESON has not evaluated the chief capacity challenges procurement officials face, and no strategy is in place to improve the procurement capacity of the workers. ISSSTESON should develop a capacity-building or training plan for its procurement workforce, including an incentive system to encourage better performance. No advisory services or help desks have been established to answer questions, give advice or recommend good practices or frameworks. Other officials who work in procurement, such as auditors and internal comptrollers, do not receive any specific training. The same goes for suppliers, who do not receive any support or training from ISSSTESON, and have to rely on their own resources to understand the procurement processes.

ISSSTESON could benefit from introducing measures that formally structure capacity-building efforts for the public procurement system. The HR Department could also be charged with developing guidance material and trainings, as needed. Ireland, for example, could serve as a model for developing guidance materials (see Box ‎5.3 below).

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Box ‎5.3. Development of national procurement guidelines in Ireland

One of the primary objectives of establishing the Office of Government Procurement (OGP) in Ireland was to improve the professionalisation of the staff involved in procurement. The Irish state spends approximately EUR 8.5 billion every year on goods and services. It is thus essential that the public service operate in a co-ordinated, efficient fashion. Procurement is a key element of the government’s public service reform.

The OGP is currently finalising national guidelines for goods and services of low and high value in public procurement tendering competitions. These guidelines will be published as a dynamic document available online, with links to relevant information, as well as policy and template documents.

The purpose of these guidelines is to promote best practices and consistency of application of the public procurement rules in relation to the purchase of goods and services. The guidelines have been written in plain language with the goal of providing a clear description of the rules. The guidelines form part of the OGP National Procurement Policy Framework, which consists of five branches:

  • legislation (directives, regulations),

  • government policy (circulars, etc.),

  • general guidelines,

  • the Capital Works Management Framework,

  • detailed technical guidelines, template documents and notes that are issued periodically.

Source: Information provided by the Office of Government Procurement (OGP).

5.2.1. A strategic vision for the procurement workforce

Many countries develop strategies to increase the capacity of their public workforce systematically, often specifically for public procurement. Such capacity strategies for the public sector and specifically for public procurement can offer benefits, as they aim to systematically increase the capacity of public procurers. A strategy can help officials prioritise activities. Ideally, ISSSTESON would opt first for an assessment of the procurement workforce, highlighting strengths, weaknesses, gaps and building blocks to serve as the starting point for any capacity-building measures. The needs assessment should pave the way for the development of an ambitious and sustainable training plan. The training action plan should provide a detailed roadmap for increased skills and competence of the procurement employees (see Figure ‎5.2).

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Figure ‎5.2. The process for assessing needs, developing a plan and implementing it
Figure ‎5.2. The process for assessing needs, developing a plan and implementing it

Source: (OECD, 2017[4]), Developing Public Procurement Capacity in Europe, http://www.oecd.org/gov/public-procurement/publications/public-procurement-capacity-europe.pdf.

A detailed training plan for ISSSTESON should include courses that have been identified in the needs assessment. The training should include indicators to allow for a regular impact assessment. A training plan should be precise and to the point, but needs to include specific information, like the course’s name, objective, target group, delivery mode and date. The training action plan should last for at least two to three years to allow time for the vision for improvement to emerge (OECD, 2017[4]). A shorter time frame would reduce the possibility of yielding any results. Part of the assessment of employees includes testing their competency before any training, and measuring progress after the training plan to measure progress.

ISSSTESON has not updated its strategy or vision for procurement since 2006. However, from 2006 to 2009, the institute was granted the ISO-9001 certificate through the American Trust Register (ATR) enterprise. At the time, the procurement department developed indicators for employees working in the area, but unfortunately, this initiative was not followed up, and the certification was lost. By developing a strategy for public procurement, ISSSTESON would be setting a path for its procurement employees to follow. It is important procurement officials have a clear idea of their purpose and goals and to link them to ISSSTESON’s overall objective of providing better health care for its beneficiaries. The old strategy sets a standard for quality, stating that ISSSTESON is committed to fulfilling the petitions or requirements received, through timely follow-up, and to ensuring a quality service. The mission and vision set out in 2006 resonates 12 years later:

  • mission:

    • to acquire quality products for our clients, managing their demands and/or requests in a timely manner, in order to warrant full satisfaction.

  • vision:

    • to be a department with a high sense of service and positive attitude, acquiring and supplying quality products for our clients.

Much has changed in the past 12 years: the staff, the regulatory framework and the procurement methods used and the technology used in procurement. The market is likely to change as well, with new suppliers coming in, and so are the expectations of the clients. For example, hospital units will have changed, as will the delivery time of products. All these factors are likely to influence ISSSTESON’s setting of objectives and targets for procurement. It will be important to combine quantitative outcomes, for such things as timely gathering of the annual acquisitions programme and delivery time, with more subjective goals, such as satisfaction with the work of the two procurement departments.

ISSSTESON needs to commit to further developing its workforce. The state of Nuevo León, for example, has a plan (see Figure ‎5.3) to address not only public procurement officials, but also public officials in general. It sets out seven “pillars” for talent development that could also benefit ISSSTESON, including developing competency standards for all public positions, as well as staff training programmes and talent retention surveys.

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Figure ‎5.3. The State Government of Nuevo León’s seven pillars for talent development
Figure ‎5.3. The State Government of Nuevo León’s seven pillars for talent development

Source: (Consejo Nuevo León, 2015[5]), El Nuevo León que queremos. Plan Estratégico para el estado de Nuevo León 2015-2030.

5.2.2. Getting the best person: professionalising the recruitment process

The recruitment process at ISSSTESON depends on the area that is recruiting, whether it is a temporary position or a permanent one. Most positions are generally not advertised. A list is maintained of people who have registered with ISSSTESON and are interested in working for the institute. They share their résumés with ISSSTESON and are put on a list of potential candidates. When a position is vacant, the recruiting area consults the list and identifies people with the competences needed. After the recruiting area identifies candidates they want to interview, the central office interviews them and eventually makes the hiring decision. The main issue with this method of recruiting, as opposed to advertising, is that it restricts the institute to a list of people that may not include the person with the necessary skills and best qualified for the job. However, the institute first needs to define those skills. To compensate for not employing the best-qualified person, the institute should offer a training programme to ensure, with on-the-job experience, that the new recruit is capable of meeting the standards set by the unit.

Given the limited budget for training, an annual survey of the staff is conducted, enquiring about their preferences for training. Participants in the survey can choose between predetermined options or write down the name of any topic for which they feel training is necessary. The institute has registered instructors, but ISSSTESON employees also use other training centres managed by the state government. The institute occasionally works with local instructors, whose services can be quite expensive. It provides general training for its employees on such subjects as service quality, how to respond to clients, and how customer advisers should approach clients, etc. On average, about three courses are held every month, each for about 40 students, but none covers procurement. Employees who attend courses organised by the institute are evaluated six months after the course on how they are using the training. Their manager assesses how well they have applied the training received, and gives a general assessment. A process is in place for areas to request a course on a specific topic, but this rarely happens. The procurement area may need to be more proactive, to ensure that the skills and competencies of the staff are up to date.

5.2.3. Expanding the competencies of procurement officials

The role of procurement employees depends on the duties they have been assigned. At ISSSTESON, they have a limited role in developing technical specifications and market analysis. For technical specifications, each deputy direction requests each area to programme its annual needs and project its budget; the deputy direction then organises, studies, modifies and authorises it. A request is then made to the procurement department to start the procedure in question. Procurement officials thus do not participate in the development of technical specifications.

A thorough market analysis should provide the contracting authority valuable information about economic operators capable of meeting the requirements and about market activity. Hence, one of the key functions of a procurement official is to understand the market. Market research helps the buyer collect information to define its procurement requirements, select the most appropriate tender method, analyse and evaluate bids, and determine the most economically advantageous tender (OECD, 2016[6]). Such skills are limited at ISSSTESON. Market research is considered a simple administrative task, with no established procedures or expert teams to ensure that ISSSTESON procurement officials acquire close familiarity with the markets.

If ISSSTESON is to drive efficiency throughout the public procurement cycle and satisfy the needs of the government and its citizens, it must actively assess its processes for conducting market analyses. The government must then utilise adequate tools to improve procurement procedures. Capacity building on market research is needed in both of ISSSTESON’s procurement departments. Market studies should be conducted by individuals with procurement or research expertise, given sufficient time and resources. ISSSTESON should also establish a guide for the minimum acceptable content of market studies, by developing a manual for use by the procurement units in the hospitals or at the central offices when they conduct market studies. Furthermore, the manual should clearly state that market analysis should be conducted in the planning stage of a procurement procedure, well before the launch of the procedure. That said, market analysis may be undertaken at set times in the year for purchases made on a regular basis.

Rather than work with isolated role descriptions, governments increasingly use competency frameworks to organise their public procurement workforce. The competency frameworks build on competencies that are represented in different procurement roles at different levels. Employees can increase their competencies and move from one level to another (see Box ‎5.4).

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Box ‎5.4. What is competency management?

Competency management is a way of defining the abilities that employees need, and the behaviour they should adopt, to do their jobs well. Competency management links several human resource management activities to ensure that an organisation is staffed by people who perform effectively. The use of competency management in OECD countries has increased steadily in recent years and has been linked to demands for increased flexibility and autonomy in workforce management.

Source: (OECD, 2015[7]), Achieving Public sector Agility at Times of Fiscal Consolidation, http://dx.doi.org/10.1787/9789264206267-en; (OECD, 2011[8]), Public Servants as Partners for Growth, http://dx.doi.org/10.1787/9789264166707-en.

Introducing a competency-based system to manage public procurement officials from a human resources perspective offers several benefits. It can contribute to a clearer understanding of expectations of employees on different levels and in different roles. A competency framework can also identify officials who need training and development (Scottish Government, 2016[9]).

Skills and competencies for effective performance need to be specified for each job, and integrated into a competency model or framework. Competency management frameworks not only help to identify the capabilities needed in the workforce; they can also be used at different stages of the human resource processes, such as workforce planning, recruitment, promotion, training and performance assessment. In a competency-based selection process, the required competencies identified for a vacant position are used as the selection criteria. Peru, for example, has developed a framework based on four categories (see Box ‎5.5). It has few competencies covering most aspects of the procurement cycle. However, many OECD countries have developed more complex competency management frameworks. In Scotland, for example, the framework has 13 competencies that identify the technical skills needed at different levels to conduct procurement. ISSSTESON could benefit from developing a framework like the one described in Box ‎5.5, adapting it to its own structure and organisation.

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Box ‎5.5. Peru’s OSCE defines four types of competencies for procurement officials

The Government Procurement Supervising Agency (Organismo Supervisor de las Contrataciones del Estado, or OSCE) has defined the four skills and competencies required of public procurement officials:

  1. 1. cross-cutting competencies (team work, results-based management);

  2. 2. general competencies (records management, office automation, mathematics and statistics, organisational and management skills);

  3. 3. legal and administrative competences (public procurement system, other administrative systems, public management and administrative procedures);

  4. 4. technical competencies (planning and programming techniques, market-analysis techniques, monitoring and control techniques, and supply-chain management).

The latter covering professional and technical effectiveness skills, as well as personal effectiveness. The definition of required skills and competencies lets public procurement officials know the requirements and helps them identify the areas on which they need to focus.

Source: (OECD, 2017[3]), Public Procurement in Peru: Reinforcing Capacity and Co-ordination, http://dx.doi.org/10.1787/9789264278905-en.

The skills and competencies identified can then be used to develop job profiles, which combine a statement about what is expected of a job with a description of what the job-holder needs in terms of skills, experience and behaviour to do the job well (OECD, 2013[10]). ISSSTESON could consider using the assessment to identify or finalise specific procurement employee profiles for the requirements of a specific post.

copy the linklink copied!5.3. Implementing strategic public procurement

Until a few years ago, public procurement was perceived as an administrative, back-office function. Today, however, it is seen as a crucial pillar of service delivery for governments and a strategic tool for achieving key policy objectives: from budget accountability to spending efficiency, to buying green and improving outcomes in health, to tackling global challenges such as climate change, and increasing socially responsible suppliers in the global value chain. Strategic public procurement can support a more circular economy and transform supply-chain business models, given the volume of government spending and its predominant role in resource-intensive public services such as infrastructure. Almost all OECD countries have introduced strategic procurement policies rewarding greening efforts and encouraging innovation, such as promoting lower energy consumption, life-cycle cost analysis or industrial low-carbon innovations.

Complementary policy objectives refer to goals that governments are increasingly pursuing through public procurement. In addition to efficiency, effectiveness and transparency, countries have increasingly realised that public procurement can help achieve overarching, complementary goals, typically including:

  • support for small and medium enterprises (SMEs),

  • innovation,

  • “greening”, i.e. improving the positive impact on the environment,

  • improving conditions for marginalised or economically under-represented groups,

  • tackling other social challenges.2

The following sections offer background on such policy goals as they bear on public procurement. ISSSTESON has not yet conducted any efforts specifically on complementary public procurement.

5.3.1. The ISSSTESON framework for supporting secondary objectives

The main law that governs ISSSTESON acquisitions is the Law on Acquisitions, Leasing and Provision of Services Related to Movable Property of the State’s Public Administration (Ley de Adquisiciones, Arrendamientos y Prestación de Servicios Relacionados con Bienes Muebles de la Administración Pública Estatal). The legislation permits the usage of different criteria to evaluate tenders. The Tender Co-ordination Unit is responsible for verifying the registration requirements to participate in the tender and to verify the delivery of the documents requested. ISSSTESON applies the binary approach, i.e. technical and economic evaluation. With the technical evaluation, the documents are fully studied and analysed and a technical decision is issued, taking into consideration several factors, including the best legal, technical, and economic conditions. SMEs from the state of Sonora are given preference over enterprises from other regions, in cases when the difference between bids is no greater than 5% compared to the lowest priced proposal, under Article 24 of the law.

The main goal of ISSSTESON’s public purchases is to achieve the best price for the requested product, taking into consideration the conditions of the product. Before purchasing, the requesting unit assesses the proposal, considering all technical aspects, like delivery time, guarantees, etc. The process for medicines is similar, but in this instance, one of the major factors is whether the objective is to purchase generic medicines, whose prices tend to be lower. The economic offer is assessed by the procurement department. Only limited consideration is given to the environmental aspects of the production of the goods or their delivery. ISSSTESON requires that suppliers from which it buys medicine have the necessary certificates, but most do not include any additional environmental standards. For the annual planning, many of the technical aspects of the goods or services to be purchased have been defined and included in a catalogue, along with price estimations. For new products, the requesting area sends a request format to the procurement unit, with its description and technical specifications. When the procurement unit receives a new request, an assessment is required to identify the options to include enhanced environmental criteria.

No specific legal, regulatory or other policy guidance governs ISSSTESON with regards to strategic public procurement. No strategy or policy has been introduced to promote secondary policy objectives in the legal procurement framework (such as promoting SMEs, sustainable green procurement, innovation, social procurement and socially responsible enterprises). No consideration is made for complementary objectives in tender documentation and offer evaluations. In offer evaluation, the life-cycle cost is not considered (including costs of use, ownership, maintenance and disposal). ISSSTESON processes include no impact evaluation methodologies to measure the efficiency of the procurement legal framework in achieving secondary policy objectives.

ISSSTESON has limited experience in applying any measurements other than the binary approach, and no attempt has been made to adopt other evaluation methodologies to achieve secondary policy objectives. Only limited data and information is available on suppliers ISSSTESON has dealt with in the past. The system is, for example, unable to determine the number of SMEs that the institute has been purchasing from, whether for medicine or for any other good, service or work. As already noted, ISSSTESON provides very limited training to its procurement employees, and no targeted training on the immediate procurement challenges of the institute is given. General courses are offered on such issues as customer service, however, which is available for procurement staff.

5.3.2. Supporting secondary objectives through public procurement

The vast majority of OECD member countries use public procurement as a tool to promote policies or strategies encouraging secondary policy objectives. Twenty-eight member countries have developed strategies or policies to support one or all of the following categories: green public procurement, SMEs, and innovative goods and services. Such strategies are predominantly developed at the central level (Table ‎5.3). Mexico’s federal government, for example, has taken steps towards supporting SMEs, green procurement and innovative goods and services, developing strategies for the central level. In 2014, 20 OECD member countries (71%) measured the results of their strategy or policy for supporting green public procurement and 17 (61%) measured the results of their strategy or policy for supporting SMEs (OECD, 2015[11]).

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Table ‎5.3. Public procurement strategies and policies to support secondary policy objectives

Green public procurement

SMEs

Innovative goods and services

2016

2014

2016

2014

2016

2014

Australia

Austria

●♦

●♦

●♦

Belgium

●♦

●♦

Canada

●♦

●♦

Chile

●♦

●♦

●♦

●♦

Czech Republic

“..”

“..”

“..”

“..”

“..”

“..”

Denmark

Estonia

Finland

●♦

●♦

France

“..”

●♦

“..”

●♦

“..”

●♦

Germany

Greece

●♦

Hungary

Iceland

Ireland

Israel

“..”

“..”

“..”

Italy

Japan

Korea

Latvia

“..”

“..”

“..”

Lithuania

0

0

0

Luxembourg

“..”

●♦

“..”

●♦

“..”

Mexico

Netherlands

New Zealand

●♦

●♦

●♦

●♦

●♦

●♦

Norway

●♦

●♦

●♦

Poland

●♦

Portugal

Slovenia

●♦

Spain

●♦

●♦

●♦

Sweden

●♦

Switzerland

“..”

●♦

“..”

●♦

“..”

Turkey

United Kingdom

United States

“..”

“..”

“..”

●♦

OECD total

● Strategy/policy developed at the central level

25

26

24

24

19

22

♦ Internal strategies/policies developed by some procuring entities

11

14

8

12

9

11

■ Rescinded

1

1

0

0

0

0

○ Never been developed

0

2

1

3

6

4

India

0

0

0

Russian Federation

0

0

0

Colombia

Costa Rica

Note: “..” indicates that data is not available.

Source: (OECD, 2017[12]), Government at a Glance 2017, http://dx.doi.org/10.1787/gov_glance-2017-en.

Some of the instruments available to countries, states and institutions to advance strategic public procurement are criteria that positively discriminate the secondary objectives in a way that those objectives, whether social, green, innovative or SMEs, get additional credit when calculating the final score of the bids. Suppliers thus need to be competitive in different areas, not simply on price criteria, to increase their chances of being selected. One prerequisite for ISSSTESON in supporting secondary policy objectives, such as supporting local producers, is to include criteria establishing that a specific percentage of local content of all goods and services subject to public procurement will be given enhanced recognition in the assessment phase.

5.3.3. Beyond SMEs, towards more complex strategic procurement

ISSSTESON is not yet at the stage of fully embracing strategic procurement. The institute should consider developing a strategy to promote secondary policy objectives such as SMEs, innovation, sustainable green procurement, social procurement or socially responsible enterprises. However, it needs to pace itself, and set up the appropriate infrastructure before going full force into strategic procurement. It is not at present measuring or able to aggregate data on the number of SMEs it deals with. The knowledge is limited on this subject; as noted earlier, hence it is important to train procurement officials to increase their skills in applying secondary policy objectives.

The procurement department has little input in developing the technical specifications for a purchase prepared by the requesting area. It assesses the standards set but does not add any environmental criteria. On the fact-finding mission to Sonora, concerns were raised in the procurement department that additional requirements would limit the participation of suppliers in public tenders. That is definitely possible in some cases, but if ISSSTESON fully commits to implementing strategic public procurement, a plan should be devised to indicate the procedures that the institute will include in its tender documents in the months and years to come, allowing the market to adjust, but creating room for new suppliers to compete for contracts.

One of the main factors that could delay the introduction of strategic procurement is the awarding criteria ISSSTESON currently uses. The institute relies heavily on the binary approach, which is not conducive to strategic procurement, since it means that every supplier either meets or does not meet specific requirements. Usually, the supplier selected fulfils the technical criteria but also offers the lowest price.

This approach is common in public procurement and should be used for procuring standardised products and services or when saving money is the main goal. ISSSTESON should thus consider expanding the use of evaluation criteria to accommodate requirements relating to strategic procurement. One example would be the most economically advantageous tender (known by an acronym, MEAT), which should be used for procurement of complex services/works or high-technology equipment, or when high quality is the main goal. This approach is identified on the basis of price or cost (using a cost-effectiveness approach, such as life-cycle costing) or the best price/quality ratio. Applying this criterion may include three different approaches:

  • price only;

  • cost only – using a cost-effectiveness approach, such as life-cycle costing;

  • the best price/quality ratio.

When using the best price/quality ratio, the criteria are given a weighting by the contracting authority that reflects their relative importance. The purpose of this method is to identify the tender that offers the best value for money. It requires procurement officials to assign scores to different aspects of a tender when incorporating weighting criteria, so it can be compared among each other and summed up, a total score for each tender is enabled. The rule used for assigning a score to any dimension of a tender is a “scoring rule”. ISSSTESON has mainly been applying the binary approach, where suppliers either meet or fail to meet the technical requirement. Points and percentages for weighing different criteria have only been applied for public works, since the institute has not been able to develop a mechanism for goods and services. ISSSTESON will need to expand the use of evaluation criteria to better incorporate requirements that support strategic procurement.

Supporting small and medium enterprises

In many countries, SMEs account for a large share of employment and growth. Given their significance in the economy, governments are recognising the importance of SMEs in encouraging economic prosperity and social well-being. In 2015 in Mexico, SMEs accounted for approximately 99% of all firms and for 70% of jobs on average, and generated between 50% and 60% of average value added (OECD, 2016[13]). Micro-enterprises dominate the business landscape throughout the globe, accounting for 70% to 95% of all firms (OECD, 2017[14]). In this context, countries endeavour to support SMEs. Public procurement is a major source of demand for SME services. SMEs often face obstacles to participating in public procurement, however. For example, SMEs may lack the capacity to bid for and deliver on large government contracts. Alternatively, delayed payments may deter SMEs from seeking government contracts, given their cash-flow constraints. Additionally, SMEs often have less access to credit, which makes it more difficult to invest, grow or respond to larger orders (Bell and Tayler, 2016[15]; European Commission, 2014[16]; OECD, 2016[17]).

Most OECD countries have strategies or policies that define objectives of support for SMEs in public procurement. A cross-cutting topic, goals of supporting SMEs are often found in two or more of countries’ strategies or policies. A recent OECD survey (OECD, Forthcoming[18]) reports that approximately 83% of OECD countries have a strategy or policy supporting SMEs in public procurement. A majority of countries (22 countries, or 73%) include such objectives in a broader strategy/policy for public procurement, while less than half (12 countries, 40%) have as a goal to support SMEs in public procurement as a stand-alone strategy/policy.

Most of the OECD countries that actively support SMEs have an implementation mechanism. The nature of these varies, as the following examples show (OECD, Forthcoming[18]):

  • action plan, i.e. the Austrian Action Plan on Public Procurement Promoting Innovation;

  • guidance, i.e. guidance on use of the proportionality principle (the Netherlands);

  • legal framework, i.e. a mechanism for implementation is given by the legal framework, since it establishes the assumptions that agencies and entities must apply to support SMEs (Mexico);

  • codes of conduct, instruction codes, i.e. to government ministries to act in accordance with the administrative code regarding the participation of SMEs in government procurement (Israel);

  • tools, i.e. an electronic calculation tool available to contracting authorities to help them find the right size of lots (Germany);

  • training for the procurement workforce; either integrated into general capacity-building activities (10 countries, 33%) or training sessions on implementing SME objectives (12 countries, 40%).

To level the playing field for SMEs, OECD countries have set up specific measures and approaches, such as division of the contract into lots, guidelines, training and workshops for SMEs (see Figure ‎5.4). The European Union (EU) reinforced the strategic use of public procurement in the transposition of the 2014 Public Procurement EU Directives. This facilitated SMEs’ access to public procurement through simplified and flexible procedures and by encouraging partitioning contracts into lots (OECD, 2017[12]).

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Figure ‎5.4. Approaches for supporting participation of SMEs in public procurement
Figure ‎5.4. Approaches for supporting participation of SMEs in public procurement

Note: Specific legislative provisions for instance could include set-aside, bid preferences.

*e.g. set-aside, bid preferences.

Source: (OECD, 2017[12]), Government at a Glance 2017, http://dx.doi.org/10.1787/gov_glance-2017-en.

Ireland’s experience shows how important it is to actively support SMEs to participate in public contracts (see Box ‎5.6).

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Box ‎5.6. Ireland’s secondary policy – the Go-2-Tender training programme for SMEs

Inter-Trade Ireland, an agency of Ireland’s Department of Jobs, Enterprise and Innovation, offers businesses services to enhance opportunities for growth, innovation and competitiveness. Among other tasks, it provides services for SMEs. These aim to help SMEs compete in procurement markets.

Inter-Trade Ireland’s flagship service in this area is the Go-2-Tender training programme. This is a two-day practical tender workshop designed for an SME audience that covers key aspects of procurement. In the workshop, SMEs are instructed how to succeed at tendering. Practical skills training includes instruction on how to identify opportunities, how to make bid or no bid decisions, and drafting successful tender proposals.

To participate, companies must meet a number of eligibility criteria, including being classified as an SME, operating in the manufacturing and tradable services sectors, and ability to demonstrate export potential. The workshops are conducted by experienced tender specialists and provide insights into the procurement practices of public sector bodies in Ireland. Guest speakers from central government procurement organisations are also invited. In addition to the plenary session, half a day of the workshop is dedicated to mentoring sessions, where participants can choose their topic of interest. Workshops are offered in various locations, and participation fees of EUR 100 apply. In 2016, seven seminars were held across the country. Participants can also apply for a follow-up workshop once they have concluded the first Go-2-Tender seminar. Since the programme was introduced in 2007, over 900 companies have completed the workshop. These companies won procurement contracts worth EUR 69 million in this same period.

Inter-Trade Ireland also organises “meet the buyer” events, giving SMEs the opportunity to meet public sector buyers face to face. The agency also offers further assistance with FAQs, guides, videos and presentations, as well as dedicated events on emerging trends in the procurement environment for SMEs.

Source: Information provided by the Office of Government Procurement (OGP).

To enhance the work ISSSTESON is doing, it should consider many of the implementation mechanisms OECD countries use to enhance its knowledge of the benefits that supporting SMEs can have for the community. The institute should look beyond the conditions set in the current legislation and identify other ways of supporting SMEs, such as alleviating barriers to participation.

Going Green: implementing best practices in public procurement

Green public procurement (GPP), that is, public purchase of products and services that are less environmentally damaging over their whole life-cycle, is increasingly used to achieve economy, efficiency, and secondary policy objectives. Countries have reported to the OECD, however, that they face obstacles in successfully converting to GPP, for a number of reasons: the common perception that green products and services are more expensive than conventional ones; public officials lack the technical knowledge to integrate environmental standards in the procurement process; and the lack of monitoring mechanisms to assess whether GPP achieves its goals. However, countries increasingly recognise that GPP can be a major driver for innovation, offering industry incentives to develop environmentally friendly works, products and services, particularly in sectors where public purchasers represent a large share of the market, such as construction, health services and public transport (OECD, 2015[19]).

Green public procurement is the cornerstone of sustainable procurement, and can be used as a powerful tool in promoting the purchase of green products. It is vital for ISSSTESON to enhance its understanding of the advantages and disadvantages of switching conventional purchases to green ones. EU studies show that the uptake of GPP strongly correlates with the existence or absence of an eco-label scheme and that eco-labels play an important role in GPP solutions (see Box ‎5.7). The ability to support long-term uptake of green solutions can be disrupted by a number of factors, such as lack of information on green products, low buyer interest, and a lack of incentives for suppliers. OECD countries have reported that GPP knowledge, training, and advice from the procurement workforce are important elements for successfully using procurement to achieve environmental benefits (OECD, 2015[19]).

The life-cycle cost of products such as cost of use, ownership, maintenance, and disposal is not particularly considered when ISSSTESON is purchasing goods, services or public works. It is only when it is purchasing medicine that the institute carefully considers a product’s lifespan. In this case, lifespan can become a factor, as it aims to avoid stocking medicine that has passed its use-by date.

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Box ‎5.7. Criteria for sustainable procurement

Estonia

The Estonian Road Administration (ERM) is a government agency operating in the administrative area of the Ministry of Economic Affairs and Communications. It is responsible for transport policy, that is, infrastructure, traffic and public transport. The ERM carried out a procurement process in October 2010 under the Green Investment Scheme (“Promoting the Use of Public Transport”) funded by the agreement between Estonia and Spain on the sale and purchase of the CO2 emissions quota. The agreement was awarded under Kyoto Protocol Article 17 and stipulated that the Estonian government invest the proceeds from the sale of the CO2 quota in areas where reductions in CO2 emissions can be achieved. The aim was to introduce new environmentally friendly buses to help popularise the use of public transport and reduce the transport sector’s CO2 emissions. Public procurement’s goal was to buy new, cost-effective, environmentally friendly buses suitable for county and regular urban services (Category M3 vehicles).

Award criteria

The award criteria were weighted as follows: 55% for the value of the tender (i.e. lowest price); 24% for a combination of warranty, bus engine smoke opacity and repair and maintenance work; and 21% for other technical properties of the buses, including the following:

  • Points were awarded if the engines of the buses offered complied with emission limits applicable to EURO V enhanced environmentally friendly vehicles (EEV), as specified in Directive 2005/55/EC. The tenderer had to prove compliance with this requirement by submitting an engine-type approval certificate, according to Directive 2005/55/EC.

  • Points were awarded if the tender was accompanied by a confirmation from the manufacturer of the engines of the buses offered, specifying that the engine may be used without modification with diesel fuel, complying with the standard EVS-EN 590:2009+NA:2009 (the Estonian equivalent of the corresponding European standard). Diesel fuel may contain up to 7% of fatty acid methyl esters (FAME), described in standard EN 14214.

  • Points were awarded if urban buses were equipped with dual-zone (driver’s cab and passenger compartment) air-conditioning equipment for automated regulation of the interior temperature.

To avoid unequal treatment of tenderers and minimise the risk of disputes, the contracting authority decided not to include criteria on fuel consumption and CO2 emissions of the offered buses. No compulsory testing procedure for Category M3 vehicles had been set up to measure fuel consumption and CO2 emissions on which the contracting authority could rely. Evaluating such criteria based on testing results provided by the tenderers or the manufacturers of buses would not have provided an adequate overview of the differences in fuel consumption and CO2 emissions between the different buses offered. This was likely to result in unequal treatment of tenderers and to lead to disputes.

Hungary

The Public Procurement Supply Directorate (PPSD) in Hungary is an autonomous central purchasing body. In 2013, PPSD planned to publish six procedures including environmental criteria (one for paper and stationery, four for IT and one for fuel procurement). The aggregated value was HUF 129.5 billion (paper and stationery: HUF 5.5 billion; information technology (IT): HUF 118 billion; fuel: HUF 6 billion). The terms of the contracts were for 24 and 48 months.

The green criteria applied in the procedures were:

  • paper and stationery products:

i) environmentally friendly products (envelopes, folders and paper products for offices)

ii) meeting the environmental management standard (ISO 14001)

iii) technical specifications: environmental labels (FSC, NordicSwan, Blue Angel), eco-labels, recycling.

  • IT:

i) EU standards

ii) energy consumption (standby and switched-off mode)

iii) noise level

iv) waste management (delivery, recycling, extermination)

v) re-manufactured products.

  • fuel:

i) EU standards and environmental/sustainability criteria

ii) alternative fuels (biodiesel, bioethanol).

Canada

Canada’s Policy on Green Procurement was developed in 2006. Support for developing and implementing the policy was led by Public Works and Government Services Canada, in collaboration with Environment Canada, Natural Resources Canada, and the Treasury Board of Canada Secretariat. Canada has a Green Procurement Plan that includes a scorecard outlining the criteria currently being used and communicated to suppliers. This allows them time to prepare for the next renewal, thus maintaining supplier competition.

IT hardware is an example of a commodity where many environmental criteria have been included in the Standing Offer using this process, including:

i) All desktop and notebook systems, as well as monitors, are certified through the Electronic Product Environment Assessment Tool (EPEAT Silver level).

ii) Desktop systems and monitors are EnergyStar 4.0-certified.

iii) Monitors are TCO’03.

iv) Desktop systems include high-efficiency power supplies (80plus).

v) All manufacturers represented on the Standing Offer are members of good repute of a recognised entity specifically established to address end-of-life electronics recycling and reuse in Canada.

vi) Desktop Category 1.0D and 1.0A Green PCs have reduced materials (with a smaller case and integrated components) and lower power consumption.

Where no centralised procurement instrument exists, the environmental considerations used for similar goods and services can be used in other procurement activities.

Source: (OECD, 2015[19]), Going Green: Best Practices for Sustainable Procurement, https://www.oecd.org/governance/ethics/Going_Green_Best_Practices_for_Sustainable_Procurement.pdf.

The OECD has developed an analytical framework for green public procurement. If ISSSTESON is to advance in this respect, it will need to incorporate many of the following six dimensions:

  1. 1. set a GPP legal and policy framework to help buying entities incorporate GPP in their procurement procedures;

  2. 2. plan GPP, including understanding market capacity and available technical solutions, as well as assessing GPP costs and benefits;

  3. 3. introducing environmental standards in the technical specifications, procurement selection and award criteria, as well as in contract performance clauses;

  4. 4. professionalising GPP and increasing know-how and skills;

  5. 5. raising awareness of GPP solutions and their benefits with buyers, businesses and civil society;

  6. 6. monitoring the results of GPP and providing a feedback loop into policy and regulation.

Towards a more innovative and sustainable public procurement

Countries seek to support innovation because it promotes economic growth and creates employment. In cultivating innovation, countries increasingly emphasise demand-side policies (i.e. creating demand for innovative solutions) as opposed to supply-side policies (i.e. creating better conditions for innovation to materialise). Public procurement is one of the most important tools available to create and implement demand-side policies (OECD, 2017[20]).

Innovation is one of the most important secondary policy objectives and is identified in the UN 2030 Agenda for Sustainable Development. It is crucial for economies, as it drives job creation, productivity and growth. Countries use various measures to support innovation procurement: mostly policy instruments, regulations or legal instruments, according to a recent OECD study (OECD, 2017[20]) that surveys government procurement strategies and practices for innovation, and collects practices from 35 member and non-member countries. About 80% of the countries participating in the study take measures to support innovation procurement and 50% have a related action plan, either as part of broader innovation or procurement strategies or as stand-alone initiatives. Demand for a new product or service is the main reason for using public procurement for innovation. The second most common reason cited by countries is improving the performance of existing products or services, reducing costs and/or increasing energy efficiency.

Countries have to overcome a range of hurdles to implement their innovative procurement practices. The most common challenges are related to risk aversion, management, personnel and skills capacity, and political support. Sound measurement systems requiring robust data and indicators are crucial for evaluating procurement for innovation strategies and improving return on investment, as well as social benefits. Successful strategic innovation procurement requires governments to:

  • communicate the positive outcomes of innovation;

  • co-ordinate more closely in the horizontal and vertical management of tasks;

  • demonstrate political leadership and political commitment;

  • build up the capacity and numbers of skilled staff;

  • cultivate a more open culture towards new ways of working;

  • encourage co-operation among different branches of the public procurement process.

Meeting these goals is a long-term challenge for any institution. ISSSTESON has no policies or guidelines to encourage innovation in procurement activities or any requirements for innovative solutions in the regulations for working with suppliers. The institute has no evaluation criteria in tender documents related to social goals, innovation, life-cycle costs or the environment.

Although health care offers great opportunities to collaborate on innovation procurement projects (see Box ‎5.8), the institute’s legal framework, culture and skills are clearly insufficient. For ISSSTESON and for most Latin American countries, introducing public procurement innovation is a challenge, especially with the current culture of excessive controls, which tends to reduce flexibility in procurement. The process is so formalised on paper that procurement officials tend to avoid any contact or discussion with the market.

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Box ‎5.8. THALEA uses telemedicine and telemonitoring to improve care for life-threatened patients

Early research from the European PCP-Project THALEA suggests that the consortium has a growing body of evidence that telemedicine can improve outcomes for intensive care unit (ICU) patients. No highly interoperable, manufacturer-independent telemedicine platform is now in place to detect ICU patients at increased risk. Encouraging results in other e-health-projects influenced the decision to use pre-commercial procurement (PCP), to provide the best possible solution for THALEA. Clearly identified demand and strategy detected by international ICU experts, agreed by multidisciplinary stakeholders (IT experts, excellence cluster e-health, insurance companies and ministries) at a pre-consortium meeting, ensures a perfect match of demand, strategy and funding instruments in an early phase of the project. Given the unacceptably high mortality of ICU patients, telemedicine has the ability to mitigate problematic pan-European challenges, such as demographic changes, a shortage of ICU professionals and a scarcity of financial resources. Bringing together market participants and stakeholders (procurers, ICU specialists, IT specialists) in close collaboration, PCP in THALEA may be able to create an appropriate common solution, fulfilling the demands for a telemedicine research framework.

For more information, see www.thalea-pcp.eu/.

Source: (OECD, 2017[20]), Public Procurement for Innovation: Good Practices and Strategies, http://dx.doi.org/10.1787/9789264265820-en.

It is important that ISSSTESON appreciate the potential of public procurement innovation and how it is used in other countries. A 2012 survey by the OECD suggested that while most OECD countries seek to use procurement for innovation, only a few had a separate budget for the purpose (Figure ‎5.5). Many, however, had used performance-based tender specifications to encourage innovation, providing guidance for procurement officers or involving suppliers at an early stage in the tender process to encourage innovation. ISSSTESON could consider this in developing its procurement for innovation strategies.

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Figure ‎5.5. Use of procurement to promote innovation
Figure ‎5.5. Use of procurement to promote innovation

Source: (OECD, 2014[21]), "Intelligent Demand: Policy Rationale, Design and Potential Benefits", OECD Science, Technology and Industry Policy Papers, No. 13, OECD Publishing, Paris, https://doi.org/10.1787/5jz8p4rk3944-en.

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Proposals for Action

This chapter has focused on the key challenges faced by the institute’s public procurement employees. Many of the suggestions and recommendations go beyond the role of procurement employees and can be reflected upon the larger workforce. This is an important lesson for ISSSTESON before embarking on a wide capacity-building assignment as procurement employees make up less than 1% of the total workforce. Implementing strategic public procurement is a greater challenge for ISSSTESON. Not only will it require improved competency among the procurement workforce, there will need to be a change of culture, because dealing directly with suppliers is restricted. Last but not least, the legislative framework will need to be modified to allow for many of the processes to be implemented, and criteria to be developed, used and evaluated. It is promising that there is some knowledge of SMEs within ISSSTESON, but the institute has no clear vision of how to involve them beyond what is already permitted under the law. The competency level could be raised and a new vision of strategic public procurement introduced if the institute were to consider the following proposals.

Building the capacity of the procurement workforce:

  • ISSSTESON should develop capacity-building or training plans for its procurement workforce, including an incentive system to encourage enhanced performance.

  • ISSSTESON’s Human Resources Department should be tasked with developing guidance material and trainings.

  • ISSSTESON should carry out an assessment of the procurement workforce, highlighting strengths, weaknesses, gaps and any building blocks that could be used as a starting point for capacity-building measures.

  • ISSSTESON should develop a strategy for public purchasing, incorporating a clear vision and objectives for its procurement employees to follow.

  • ISSSTESON should advertise vacant positions for public procurement, to attract professionals with the skills and competencies needed for the job.

  • ISSSTESON should define the skills and competencies procurement employees should have.

  • ISSSTESON should build up knowledge of market research in its procurement function.

  • ISSSTESON should establish a guide for the minimum acceptable content for market studies. It can do this by developing a manual to be used by the procurement units in the hospitals and at the central office.

  • ISSSTESON should consider the development of a competency framework covering most aspects of the procurement cycle.

Implementing strategic public procurement

  • ISSSTESON should consider developing a strategy to promote secondary policy objectives such as SMEs, sustainable green procurement, innovation, social procurement or socially responsible enterprises.

  • ISSSTESON’s procurement unit should be involved in the development of technical specifications during the planning process, allowing it to incorporate enhanced environmental criteria.

  • ISSSTESON should consider expanding the use of evaluation criteria to better incorporate requirements for strategic procurement.

  • ISSSTESON should support secondary objectives by introducing several of the following: an action plan, developing guidance, adjusting the legal framework, introducing codes of conduct, and training.

  • ISSSTESON should further explore the potential of public procurement innovation and launch a pilot project to understand its implications.

  • ISSSTESON should consider taking on the different approaches noted in this chapter to help promote innovation among suppliers to meet the institute’s needs in the future.

References

[15] Bell, S. and Y. Tayler (2016), Government procurement – a path to SME growth?, http://blogs.worldbank.org/psd/government-procurement-path-sme-growth (accessed on 19 June 2017).

[5] Consejo Nuevo León (2015), El Nuevo León que queremos. Plan Estratégico para el estado de Nuevo León 2015-2030.

[16] European Commission (2014), Public Procurement as a Driver of Innovation in SMEs and Public Services, http://www.ecpar.org/files/public-procurement-driver-of-innovation.pdf.

[1] ISSSTESON (2015), Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado de Sonora, http://transparencia.esonora.gob.mx/NR/rdonlyres/3FF4F43E-5292-4D7D-B260-ECE3BE9C0720/146442/ORGANIGRAMAGENERALACTUALIZADOJUNIO2015.pdf (accessed on 5 October 2017).

[4] OECD (2017), Developing Public Procurement Capacity in Europe, OECD, Paris, http://www.oecd.org/gov/public-procurement/publications/public-procurement-capacity-europe.pdf.

[12] OECD (2017), Government at a Glance 2017, OECD Publishing, Paris, http://dx.doi.org/10.1787/gov_glance-2017-en.

[20] OECD (2017), Public Procurement for Innovation: Good Practices and Strategies, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264265820-en.

[3] OECD (2017), Public Procurement in Peru: Reinforcing Capacity and Co-ordination, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264278905-en.

[14] OECD (2017), Small, Medium, Strong. Trends in SME Performance and Business Conditions, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264275683-en.

[13] OECD (2016), Entrepreneurship at a Glance 2016, OECD Publishing, Paris, http://dx.doi.org/10.1787/entrepreneur_aag-2016-en.

[17] OECD (2016), Financing SMEs and Entrepreneurs 2016: An OECD Scoreboard, OECD Publishing, Paris, http://dx.doi.org/10.1787/fin_sme_ent-2016-en.

[6] OECD (2016), “Market Analysis, Preliminary Market Consultations, and Prior Involvement of Candidates/Tenderers”, Policy brief, No. 32, SIGMA, Paris, http://www.sigmaweb.org/publications/Public-Procurement-Policy-Brief-32-200117.pdf.

[7] OECD (2015), Achieving Public Sector Agility at Times of Fiscal Consolidation, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264206267-en.

[19] OECD (2015), Going Green: Best Practices for Sustainable Procurement, OECD, Paris, https://www.oecd.org/governance/ethics/Going_Green_Best_Practices_for_Sustainable_Procurement.pdf.

[11] OECD (2015), Government at a Glance 2015, OECD Publishing, Paris, http://dx.doi.org/10.1787/gov_glance-2015-en.

[2] OECD (2015), OECD Recommendation of the Council on Public Procurement, http://www.oecd.org/gov/ethics/OECD-Recommendation-on-Public-Procurement.pdf.

[21] OECD (2014), “Intelligent Demand: Policy Rationale, Design and Potential Benefits”, OECD Science, Technology and Industry Policy Papers, No. 13, OECD Publishing, Paris, http://dx.doi.org/10.1787/5jz8p4rk3944-en.

[10] OECD (2013), Public Procurement Review of the State’s Employees’ Social Security and Social Services Institute in Mexico, OECD Public Governance Reviews, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264197305-en.

[8] OECD (2011), Public Servants as Partners for Growth, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264166707-en.

[18] OECD (Forthcoming), “Levelling the procurement playing field to facilitate SMEs’ access to public contracts”, OECD Publishing.

[9] Scottish Government (2016), The procurement competency framework, http://www.gov.scot/Topics/Government/Procurement/Capability/proccompfw (accessed on 4 July 2017).

Notes

← 1. The 11 divisions are training; scale movements; payroll administration, operation and integration; staff recruitment and selection; incentives payment and control; labour relations; economic benefits; working history; disabilities; civil responsibilities and social care; civil protection and contracts.

← 2. (OECD 2015), OECD Recommendation of the Council on Public Procurement, www.oecd.org/gov/public-procurement/OECD-Recommendation-on-Public-Procurement.pdf.

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