coll. - Public procurement in Nuevo León, Mexico promoting efficiency through centralisation and professionalisation

The state of Nuevo Len is one of the fastest-growing economies in Mexico. In 2015, Nuevo Len had a growth rate of 4.3%, well above the national average of 2.5%. That year, Nuevo Len also had the second-highest GDP per capita in the country. The states primary engine of growth is the export-led manufacturing sector. It also relies heavily on construction, transport, financial services and insurance. However, many challenges lie ahead, including uncertainties about future access to major export markets and its effects on the states economy and finances. It is in this context that the new administration will be implementing an ambitious reform plan to improve productivity and maintain this growth trajectory. Public procurement will play a key part in the success of those reforms; improving the competency of the workforce and introducing up-to-date methods will thus be crucial for the entire procurement cycle.

Trust in public institutions in Mexico is currently quite low by international comparison, with the level of perceived corruption much higher than the average among OECD countries. The business community of Nuevo Len recognises corruption as a serious problem. Indeed, almost nine out of ten local companies (86.7%) stated in 2016 that acts of corruption by public servants were "frequent" or "very frequent, above the national average of 82.2%.

The new administration of Nuevo Len, in place since October 2015, is seeking to address this issue and to ensure long-term growth through a variety of initiatives. These initiatives include investments in infrastructure especially transport and energy and boosting productivity and competitiveness through investment in research and development, as well as innovation. The administration is also determined to improve trust in government. To help it achieve that goal, the government commissioned the OECD to carry out two major peer reviews: an integrity review and a public procurement review. The public procurement review is the first of its kind at the subnational level.

This report presents the findings and policy recommendations of the public procurement review. The review addresses existing strategic and operational gaps, and reflects on how the state can establish a coherent and comprehensive public procurement system. Furthermore, the review suggests how Nuevo Len can strengthen its governance model, based on the framework set by the 2015 OECD Recommendation on Public Procurement, by developing a culture of efficiency and competency among the key procurement stakeholders. To support the State Government of Nuevo Len (SGNL) in achieving successful implementation, the review draws on the invaluable support and input of peer reviewers from Ireland and Colombia, as well as international good practices and lessons learned from across the OECD, including Australia, Canada, Korea and the United States. The review process has also included workshops on the key phases of the public procurement cycle, such as planning, market analysis, award criteria, payment systems and framework agreements.

This review recognises the progress made so far, such as the introduction of a central purchasing body for the centralised administration, which is a common practice in almost all OECD countries. As in many other Latin American countries, public procurement practices in Nuevo Len have long focused on instilling a culture of procedural compliance among procurement officials and other stakeholders. There is an understanding within the SGNL that further centralisation of the purchasing system is needed, with a greater focus on aggregated procurement. However, the workforce culture needs to change if the new vision is to materialise. In order to achieve results in the future, the SGNL will need to continue on its current path for years to come. Sustaining the momentum is crucial; the state must galvanise and maintain strong political support for the reform of the procurement process. It must also ensure a clear understanding of the priorities and responsibilities of the public procurement system. If the administration can achieve these objectives, it will be able to modernise the states procurement processes and create the conditions for long-term and inclusive growth.

Marcos Bonturi

Director, OECD Public Governance Directorate