copy the linklink copied!3. Increasing the Transparency and Performance Evaluation of the ISSSTESON Procurement System

This chapter reviews the legal requirements for transparency in ISSSTESON procurement, as well as the practices now implemented by the institute. It also provides recommendations for improving transparency and access to information policies to enhance accountability in public procurement. This chapter also discusses how ISSSTESON could leverage existing information technology (IT) systems to tackle a number of issues (information management, integration of systems and improved collaboration and communication) which could have a positive impact on procurement operations. Finally, this chapter assesses the extent to which ISSSTESON leverages data and indicators to evaluate and improve the performance of its procurement function.

    

copy the linklink copied!3.1. Ensuring a high degree of transparency of the public procurement system

Mexico, like many other OECD countries, is going through a trust deficit. The erosion of public trust has been a recurring issue for many years, but it came to the forefront of public debate in several OECD countries with the onset of the 2008 global financial crisis and ensuing recession. On average in OECD countries, trust in government decreased from 42% (2005-2007) to 38% in 2014-16, but since 2011-13, the decline has slowed and trust levels are stabilising (see Figure ‎3.1). In sharp contrast to the OECD average, the reduction of trust levels in Mexico has been much steeper in the past five years. Trust in government has decreased from 38% in 2011-13 to 28% in 2014-16. Several reasons could explain this trend: the economic slowdown of the past five years, the revelation of several corruption scandals involving high-level government officials, deteriorating security conditions, low capacity to deliver public goods and services, and a challenging global environment for the very open Mexican economy.

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Figure ‎3.1. Trust in the Mexican government is on a downward trend
% of respondents saying that they have trust in their national government
Figure ‎3.1. Trust in the Mexican government is on a downward trend

Source: Gallup World Poll.

The Institute of Security and Social Services of the Workers of the State of Sonora (Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado de Sonora, or ISSSTESON) is not excluded from this situation. On the fact-finding mission, the OECD heard suppliers’ scepticism about the integrity of the institute’s procurement operations and the complaint from civil society that governments had used ISSSTESON as their “checking account” (caja chica). This negative perception was exacerbated by scandals involving ISSSTESON in the past administrations.

Regaining trust from the institute’s beneficiaries and society at large presents a significant challenge. It requires extraordinary measures, beyond those strictly mandated by law, to demonstrate a commitment to transparency and integrity and to communicate clearly how ISSSTESON operates and how it uses its resources. Transparency can also be a tool for informing ISSSTESON’s stakeholders the severity of its financial situation and the urgent need for reform.

The OECD Recommendation of the Council on Public Procurement outlines specific principles for dealing with transparency (Box ‎3.1). Public procurement carries a high risk of integrity failures. This is not only because of the interaction between the public and the private sectors in procurement operations, but also because of the amounts involved. The OECD Foreign Bribery Report found that 57% of cases of foreign bribery were related to obtaining public contracts, based on data from the 427 foreign bribery cases filed since the entry into force of the OECD Anti-Bribery Convention in 1999 (OECD, 2014[1]).

Openness should be a critical feature of public procurement to reduce waste, prevent corruption and restore trust. Openness and transparency should not only be required in laws and regulations but become an integral part of the culture of integrity and the accountability practices of public organisations.

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Box ‎3.1. The OECD Recommendation of the Council on Public Procurement (transparency)

Adherents are recommended to ensure an adequate degree of transparency of the public procurement system in all stages of the procurement cycle. To this end, Adherents should:

i) promote fair and equitable treatment for potential suppliers by providing an adequate and timely degree of transparency in each phase of the public procurement cycle, while taking into account the legitimate needs for protection of trade secrets and proprietary information and other privacy concerns, as well as the need to avoid information that can be used by interested suppliers to distort competition in the procurement process. Additionally, suppliers should be required to provide appropriate transparency in subcontracting relationships;

ii) allow free access, through an online portal, for all stakeholders, including potential domestic and foreign suppliers, civil society and the general public, to public procurement information notably related to the public procurement system (e.g. institutional frameworks, laws and regulations), the specific procurements (e.g. procurement forecasts, calls for tender, award announcements), and the performance of the public procurement system (e.g. benchmarks, monitoring results). Published data should be meaningful for stakeholder uses;

iii) ensure visibility of the flow of public funds, from the beginning of the budgeting process throughout the public procurement cycle to allow (a) stakeholders to understand government priorities and spending, and (b) policy makers to organise procurement strategically.

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

While it is a necessary condition for accountability, transparency is not enough to guarantee greater accountability. This is especially true if it merely makes public a flow of complex information without a tool for understanding it or a mechanism for stakeholders to engage with public institutions in shaping the public debate and decision-making processes. Some governments may disclose significant volumes of information and remain opaque, while others may make public a more limited set of information and be more accountable, because they provide tools to make the information accessible and encourage forms of stakeholder participation.

This chapter reviews the legal requirements for transparency in procurement, as well as the practices implemented by ISSSTESON. It concludes with recommendations for improving policies on transparency and access to information.

copy the linklink copied!3.2. Meeting legal requirements for transparency and access to information in public procurement

3.2.1. ISSSTESON should disclose all procurement information required by law, in a proactive and timely way. It should also give users guidance on how to find specific information on procurement.

ISSSTESON is required by law to proactively disclose relevant procurement-related information. Mexico has about two decades of experience in working on freedom of information regulations. The 2002 Federal Law on Transparency and Access to Government Public Information (Ley Federal de Transparencia y Acceso a la Información Pública Gubernamental) was the first to establish the duty of public entities of the federal government to disclose information proactively and upon request by individuals. This initiative was reinforced in 2007, when access to information became a constitutional right in Mexico.

In May 2015, Congress issued the General Law on Transparency and Access to Public Information (Ley General de Transparencia y Acceso a la Información Pública, or LGTAIP), which requires even more information to be disclosed proactively, much of it having to do with public procurement. The LGTAIP is explicit about the procurement-related information to be disclosed. This includes the outcome of procedures of direct awards, restricted invitations and public tenders, including the public versions of the files and the contracts awarded containing the information shown in Table ‎3.1.

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Table ‎3.1. Information on public procurement to be proactively disclosed, as laid out in the LGTAIP

Direct awards

Restricted invitation or public tender

Bid proposal submitted by the participant

Call for tender and its legal basis

The legal basis to carry out the process

Name of the participants or invitees

Authorisation for the direct award

The successful bidder and justification

If applicable, the quotes considered, specifying suppliers and prices

Invitations issued

The name of the company or individual awarded the contract

The award decision

The requiring and the purchasing units

The contract and its annexes, if applicable

Number and amount of the contract, date, and time for delivery or execution

Surveillance and oversight mechanisms

Surveillance and oversight mechanisms

Budget code

Progress reports (physical and financial) of the works or services awarded

Origin of the resources

Completion agreement

Contractual modifications, including objective and date

Payment

Progress reports (physical and financial) of the works or services awarded

Completion agreement

Payment

Source: (Government of Mexico, 2015[3]), Ley General de Transparencia y Acceso a la Información Pública, http://www.diputados.gob.mx/LeyesBiblio/pdf/LGTAIP.pdf, accessed on 28 February 2018.

As a general law, the LGTAIP mandates that federal states align their own regulations with its provisions. Sonora has already enacted reforms to align its own Transparency and Freedom of Information Law (Ley de Transparencia y Acceso a la Información Pública del Estado de Sonora) with the LGTAIP. Article 81 of Sonora’s Law establishes the information to be proactively disclosed regarding public procurement, which is consistent with the information required by the LGTAIP and described in Table ‎3.1.

ISSSTESON publishes procurement information on several online platforms. First, in the National Transparency Platform (Plataforma National de Transparencia, or PNT, (www.plataformadetransparencia.org.mx/web/guest/inicio), an online portal for consulting information to be proactively disclosed by all public institutions in the country, including federal, state and municipal institutions. The information in the PNT is organised by trimester. At the time of consulting (8 May 2019), information on the first trimester of 2019 was not yet uploaded, but the information for 2018 was available. A random check of several public tender and direct award procedures suggests that the information available complies in general terms, with the legal requirements, with a few exceptions.

In the case of public tenders, the information available included items such as the calls for tender, the names of the bidders, the selected bidder and the corresponding justification, the award decision, the contracts, the budget codes, and the nature of the resources. However, some items of recurrent missing information included surveillance and oversight mechanisms, progress reports of the services awarded, completion agreements and payments.

With regards to direct awards, the information available included items such as the prices of the bids submitted by the participants, the legal justifications, the quotes considered, the companies awarded with a contract, the purchasing units, and the codes and value of the contracts. On the contrary, recurrent missing information related to delivery and execution time, surveillance and oversight mechanisms, progress reports of the services contracted, completion agreements and payments.

The second platform used by ISSSTESON to disclose information relative to its procurement operations is the Transparency Portal of the State of Sonora (http://transparencia.sonora.gob.mx/). However, the procurement information published here reveals several problems. The latest update to the information took place in May 2017. This is precisely because PNT replaced this platform. For the procurement of goods, the name of the bidders, the justification for the successful bidder, the award decision, the contracts, the progress reports, the completion agreements, the surveillance and oversight mechanisms, and the payments, among other critical information, are all missing. An Excel spreadsheet was the only element found, including the following information:

  • good purchased,

  • amount of the contract,

  • extensions (no contract reported any extension),

  • payment form (wire transfer in all cases),

  • supplier’s name,

  • supplier’s address,

  • duration of the contract,

  • citizen participation mechanism.

The same situation prevails for public works, but for the duration of the contract, the Excel spreadsheet for public works carried out in 2017 only provides the date in which the contract starts, but the date of completion is not indicated. The same omission is applicable to the procurement of services and leases.

The third platform on which ISSSTESON publishes procurement information is its very own website (www.isssteson.gob.mx/). A label “Tenders” (licitaciones) opens up a window where the user can search ongoing and concluded tenders. At the time of the review of the website (14 March 2019), there were no ongoing tenders. For ones that they were concluded, the user has access to several kinds of documents, such as the calls for tender, annexes and in some cases the model contract. Again, key information, such as the name of the bidders, the justification for the successful bidder, the award decision, the signed contracts, the progress reports, the completion agreements, the surveillance and oversight mechanisms and the payments are all missing.

A fourth source where ISSSTESON publishes information is CompraNet, the e-procurement platform of Mexico’s federal government (https://compranet.hacienda.gob.mx). ISSSTESON entered into an agreement with the Federal Ministry of Public Administration (Secretaría de la Función Pública, or SFP) in 1999 to be allowed to use CompraNet. In CompraNet, ISSSTESON uploads the calls for tender and their annexes, the minutes of the meetings to open bids and award the contract, the minutes of clarification meetings, and the signed contracts. However, CompraNet is used merely as a mechanism for uploading information and ISSSTESON does not leverage CompraNet’s transactional functionalities.1

The first problem observed with ISSSTESON transparency practices is that the institute is not fully complying with disclosure of all the procurement-related information stipulated by the LGTAIP and Sonora’s law. Although PNT helped significantly to comply with the disclosure of the different information required, some information may still be hard to find, such as on the surveillance and oversight mechanisms and the completion agreements, which were not found in any of the four platforms described above for direct awards. Likewise, for public tenders, some items of information, such as the surveillance and oversight mechanisms, the progress reports and the completion agreements, are not available.

The second issue is the dispersion of the information over four platforms. ISSSTESON could develop a procurement microsite to upload and consolidate all procurement-related information. This would help ISSSTESON keep track of its compliance with information disclosure legal requirements and avoid the risk of inconsistencies between different platforms. On the other hand, it would provide a more user-friendly mechanism for searching for procurement information. Along with the microsite, ISSSTESON could develop a user guide indicating which kind of information is found on each of the four platforms described above as, for example, the use of CompraNet is required by law. The Mexican Institute for Social Security (Instituto Mexicano del Seguro Social, or IMSS), for instance, has developed a procurement microsite, as recommended by OECD (see Box ‎3.2).

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Box ‎3.2. The IMSS Procurement Portal

IMSS created the Procurement Portal (Portal de Compras del IMSS, http://compras.imss.gob.mx) in 2011, to enhance transparency and improve understanding of IMSS expenditures. It presents IMSS procurement activities in a user-friendly manner, and provides a full picture of how, on what and why IMSS spends its resources, as well as their benefits. It also includes information on what is procured by delegations and highly specialised medical units (Unidades Médicas de Alta Especialidad, or UMAEs).

The portal contains information for suppliers and potential suppliers, and for the wider public. For example, information for suppliers includes the goods most often purchased by IMSS, the annual procurement plan, frequently asked questions, and the suppliers who sold the most to IMSS. Potential suppliers can benefit from information on how IMSS procures, how to sell to IMSS, and how to register in the IMSS suppliers’ catalogue. Likewise, the general public can find the reports by social witnesses who observe tender procedures and the regulations applicable to IMSS procurement. There are also various categories of general statistics on IMSS procurement.

In addition to providing important information to suppliers and the general public, the portal is an informational tool for IMSS’s various purchasing units, including the decentralised ones (for example, the delegations and UMAEs). The Procurement Portal has a section on suppliers who have failed to comply with contracts, which can be used by purchasing units to assess the risk of working with specific suppliers.

Source: (OECD, 2018[4]), Second Public Procurement Review of the Mexican Institute of Social Security: Reshaping Strategies for Better Healthcare, OECD Publishing, Paris, http://doi.org/10.1787/9789264190191-en.

A third issue has to do with the format in which the information is presented. There is no uniform standard for publishing information in the three platforms described above. Documents are often uploaded in PDF and other formats that are not machine-readable. ISSSTESON could develop the microsite suggested above, using the Open Contracting Data Standard (Estándar de Datos para las Contrataciones Abiertas, or EDCA). Ukraine, for example, uses the EDCA to publish procurement-related information. In Mexico, the project to build the New International Airport of Mexico (Nuevo Aeropuerto Internacional de México, or NAIM) also adopted this standard (see Box ‎3.3).

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Box ‎3.3. National and international practices for using the Open Contracting Data Standard

Ukraine

After the Maidan revolution, civil society, the private sector and Ukraine’s government came together to make the provision of humanitarian resources more transparent. Based on this experience, civil activists and procurement experts formed a public-private partnership, the ProZorro initiative, to work on expanding this experience to make Ukraine’s procurement system more accessible.

The new system, based on the Open Contracting Data Standard, was launched in February 2015. It makes information related to public procurement (including annual plans, tender notices and documentation, bids, decisions of evaluation committees, and contracts) freely accessible online as open data. The results of the project have been impressive: in the first three months, the savings realised savings of USD 1.5 million in public funds, and competition increased from an average of two participating bidders per tender to three.

After the adoption of the new public procurement law in December 2015, and after it became mandatory on 1 April 2016, ProZorro was scaled up to include all procurement in Ukraine. The success of the project was largely due to the collaboration between different stakeholders. For them, this project went far beyond open data as a principle. The implementation was results-oriented, not only in terms of numbers and savings, but also in terms of transforming the business culture. Ukraine´s project has been shared with others, and ProZorro won the World Procurement Award in the Public Sector.

New International Airport of Mexico (NAIM)

As a result of the commitment to publish NAIM procurement operations following the Open Contracting Data Standard, made by the President of Mexico during the Open Government Summit held in Mexico City on October 2015, the Airport Group of Mexico City (Grupo Aeroportuario de la Ciudad de México, or GACM) gradually published relevant information and documents concerning 461 procurement procedures, including information about their execution.

GACM was the first federal entity in Mexico to disclose its procurement procedures after the Open Contracting Data Standard was adopted. As of September 2018, 461 NAIM contracts had been uploaded in the open data website of Mexico’s government (gacm.gob.mx). The information published includes the purpose of the contract, value, contractor, type of procurement procedure (i.e., open tender, restricted invitation or direct award), guarantees, calls for tender and awards. Likewise, documents such as the signed contract, terms of reference, the call for tender, the minutes of the clarification meetings, the award statement, the statement of the reception of the purchased items, and the payment settlement, are accessible through this site. Finally, as of the same date, GACM had published financial and physical progress data for most contracts.

Source: (Open Contracting Partnership, 2017[5]), “The Open Contracting Partnership showcase projects – Ukraine”, available at https://www.open-contracting.org/why-open-contracting/showcase-projects/ukraine/, accessed on 2 March 2018 and (OECD, 2018[6]), Second Progress Report on the Development of the New International Airport of Mexico City: Adapting Practices to Meet Emerging Challenges, available at https://www.oecd.org/gov/ethics/second-progress-report-development-new-airport-mexico.pdf, accessed on 2 March 2018.

In addition to the information proactively disclosed, Sonora’s Law empowers citizens to request specific information. During 2018, ISSSTESON received 785 requests for information, of which nine were declined, 58 were not taken care of and prescribed, and 29 were challenged through a juicio de amparo.

The response to a citizen’s request, which must be provided within 15 working days, can be either positive (e.g. information is disclosed and provided to the requester) or negative (e.g. information is not disclosed, either because it did not exist or is restricted or confidential). The entity being requested for information can also decline the request in cases when the information is not within the realm of its responsibilities. When disclosed, the information can be provided by electronic means or on paper.

copy the linklink copied!3.3. Using digital technologies to implement ISSSTESON strategies

This section discusses how ISSSTESON could leverage existing information technology (IT) systems to tackle a number of issues (i.e. information management, integration of systems, improved collaboration and communication) that would have a positive impact on procurement functions. It would be advisable for ISSSTESON to develop an IT-based platform to manage all the activities related to its procurement function. Introducing such a system in its procurement units could help to improve its procurement function overall, for example, by making the process more standardised, consolidating opportunities and planning. Likewise, the system would complement the functionalities enabled by CompraNet, the national e-procurement tool used by ISSSTESON, but it does not support the full digital management of the procurement cycle. Indeed, the OECD Recommendation of the Council on Public Procurement calls on Adherents to improve their public procurement systems by using digital technology to support innovations in e-procurement throughout the procurement cycle (see Box ‎3.4).

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Box ‎3.4. The OECD Recommendation of the Council on Public Procurement (e-procurement)

Adherents are advised to improve the public procurement system by harnessing digital technologies to support appropriate e-procurement innovation throughout the procurement cycle. To this end, Adherents should:

i) employ recent developments in digital technology that make possible integrated e-procurement solutions covering the public procurement cycle. Information and communication technologies should be used in public procurement to ensure transparency and access to public tenders, increasing competition, simplifying processes for the award and management of contracts, driving cost savings and integrating public procurement and public finance information.

ii) pursue state-of-the-art e-procurement tools that are modular, flexible, scalable and secure in order to assure business continuity, privacy and integrity, provide fair treatment and protect sensitive data, while supplying the core capabilities and functions that allow business innovation. E-procurement tools should be simple to use and appropriate to their purpose, and consistent across procurement agencies, to the extent possible; excessively complicated systems could create implementation risks and challenges for new entrants or small and medium enterprises (SMEs).

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

3.3.1. Scaling up ISSSTESON’s online platforms for procurement would increase transparency and efficiency

ISSSTESON does not have a single IT-based procurement platform. Its central administration and decentralised units in hospitals may use the state version of CompraNet for public tenders and restricted invitations or the Electronic Procurement System (Sistema Electrónico de Compras, or SIEC) for direct awards.

The institute started using the state version of CompraNet in August 2017, to publish public tenders and restricted invitations subject to the regulatory framework for state procurement. It had been using the version of CompraNet used by the federal government. As noted earlier, ISSSTESON uploads in CompraNet the calls for tender and their annexes, and the model contracts, among other basic documents. The system, however, is used merely as a mechanism to upload information, and ISSSTESON does not take advantage of CompraNet’s transactional functionalities. The regulatory framework still allows suppliers to use paper-based processes to participate in public tenders, which has limited the full transactional use of CompraNet.

Traditional procedures on paper have several disadvantages. First, when tenders are submitted in paper form, ISSSTESON must organise clarification meetings and bid-opening sessions that require the physical presence of bidders, rather than participating virtually in clarification meetings, which would reduce costs for both the contracting authorities and suppliers. Second, the physical contact between bidders in paper-based tenders increases the risk of bid rigging and collusion.

SIEC was developed in 2009 to streamline procedures for direct awards. It includes several modules:

  • suppliers: This module allows suppliers to register in the system. It also allows the user to consult general information about the suppliers registered, such as name, address, contact information, product categories under which they are registered, and requisitions for which they have provided quotes, which are categorised into those that have been awarded, those that have not been awarded, and those that are in process. As of 21 May 2018, SIEC had 1 031 authorised suppliers, of a total of 1 644 that had pre-registered.

  • requisitions: ISSSTESON publishes its needs in this module, and authorised suppliers can upload an offer in response. Once the requisition is published, the system sends an e-mail to the suppliers registered under the corresponding category to inform them of the opportunity to provide a quote. Requisitions are published by purchasing unit (i.e. central offices or hospital) and include a general description of the product needed, quantity and units (gallon, litre, piece, etc.).

  • purchase orders: This module makes it possible to access information about purchase orders by category and supplier. The information displayed includes the quantity purchased, place of delivery, and the requisition linked to the purchase order.

  • historic: This module accesses information on past procurement operations, by category, supplier or requisition. In each case, the system displays the amount paid to the supplier. In addition, it allows for monthly reports of completed purchases, cancelled purchases and suppliers.

The lack of a single organisational procurement management system integrated with other associated systems (e.g. budget, stock) is a significant weakness of ISSSTESON’s procurement function.2 The goals of fairness, competition and economic value are paramount in public procurement, and require effective and efficient procurement processes. This involves adequate controls to promote competition and minimise the risk of fraud, corruption, waste and the mismanagement of public funds. Information and communications technology (ICT) is a critical tool for encouraging efficiency and transparency in public procurement.

There is no clear justification for maintaining two separate ISSSTESON departments to carry out procurement operations, one for public tenders and restricted invitations and another one for direct awards. Similarly, it makes little sense to maintain two different e-procurement platforms. This fragmentation prevents staff from specialising and is an inefficient use of their expertise, for example, on markets, which is precious to any procurement no matter what type of procedure is involved. It also complicates data collection, as the data is stored in two different databases and must be manually downloaded and processed to obtain a general picture of ISSSTESON’s procurement operations. The need to master two different systems places an administrative burden on suppliers, which may deter participation and prevent ISSSTESON from selecting from a wider variety of products at better prices.

E-procurement, the use of information technologies in procurement, can help streamline and increase the efficiency of purchasing and yield significant cost and time savings. It can also help optimise the efficiency of the entire process by integrating support functions (whether legal, budget-related, product-specific, stock and supply management or statistical), encouraging the creation of specialised skills and facilitating the standardisation of practices as appropriate. ICTs enable economies of scale, for instance by consolidating procurement information on electronic portals.

In addition, e-procurement allows for more rigorous management of the procurement process, offering a mechanism for increasing objectivity in the selection of suppliers. This can have direct consequences on the perceived level of accountability and integrity of ISSSTESON activities. It can, for example, streamline the provision of data and information requested for auditing purposes, minimising the time spent on data collection required for internal control.

As for all other areas of public service, openness and transparency are core principles of public procurement. Fairness can only be ensured by making information throughout the process open and available to all. Using ICTs to share data in open formats developed by various departments of the institute at all levels can facilitate the consolidation of requirements, which could allow for better prices at greater volumes. Savings can be achieved with a combination of price reductions, administrative efficiencies and demand management. Such efficiencies can benefit both ISSSTESON, as purchaser, and its suppliers.

The development of SIEC and the use of CompraNet demonstrate ISSSTESON’s efforts to promote more strategic use of information, increasing the use of ICTs to encourage co-ordination and collaboration at the various administrative levels. Such systems, however, only cover some aspects of the management of the procurement process. Rather than invest resources on individual systems, it would be advisable to adopt a comprehensive strategic view and formulate an action plan for a single integrated e-procurement system. This would more strategically frame the development of single components as part of a full-scale system.

Following the experience of such OECD countries as Korea, ISSSTESON should consider developing a complete e-procurement management system used by all of its procurement units, covering the entire procurement cycle and all procurement procedures (public tenders, restricted invitations and direct awards), accessed through a single portal and integrated with relevant IT systems and databases, such as those used for budgetary purposes (see Box ‎3.5).

All OECD countries have e-procurement systems for various functionalities. Fewer have systems covering the entire procurement cycle (that is, from needs identification and planning through tender, and including contract management and payments), including electronic submission of bids, contract management and issuing invoices (see Table ‎3.2). Digitising the procurement process can be a commercial incentive for suppliers, improving productivity through time and cost savings. It can also increase productivity by automating repetitive administrative tasks.

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Table ‎3.2. Provision of e-procurement functionalities

 

Announcing tenders

Provision of tender documents

E-submission of bids

E-reverse auctions

Notification of award

E-submission of invoices

Online catalogue

Australia

Austria

●♦

●♦

●♦

Belgium

Canada

Chile

Denmark

●♦

●♦

●♦

●♦

Estonia

●♦

●♦

Finland

Germany

●♦

●♦

●♦

●♦

Greece

Hungary

Iceland

Ireland

Israel

●♦

●♦

Italy

●♦

●♦

●♦

●♦

Japan

●♦

●♦

●♦

●♦

●♦

●♦

Korea

Latvia

●♦

●♦

●♦

Lithuania

Mexico

Netherlands

New Zealand

Norway

Poland

Portugal

Slovak Republic

Slovenia

Spain

Sweden

Turkey

United Kingdom

OECD total

● In a national central e-procurement system

29

26

21

11

29

10

11

♦ Only in e-procurement systems of some specific procuring entities

1

4

3

5

1

7

5

○ No

0

0

6

14

0

13

14

Colombia

Costa Rica

India

●♦

●♦

●♦

●♦

Note: Data for the Czech Republic, France, Luxembourg, Switzerland and the United States are not available. In Poland, tender documents are provided on the websites of procuring entities or in the e-procurement systems of some sectoral procuring entities.

Source: (OECD, 2017[7]), Government at a Glance 2017, OECD Publishing, Paris, http://dx.doi.org/10.1787/gov_glance-2017-en.

Given the status of ISSSTESON’s online platforms, the development and introduction of a consolidated e-procurement system could provide various advantages, such as:

  • increasing the consistency and adequacy of the procurement activities through a common process, the availability of templates (e.g. model solicitation documents) and the automation of various steps of the process (bid evaluation and selection of the best offer, automatic calculation and application of penalties for late delivery, etc.);

  • strengthening communication, collaboration, co-ordination and planning, which could have a positive impact on the overall quality of procurement;

  • collecting key procurement data for decision making, performance management (of both the procurement function and suppliers) and auditing purposes;

  • improving the transparency of the management of the procurement process, which could help increase overall accountability;

  • reducing the time and effort required to complete the procurement cycle, freeing up resources for higher value-added activities (such as market research and developing procurement strategies).

It is important to bear in mind that no one solution fits all circumstances. It is thus critical that any decision to make an online tool mandatory for specific procedures takes into account the specific organisational and field context, as well as the level of IT readiness among users.

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Box ‎3.5. The KONEPS integrated e-procurement system (Korea)

In Korea, a notable improvement has been made in the transparency of public procurement administration since the early 2000s, after the introduction of a national e-procurement system.

In 2002, the Public Procurement Service (PPS), Korea’s central procurement agency, introduced , KONEPS, a fully integrated, end-to-end e-procurement system. It covers the entire procurement cycle electronically, including a one-time registration, tendering, contracts, inspection and payment. All associated documents are exchanged online. KONEPS links to about 140 external systems to share and retrieve any necessary information and provide a one-stop service, including automatic collection of bidders’ qualification data, a delivery report, e-invoicing and e-payment. It also provides related information on a real-time basis.

All public organisations are mandated to publish tenders through KONEPS, which links 45 000 public entities with 244 000 registered suppliers. PPS reports that the system has increased efficiency in procurement and significantly reduced transaction costs. It has also increased participation in public tenders and considerably improved transparency, reducing corruption by preventing illegal practices and collusive acts. For example, on KONEPS, the Korea Fair Trade Commission runs its BRIAS system (Bid-Rigging Indicator Analysis System), an automated detection system for identifying suspicious bid strategies. According to an integrity assessment conducted by Korea’s Anti-Corruption and Civil Rights Commission, the integrity perception index of PPS has improved from 6.8 out of 10 to 8.5 since KONEPS was established.

Source: (OECD, 2016[8]), Country case: Integrated e-procurement system KONEPS in Korea, www.oecd.org/governance/procurement/toolbox/search/integrated-e-procurement-system-koneps.pdf.

3.3.2. ISSSTESON should create a consolidated e-procurement system, sharing information between databases

Integrating IT systems and databases for electronic management of procurement is increasingly seen in OECD countries as a vital element for improving the efficiency and transparency of the procurement process. KONEPS, which covers all procurement processes (from suppliers’ registration to bidding, contracting and payment) is one good example. A one-stop service, it is linked to about 140 external systems. In Mexico, IMSS has also linked some of its procurement-related IT systems (see Box ‎3.6).

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Box ‎3.6. Mexico’s linked procurement systems, SAI and PREI, for IMSS

IMSS has two systems for managing procurement activities: the Institutional Supply System (Sistema de Abasto Institucional, or SAI) and the Institutional Resources Planning (Planeación de Recursos Institucionales, or PREI). The SAI was developed in 1997 and introduced in 2000 for IMSS procurement activities. The PREI is the platform used by IMSS to manage budget and financial information.

In line with its strategy of technical modernisation, IMSS decided in 2008 to incorporate SAI modules into the PREI. This was intended to enhance the efficiency of the system and provide full visibility of procurement activities and budgeting. The figure below illustrates how this interconnection works.

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Source: (OECD, 2018[4]), Second Public Procurement Review of the Mexican Institute of Social Security (IMSS): Reshaping Strategies for Better Healthcare, OECD Publishing, https://dx.doi.org/10.1787/9789264190191-en.

In ISSSTESON, the systems and databases used at the central and decentralised levels are not interoperable, which reduces the institute’s ability to realise potential efficiencies. The low level of integration has a negative impact on ISSSTESON’s resources, resulting in inefficiencies, errors and a lack of accurate information for decision making, operations and performance management. Integrated portals would allow units (and suppliers) to submit information only once, increasing the efficiency of the process.

IT integration would lead to greater efficiency in the management of procurement functions. It could also increase transparency in the management of procurement-related information. Better integration of systems could result in greater availability of standardised, consistent and consolidated data and might also help resolve certain inherent inefficiencies in the procurement process.

3.3.3. Using ICTs to share information can boost efficiency and transparency in procurement

Strategic use of ICTs could improve efficiency and transparency in communication between ISSSTESON’s central procurement units, hospitals, senior management and the public. The institute’s use of technology for exchanging information is rudimentary at present. Internal communication and information exchange within the central units, and with heads of departments and hospitals, is time-consuming, since it is mainly conducted in person, over the phone or via e-mail. Heads of department visit the various hospitals in person to learn how things are being done, and to ensure that they are done as expected. The overall impression is that there is no sense of the value of the time being lost.

There appears to be little awareness of how ICTs can be used strategically to manage communication and interpersonal exchange and support the management of operations, with real time savings. This could help establish an environment in the institute conducive to the use of ICTs to improve the performance of all functions. An e-procurement system could automatically record the data needed for decision making, improving performance and internal control. A better exchange of information and better communication could encourage co-ordination between the hospitals and central units. Finally, better communication with the public could increase the visibility of the procurement function and bring ISSSTESON closer to users.

On the other hand, the focus should not only be on implementing new ICTs. Greater use of simple technologies already in place (such as videoconferencing and teleconferences) would be a low-cost, low-commitment approach for improving communication and engaging, informing and motivating stakeholders. ISSSTESON could leverage simple technologies to broadcast live the events where contracts are awarded, engaging citizens and staff in organisations that might be interested in participating as observers.

Finally, ISSSTESON has no central repository of all important and useful documents and information. This would include market analyses by each procurement unit, which are not integrated into internal IT systems. This risks wasting the information and duplicating the efforts of units involved in similar procurement procedures. ISSSTESON might consider developing a central repository for sharing such information among procurement officials in the different units. Some information is already being uploaded. SIEC allows officials to consult the last prices of direct awards, for example, including those carried out by hospitals, and even the last reference prices registered. Box ‎3.7 describes a French information system developed in 2016 by Resah, a public interest group aiming to increase health sector performance.

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Box ‎3.7. Sharing procurement information in Resah (France)

The goal of Resah (Réseau des acheteurs hospitaliers or network of hospital buyers) is to support performance in the health sector by aggregating demand and professionalising the procurement workforce. It includes a central procurement body and a centre of expertise. Given that IT tools can be a lever for operational performance, the Resah developed an IT platform in 2016 with four modules: 1) aggregating demand, 2) standardisation, 3) performance management and 4) exchange.

The main goal of the exchange module is to serve as a collaborative platform for procurement officials from the entities and hospitals in the group. It includes three main spaces:

  • communication: news, exchange I;

  • contact details: joint directory, organisation chart per hospital department, etc.;

  • work: good practice sheets, satisfaction questionnaires and exchange of best practices.

Beyond merely sharing procurement data, this information-sharing system creates a community of users who exchange ideas on procurement best practices and provide insights into strategic stages of the procurement cycle, such as the information needed to design procurement strategies.

Source: (OECD, 2018[4]), Second Public Procurement Review of the Mexican Institute of Social Security: Reshaping Strategies for Better Healthcare, OECD Publishing, Paris, http://doi.org/10.1787/9789264190191-en.

3.3.4. To prepare for a new e-system, ISSSTESON should facilitate uptake of electronic systems for procurement

Mexico is one of the OECD countries that allows electronic submission of bids on a national e-procurement system (CompraNet). Bidders for ISSSTESON, however, submit their offers on paper when participating in public tenders, as CompraNet is only used for informational purposes. ISSSTESON has made no recent efforts to increase adoption of CompraNet for transactional purposes, and uses SIEC for direct awards.

In 2019, ISSSTESON launched a new accounting system called SIREGOB (Sistema Integral de Contabilidad Gubernamental). This makes it possible to carry out procurement processes online, for both public tenders and direct awards. It allows potential suppliers to submit their technical and economic bids electronically and incorporates a module for reverse auctions.

Several facilitation strategies could help increase uptake of these systems. First, ISSSTESON’s top management should decide to gradually increase the number of public tenders conducted online. Likewise, SIEC should be designated as the only system to receive offers for direct awards, until a new system for all procurement activities is launched, such as SIREGOB.

Second, better understanding of the users’ needs and perspectives – of both ISSSTESON procurement officials and suppliers – could help design a focused capacity-building pIcluding training and assistance. To ensure a level of buy-in that would maximise the benefits of the investments made in e-procurement so far, a culture of confidence and trust in the IT systems should be encouraged. Targeted awareness-raising and capacity-building initiatives could help increase supplier awareness of the benefits of using e-procurement platforms.

Another possibility would be to make the use of e-procurement systems compulsory. Businesses in a number of OECD countries have taken this route to achieve the level of uptake necessary to guarantee the desired return on investment. Such a decision, however, requires a level of technical skills that many ISSSTESON suppliers now lack. Undertaking such a step without preparing the users may also entail risks, such as deterring businesses from participating and bidding in public tenders.

copy the linklink copied!3.4. Sharing performance information and indicators on public procurement

Efficient management of the procurement function calls for an evidence-based assessment and decision-making process. In a context where countries hope to make public service delivery more efficient – chiefly because of budgetary constraints, but also in response to citizens’ demands – it is essential to conduct an in-depth assessment of the procurement system. The OECD Recommendation of the Council on Public Procurement calls on countries and entities to drive performance improvements by evaluating the effectiveness of the public procurement system, from individual procurements to the system as a whole.

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Box ‎3.8. The OECD Recommendation of the Council on Public Procurement (evaluation)

Adherents are recommended to drive performance improvements through evaluation of the effectiveness of the public procurement system, from individual procurements to the system as a whole, at all levels of government where feasible and appropriate.

To this end, Adherents should:

i) periodically assess the results of the procurement process. Public procurement systems should collect consistent, up-to-date and reliable information and use data on prior procurements, particularly of price and overall costs, in structuring new needs assessments, as they provide a valuable source of insight for future procurement decisions.

ii) develop indicators to measure performance, effectiveness and savings of the public procurement system for benchmarking, and to support strategic policy making on public procurement.

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

In line with the OECD Recommendation, it is critical that ISSSTESON collect high-quality procurement data for systematic assessment. Such activities can be significantly upgraded by implementing a performance monitoring and management system. A system of this kind would allow for regular monitoring of progress against the priorities identified and help spot specific opportunities for improving the efficiency and effectiveness of the procurement process, contributing to the ongoing improvement of the function.

The OECD team found a virtually total lack of clear, appropriate data on the performance of procurement in ISSSTESON. This is a major obstacle to managing and improving the institute’s procurement function and limits the development of optimal procurement strategies. The situation is exacerbated by the lack of a performance management system, which means the institute cannot fully assess the results of its procurement activity or any opportunities to identify areas for improvement. This results in poor incentives and reduced capacity to improve the procurement function and limits awareness of its strategic contribution to the organisation’s objectives.

3.4.1. ISSSTESON should start to collect systematic data on procurement performance to inform decision making

ISSSTESON has no systematic or common data collection strategy. From 2006-09, it was certified under ISO-9001, which encouraged the institute to develop indicators and collect some data. The institute was required to measure compliance against the following quality goals:

  • collecting 80% of the needs of the annual procurement plan on time;

  • meeting 50% of clients’ requests and informing them within 30 days of the response;

  • meeting 70% of satisfaction with the delivery of goods by the suppliers awarded a contract.

  • meeting 70% of client satisfaction with the delivery of requested goods.

The indicators developed to measure these objectives included the following indicators:

  • timely collection of needs for the annual procurement plan = needs collected on time/total participating departments

  • purchases requested by the different departments = requests met/requests received

  • orders requested to awarded tenders = quantities received in warehouses/quantities requested to suppliers

  • survey results = satisfied staff/total surveyed staff.

These valuable efforts unfortunately ceased in 2009, and the ISO certification was lost. The current lack of capacity to consolidate data rapidly and accurately into organisational-wide statistics and reports is a significant drawback for the institute. ISSSTESON had some difficulty providing the OECD with some of the information for this review, such as the use of exceptions to public tender. For this reason, it would be advisable to relaunch the efforts towards the ISO certification as a way of encouraging the different departments to produce updated indicators and the ensuing follow-up for continuous improvement.

The dispersion and lack of systematisation of performance data has limited the use of procurement statistics in planning, evaluation and decision making. This lack of credible, comprehensive procurement data prevents ISSSTESON from assessing the procurement system as a whole. It also compromises its ability to address strategic management elements such as its procurement strategy, internal control, performance monitoring and management.

A potential solution to the limited capacity for collecting data necessarily includes leveraging information systems. ISSSTESON should consider improving the existing capacity of its procurement information systems. This would encourage efficient collection of the key procurement data required for strategic purposes at the level of the procurement unit. Information systems should also facilitate online consolidation of that information at different aggregation levels. To fully reap the benefits, information systems should not only stock data, but collect data in a structured, reusable way. In developing platforms or IT tools, ISSSTESON needs to consider carefully the type of reporting and data needed.

ISSSTESON could start by looking inside the organisation to see what type of data – costs, schedules, methodologies and outcomes – are easiest to produce and collect. The institute could then develop an action plan to collect missing data. Relevant reports should be produced following adequate collection, use and assessment of that information. This will provide a clearer picture of the various procurement activities undertaken by ISSSTESON (at the consolidated or hospital level) and illustrate the value of that function.

3.4.2. Once data is available, ISSSTESON should develop indicators to assess procurement performance and introduce a performance monitoring and management strategy

Identifying opportunities for improvement and establishing strategic priorities and objectives in ISSSTESON’s procurement function requires a thorough understanding and assessment of its actual performance. Such an analysis is currently not available without organisation-wide indicators. The indicators developed in the framework of the ISO certification are no longer in use. However, the development of indicators requires the right kind of data, as well as the possibility of reusing them.

The performance of public procurement systems can be assessed at three distinct levels: the contract management/micro level, the contracting authority/macro level and national/meta level. These levels are closely linked, since the performance at the procedure or contract level has an impact on the performance of the entity, which in turn influences the performance of the procurement system at the national level. In the case of ISSSTESON, these levels would correspond to individual contracts, administrative units and hospitals, and the whole institution. Indicators should be developed to reflect the strategies and policies designed at the unit and institutional levels. Box ‎3.9 describes the key aspects to consider in developing key performance indicators (KPIs). It could also be relevant to set specific targets to serve as goals for the entity. These would help identify gaps and bottlenecks for continuously improving the system, by undertaking relevant actions and tailoring specific strategies. Clearly, not all the indicators need to be monitored with the same frequency.

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Box ‎3.9. Characteristics of key performance indicators (KPI)

Good KPIs must possess fundamental qualities to fully benefit an organisation and its suppliers. They should be:

  • relevant, i.e. linked to key objectives of the organisation (avoiding critical outcomes or risks), rather than on process;

  • clear, i.e. spelled out in the contractual document and rendered as simply as possible, to ensure common understanding by the buying organisation and the supplier;

  • measurable and objective, i.e. expressed in pre-determined measures and formulas, and based on simple data that can be gathered objectively and in a cost-effective manner;

  • achievable, i.e. realistic and within the control of the supplier;

  • limited, i.e. as few as needed to achieve the objectives, while minimising their disadvantages (costs, efforts and risk of dispute) to both entities. To the extent possible, the use of information and documentation already available under the contract management process should be encouraged, rather than requiring collection of additional data or documentation.

  • timed, i.e. include specific time frames for completion.

Source: (OECD, 2018[4]), Second Public Procurement Review of the Mexican Institute of Social Security: Reshaping Strategies for Better Healthcare, OECD Publishing, Paris, http://doi.org/10.1787/9789264190191-en.

To set up a strategic procurement function with clear objectives focused on continuous improvement, ISSSTESON should identify clear organisation-wide priorities and targets for regular assessment of the progress of all procurement units through KPIs. Box ‎3.10 shows how the United Kingdom uses indicators to assess its procurement capacity.

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Box ‎3.10. Procurement Capability Reviews and the use of Indicators in the United Kingdom

In the United Kingdom, Procurement Capability Reviews were first announced in Her Majesty’s Treasury Report Transforming Government Procurement, and piloted in early 2007. The Reviews were modelled on Departmental Capability Reviews operated by the Cabinet Office but focused on commercial activities of public organisations, both across the whole life-cycle, from policy and strategy to delivery and disposal, and across different commercial activities (i.e. from commodity procurement to complex procurement). To encourage a high level of confidence in the report and its recommendations, the reviews were conducted by a team with significant depth and breadth of experience and knowledge of commercial issues.

The goal of the procurement capability review was to assess three broad areas with corresponding indicators: i) leadership (visibility, vision and confidence levels); ii) skills development and deployment (effective resourcing and “intelligent client capability”); and iii) systems and processes (governance and organisation, strategic and collaborative approach to markets, effective use of procurement techniques, and knowledge management).

A primary aspect of the reviews was the use of KPIs to help organisations continuously improve. There are three different types of indicators:

  • key metrics designed to help the public organisation and other governmental stakeholders track whether performance is improving over time. There are nine key metrics.

  • contextual metrics, which inform the key metrics and are useful to track changes over time, but need to be interpreted alongside other information. Six contextual metrics are used.

  • diagnostics metrics, more detailed measures to inform specific lines of enquiry during the Procurement Capability Review or subsequent evaluation. They are not intended for ongoing monitoring of procurement performance. There are eight diagnostic metrics.

KPIs were awarded scores on a five-point red/yellow/green scale. These scores were subsequently subject to a rigorous moderation process by an independent panel of representatives from the National Audit Office, the Confederation of British Industry, the HM Treasury and the Cabinet Office. A snapshot of 23 Procurement Capability Review performance indicators over four areas of interest (leadership, skills development and deployment, systems and processes, and results delivered) used under such review can be found in Annex Table ‎3.A.1.

Each reviewed organisation was expected to develop and implement an Improvement Plan in response to the review. The departments, with the appropriate governmental authority, agreed on an Engagement Plan based on assessed risk to delivery against the approved Improvement Plan. Follow-up plans included self-assessment by the department six months after the approval of the Improvement Plan, an evaluation around 12 months after the first review to measure progress against the Improvement Plan, leading eventually to a follow-up full review within 24 months.

Source: (Office of Government Commerce, 2007[9]), Procurement Capability Review Programme: Tranche One Report, London, available at: https://webarchive.nationalarchives.gov.uk/20110802155428/http://www.ogc.gov.uk/documents/OGC_Procurement_Capability_Review_Programme_Tranche_One_Report.pdf, accessed on 7 May 2018.

As a corollary of the efforts to design KPIs, ISSSTESON could consider developing a performance-monitoring and management strategy for its procurement function (see the experience of Ontario, Canada, in Box ‎3.11). This initiative should be based on a gradual plan determining such elements as:

  • the specific elements of procurement subject to ongoing assessment, covering all important areas of risks, efficiency and weaknesses in the various activities of the procurement process;

  • the specific metrics used to evaluate these various elements, including the data collected and the formulas used for calculation;

  • specific targets for each metric, to identify improvement objectives and measure progress against them;

  • the strategy to promote continuous improvement. Rather than simply identifying weaknesses, current best practices should promote performance-measurement activities that add value through continuous improvement.

  • the process under which procurement performance will be assessed (frequency, responsibility to collect data, calculate the metrics and assess the results, etc.) and the results communicated within the institute that should be used for strategic planning purposes.

The execution of the strategy should be designed to minimise the resources needed (in time and effort) and the costs, while maximising the benefits. The lack and poor quality of procurement statistics and data is likely to prove an initial obstacle. ISSSTESON should thus initiate its performance-management monitoring system in stages. For example, the first round of evaluation could focus on developing a few key metrics and analysing a limited number of procurement units. Other metrics and units could be gradually addressed as data become available. To ensure timely, efficient assessment of the performance of the procurement function, it is critical that a clear time frame be established and respected for integrating other metrics and units. To ensure their full integration in procurement activities, performance priorities and targets should be communicated to all levels of the procurement function. This would include employees, for whom they would be part of the annual evaluation, and the main suppliers subject to performance strategy.

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Box ‎3.11. Ontario’s measurement of procurement performance in healthcare systems

In November 2005, the Ministry of Finance of Ontario, Canada, invited 12 healthcare supply-chain specialists to assess the current state of supply-chain performance measurement at Ontario hospitals. The resulting report, Performance Measurement: A Report by the Hospital Supply Chain Metrics Working Group, proposes a series of 48 metrics and 21 supporting standards for hospitals to use in evaluating their supply-chain performance and target performance improvement. It also advises how to adopt and use the metrics to support the underlying leading practices and recommends introducing them in three stages: basic supply-chain operations, emerging supply-chain practices and supply-chain excellence.

Two companion reports, issued in 2009, expand on 20 of the metrics and 12 of the standards introduced in the original reports. Each defines the objectives, rationale and proposed benefits, together with formulas, targets, associated variables and potential data sources, related metrics and potential challenges in implementing them. The 20 metrics proposed by these recent reports cover six areas of interest (governance and process, financial, transactions and technology, customers, suppliers, and people) and are presented with their objectives in Annex Table ‎3.A.2.

Source: (OECD, 2013[10]), Public Procurement Review of the Mexican Institute of Social Security: Enhancing Efficiency and Integrity for Better Health Care, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264197480-en.

3.4.3. ISSSTESON should focus on developing a range of useful key performance indicators

Given ISSSTESON’s financial situation, demonstrating value for money should guide procurement strategies. The performance of the procurement system is often measured in savings made. There are two ways to measure procurement savings: budgetary savings or performance savings. Calculating budgetary savings involves measuring how much the contracting authority is saving in terms of spent budget from one year to the next. Calculating performance savings considers the efficiency of procurement, while taking into account all financial aspects. One of the main challenges identified in the OECD survey on Centralised Framework Agreements was the methodology for calculating this indicator. A broad range of calculation methods are used in OECD countries, depending on the nature of contracting mechanisms or the perspective adopted (OECD, 2017[7]). Box ‎3.12 describes a variety of methodologies used.

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Box ‎3.12. Common methodologies for measuring procurement savings in OECD countries
  • Comparison between historical prices or reference price based on market analysis and final price proposed by the awarded supplier;

  • assessment of the total cost of ownership of products or services procured, and comparison with reference prices;

  • comparison between the price list proposed by the awarded suppliers in the first competition stage, or the average historical price paid by contracting authorities, and the discounted price obtained after second-stage competition;

  • comparison between historical processing or labour costs and new processing or labour costs.

Source: (OECD, 2018[4]), Second Public Procurement Review of the Mexican Institute of Social Security: Reshaping Strategies for Better Healthcare, OECD Publishing, Paris, http://doi.org/10.1787/9789264190191-en.

The evaluation of the cost of a product requires taking into account more than the initial price agreed in the contract. For instance, for medical devices, in addition to the price, the analysis could take into account the costs involved throughout the life of the product: maintenance costs, training, insurance, as well as indirect costs such as the impact on beds and patients’ length of stay, and the time needed by medical professionals to use the product or take care of patients. Integrating these components into the calculations could provide ISSSTESON with new ways of generating savings.

An additional argument why ISSSTESON should measure savings is that communication about savings is a persuasive way of reassuring stakeholders (employees, pensioners, the government and taxpayers) that ISSSTESON’s procurement strategy is sound and improving its operational efficiency.

In addition to measuring price and cost savings, savings can also be expressed in terms of administrative costs. Tools such as e-procurement, centralised procurement and consolidated procurement can save significant amounts in processing and productivity. However, it is not easy to measure the savings and more generally the efficiencies derived from these instruments (see Figure ‎3.2).

Measuring savings in administrative costs requires information on direct procurement process costs (i.e. procurement officials’ salaries and standardised time frames for each type of procurement procedure). It also requires a harmonised mapping exercise of roles and responsibilities within contracting authorities to incorporate indirect costs, such as hierarchical approvals or budgetary validations.

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Figure ‎3.2. OECD countries measuring the efficiencies generated by e-procurement systems
Figure ‎3.2. OECD countries measuring the efficiencies generated by e-procurement systems

Source: (OECD, 2017[7]), Government at a Glance 2017, OECD Publishing, Paris, http://dx.doi.org/10.1787/gov_glance-2017-en.

The efficiency of the procurement function could also be measured by the number or share of unsuccessful tenders or the number of products and services not awarded. These indicators could identify procurement categories in need of capacity building in the public procurement workforce or the need for enhanced engagement with the private sector. The share of products not awarded could also indicate deficiencies in specific product categories that ultimately prevent some patients from receiving the medicines they need.

Likewise, the performance of the procurement function can be measured by how easy it is for suppliers to access procurement opportunities. The ideal performance indicator on access is the number of bids measured against the number of economic operators in the respective market. ISSSTESON could also measure the level of effective competition or possible barriers to competition by excessive specifications by measuring indicators such as the number of qualified bids, the number of suppliers downloading or requesting tender documents, and the number/share of bids not awarded.

Additionally, ISSSTESON could develop an indicator to assess suppliers’ level of compliance. This should be done with care, since delayed payments to suppliers have made it more difficult for them to deliver on time and in the quantities required. Even if the data are dispersed and not systematically collected, ISSSTESON holds information on the effective delivery date of goods and provision of services, as well as the expected delivery date. This information could be used to develop a specific indicator on the relevance of delivery time frames for each product category, hospital or supplier. This indicator can help ISSSTESON optimise its stock management.

Finally, ISSSTESON could produce indicators based on the quality of services provided to its beneficiaries, as the IMSS does (see Box ‎3.13).

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Box ‎3.13. Indicators developed by IMSS to measure the quality of its service

Since 2009, IMSS has run a National Satisfaction Survey to gather information on the perceptions of the quality of services provided to its affiliated beneficiaries. The most recent survey took place in April 2017 and had 24 757 respondents. This survey was designed to measure ten indicators, developed at the national level and at the delegations and High Specialty Medical Units (Unidades Médicas de Alta Especialidad, or UMAE) level:

  • general satisfaction with medical care

  • provision of drugs to patients

  • treatment received during the visit to the unit

  • average score of the treatment received by different categories of personnel

  • waiting time for medical consultation

  • cleanliness of the unit

  • cleanliness of the bathrooms

  • evaluation of the emergency service

  • hospitalisation services

  • surgery services

IMSS also uses another indicator on medical prescriptions prescribed to patients after a consultation. These drugs should be provided by IMSS pharmacies. The indicator aims to measure the percentage of drug prescriptions totally or partially provided to patients.

Source: (OECD, 2018[4]), Second Public Procurement Review of the Mexican Institute of Social Security: Reshaping Strategies for Better Healthcare, OECD Publishing, Paris, http://doi.org/10.1787/9789264190191-en.

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Proposals for action

ISSSTESON faces significant challenges using e-procurement and generating performance information and indicators intended to increase efficiency and accountability in its procurement operations. It also needs to review its compliance with transparency requirements, which notably improved after the introduction of the National Transparency Platform, to regain public trust in the fairness and integrity of its procurement activities. The following recommendations are intended to support ISSSTESON’s efforts to achieve such improvements.

Ensuring a high degree of transparency of the public procurement system

  • ISSSTESON should ensure that it complies with all the procurement information it must proactively disclose in a timely fashion, as established in general and local laws. In addition, the institute should rationalise the information provided on different platforms and provide guidance to users on where to find specific procurement-related information.

Using digital technologies to implement ISSSTESON strategies

  • Scaling up and integrating ISSSTESON’s online platforms for procurement would advance transparency and efficiency in its procurement operations.

  • As well as developing a consolidated e-procurement system, ISSSTESON should work on integrating this system with others (i.e. budget, stock) and sharing data between databases.

  • Leveraging ICTs to increase co-ordination, communication and information sharing has the potential to advance efficiency, transparency and informed procurement strategies.

  • In preparation for a new consolidated e-procurement system, ISSSTESON should encourage the uptake of online systems for its procurement operations.

Generating and publishing performance information and indicators on the public procurement system

  • ISSSTESON should launch an effort to collect and systematise data on procurement performance, to upgrade decision making and realise the potential for greater efficiency.

  • Once data becomes available, ISSSTESON should develop indicators to assess the performance of the procurement function and facilitate continuous improvement, ultimately leading to a strategy for monitoring and managing performance.

  • In developing indicators, ISSSTESON should focus not only on activity but on performance indicators, such as procurement savings/efficiencies, unsuccessful tenders, accessibility of tenders, suppliers’ level of compliance, quality of services and prescriptions supplied.

References

[3] Government of Mexico (2015), Ley General de Transparencia y Acceso a la Información Pública, http://www.diputados.gob.mx/LeyesBiblio/pdf/LGTAIP.pdf (accessed on 28 February 2018).

[6] OECD (2018), Second Progress Report on the Development of the New International Airport of Mexico City: Adapting Practices to Meet Emerging Challenges, OECD, Paris, https://www.oecd.org/gov/ethics/second-progress-report-development-new-airport-mexico.pdf.

[4] OECD (2018), Second Public Procurement Review of the Mexican Institute of Social Security (IMSS): Reshaping Strategies for Better Healthcare, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264190191-en.

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

[8] OECD (2016), Country case: Integrated e-procurement system KONEPS in Korea, http://www.oecd.org/governance/procurement/toolbox/search/integrated-e-procurement-system-koneps.pdf.

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

[1] OECD (2014), OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264226616-en.

[10] OECD (2013), Public Procurement Review of the Mexican Institute of Social Security: Enhancing Efficiency and Integrity for Better Health Care, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264197480-en.

[9] Office of Government Commerce (2007), Procurement Capability Review Programme Tranche One Report, Londres, https://webarchive.nationalarchives.gov.uk/20110802155428/http://www.ogc.gov.uk/documents/OGC_Procurement_Capability_Review_Programme_Tranche_One_Report.pdf (accessed on 7 May 2018).

[5] Open Contracting Partnership (2017), “The Open Contracting Partnership showcase projects – Ukraine”, https://www.open-contracting.org/why-open-contracting/showcase-projects/ukraine/ (accessed on 2 March 2018).

copy the linklink copied!Annex 3.A. Use of indicators and performance management in the United Kingdom and Ontario, Canada
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Annex Table ‎3.A.1. United Kingdom procurement capability review performance indicators

Metrics

Leadership

Skills development and deployment

Systems and processes

Results delivered

Key

• Stakeholder confidence

• Supplier confidence

• Ratio of procurement value-for-money savings to the cost of procurement function

• Average processing cost per purchase order/per invoice

• Percentage third-party spend via pre-arranged contracts

• Percentage third-party spend via collaborative procurement

• Procurement value-for-money savings as a percentage of third-party spend

• Percentage third-party spend through small and medium enterprises (SMEs)

• Performance against sustainable consumption and production targets

Contextual

• Percentage third-party spend actively managed by procurement professionals

• Cost of procurement function as percentage of third-party spend

• Percentage staff turnover of • procurement professionals

• Percentage of third-party spend via procurement cards

• Percent achievement of payment terms/within 30 days of receipt

• Average unit cost of a basket of 11 commodities

Diagnostic

• Level of head of procurement function

• Percentage procurement staff full-time equivalent that are qualified

• Percentage procurement staff undergoing professional training

• Percentage procurement employees externally resourced

• Percentage third-party spend covered by supplier relationship management

• Percentage third-party spend via structured category management

• Percentage third-party spend management via e-sourcing (e-procurement)

• Customer satisfaction with supplier performance

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Annex Table ‎3.A.2. OntarioBuys programme’s supply-chain metrics

Area

Governance and process

Financial

Transaction and technology

Goal

Control the plan-to-pay process and use of leading practices

Reduce operating and purchasing costs of the supply chain

Reduce the transactional burden and improve information

Proposed metrics

Metric 1.1. Percentage of active items under contract

Objective: To improve the control of supply chain spending by increasing the number of items bought under a negotiated contract

Metric 1.2. Purchasing response time

Objective: To improve the ability to quickly issue rush orders to suppliers

Metric 2.1. Average cost to issue a purchase order

Objective: To maximise the productivity of supply chain staff associated with purchasing goods and services, including supplier management, contract management, order processing and problem resolution

Metric 2.2. Inventory turnover in one month

Objective: To optimise the investment in inventory by balancing the cost of storing goods against the cost of replenishment, stock-outs and resulting service failures

Metric 2.3. Operating costs as a percentage of expenditures

Objective: To optimise the overall operating costs of the supply chain department relative to the expenditures on goods and services

Metric 3.1. Number of purchase orders in one month

Objective: To create efficiencies and reduce costs by optimising the number of purchase orders

Metric 3.2. Percentage of rush purchase orders

Objective: To reduce the number of unplanned and unscheduled rush purchase orders by improving planning and demand management

Metric 3.3. Number of purchase orders placed per full-time equivalent in one month

Objective: To improve the productivity of the supply chain department in creating and issuing purchase orders

Metric 3.4. Average lines per purchase order

Objective: To reduce transactional costs by consolidating purchase order lines into fewer purchase orders

Metric 3.5. Average number of purchase orders placed to top ten suppliers in one month

Objective: To consolidate and reduce the number of purchase orders issued to the top ten most active suppliers

Metric 3.6. Percentage of invoices with purchase orders

Objective: To reduce the number of invoices processed without a purchase order to properly control and manage organisational spending centrally through the supply-chain department

Metric 3.7. Percentage of invoice matches

Objective: To improve accuracy in the information contained in purchase orders, receiving slips and supplier invoices

Metric 3.8. Percentage of low-dollar-value purchase orders

Objective: To increase the use of alternative, easy-to-use purchasing methods for low-dollar-value purchases

Area

Customers

Suppliers

People

Goal

Improve service delivery through comprehensive understanding of patient and clinical needs

Leverage supplier expertise and resources to drive better supply chain outcomes

Invest in employees to improve their contribution and help make supply chain a profession of choice

Proposed Metric

Metric 4.1. Stock-outs at the cart level

Objective: To optimise stock levels at point-of-use storage locations across the healthcare organization, to safeguard patient safety and improve customer service

Metric 4.2. Fill rates to customers

Objective: To improve customer satisfaction at point-of-use storage locations across the healthcare organisation

Metric 4.3. Percentage of items activated in the master file in one month

Objective: To increase the scope of goods and services purchased by the supply chain department to include new products and suppliers

Metric 4.4. Percentage of items inactive in the master file in one month

Objective: To rationalise the number of duplicate and alternate products, services and suppliers used across the organisation

Metric 5.1. Percentage of invoices paid by due date

Objective: To increase compliance with agreed-upon payment terms to maintain good supplier relationships

Metric 5.2. Supplier performance

Objective: To ensure reliable delivery performance from an organisation’s top ten suppliers

Metric 6.1. Voluntary turnover

Objective: To improve retention of quality supply-chain staff

Notes

← 1. In June 2017, the State Government of Sonora launched CompraNet-Sonora to upload, follow up on and disclose procurement operations conducted according to state regulations.

← 2. ISSSTESON is in the process of introducing the System for Accounting Harmonisation (Sistema de Armonización Contable), which includes a procurement module and aims to improve control and monitoring of institutional operations, spending and revenues, in line with the General Law for Government Accounting (Ley General de Contabilidad Gubernamental).

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