OECD Public Governance Reviews Public Procurement Review of Mexico's PEMEX: Adapting to Change in the Oil Industry

Description

This report on Mexico’s state-owned oil company PEMEX is part of a series of OECD reviews of Mexico’s procurement institutions. PEMEX’s procurement system was overhauled after Mexico’s 2013 Energy Reform opened up the sector to private participation, requiring PEMEX to compete in an open market. Using the 2015 Recommendation of the OECD Council on Public Procurement as a benchmark, the review assesses the effectiveness and integrity of PEMEX’s entire procurement system while identifying a series of actions for improvement. A state-of-the art procurement system can not only help PEMEX achieve value for money on a sustainable basis, but also support other social and environmental policy objectives in Mexico. Foreword Acknowledgements Table of contents Acronyms and abbreviations Executive summary Key findings Key recommendations Part I. Implementing the right procurement framework in Petróleos Mexicanos (PEMEX) Chapter 1. Strengthening the structure and governance of Petróleos Mexicanos’ procurement function Corporate governance of Petróleos Mexicanos (PEMEX) PEMEX’s organisational structure The normative framework for procurement in PEMEX Procurement structure and governance as a result of recent reforms Centralisation Co-ordination and communication Proposals for action Notes References Chapter 2. Implementing strong organisational procurement strategies at Petróleos Mexicanos PEMEX should ensure a permanent alignment of its procurement strategy with business objectives In a challenging economic environment, the positioning of the procurement function in the organisation of the company could create synergies with business strategic orientations Effective and efficient organisational structure and processes are needed to unlock the potential of procurement at PEMEX Aligning PEMEX and suppliers’ strategies could create an environment conducive to increased productivity on both ends PEMEX should ensure that information systems support its strategic internal procurement organisation Meaningful performance assessments of the procurement function could support the strategic positioning of the DCPA Proposals for action References Chapter 3. Promoting complementary policy objectives through Petróleos Mexicanos’ procurement The relevance of diminishing SMEs in the Mexican economy The need for a holistic strategy to enhance SME participation The need for a robust green procurement policy Towards social objectives through social responsibility A new landscape for complementary objectives Proposals for action Notes References Chapter 4. Enhancing procurement capabilities in Petróleos Mexicanos Overview of Petróleos Mexicanos’ workforce organisation Strengthening the strategic role of the procurement workforce Creating a specific procurement profession in PEMEX Proposals for action Notes References Chapter 5. Ensuring clarity and minimising procurement risks in Petróleos Mexicanos through strong tender documents and model contracts Reform of solicitation documents and model contracts The legislative framework for solicitation document and contract models Towards a new framework: Assessment of the solicitation documents and model contracts used in PEMEX Identification of potential improvements to the model contracts: The transitional phase 2014-16 PEMEX planning to introduce new generic model contracts reflecting various requirements and circumstances, and reducing the risks of inadequate use of optional clauses Proposals for action Notes References Part II. Ensuring integrity, transparency and accountability in Petróleos Mexicanos’ procurement function Chapter 6. Ensuring integrity throughout Petróleos Mexicanos’ procurement cycle Addressing weaknesses in PEMEX’s legal and policy framework for integrity Moving beyond compliance towards the implementation of a values-based strategy Proposals for action Notes References Chapter 7. Ensuring Petróleos Mexicanos’ accountability through transparency and stronger engagement with civil society Increasing access and availability of procurement information Enhancing social scrutiny and citizen participation Proposals for action References Chapter 8. Ensuring effective internal control and risk management in Petróleos Mexicanos’ procurement activities Internal control mechanisms and committees PEMEX’s risk-management system Proposals for action Annex 8.A1. Governance of internal control and risk management Note References Chapter 9. Petróleos Mexicanos’ review and remedy system on procurement decisions Current review and remedy mechanisms on procurement procedures Formal challenges against PEMEX procurement procedures Opportunities to reduce the number of challenges Proposals for action Notes References Part III. Connecting Petróleos Mexicanos’ competencies with suppliers’ capabilities for a new procurement Chapter 10. E-procurement: Implementing a strong information technology environment to support Petróleos Mexicanos’ procurement activities Laying the foundations for an interoperable procurement system End-to-end platform for e-procurement and the challenges ahead Improving information management through supplier’s registration and performance assessment The institutional context and governance of SAP-Ariba The scope of functions and usage of the e-procurement system Proposals for action References Chapter 11. Revising Petróleos Mexicanos’ pre-solicitation activities for a stronger procurement function Revisiting pre-solicitation strategies could help PEMEX maximise value creation To support strategic procurement decisions PEMEX should implement a comprehensive collection of procurement needs reflected in a holistic procurement plan Targeted implementation efforts would maximise the impact of the procurement plan Ensuring that PEMEX technological and operational needs meet or develop market capabilities Proposals for action Note References Chapter 12. Increasing efficiency and fairness in Petróleos Mexicanos’ solicitation and contract award process Embrace more systematic tools and platforms to achieve value for money Standardisation of the templates and review processes could increase the quality of the solicitation documents and contracts Provision of clarifications through established meetings and e-tools helps accelerate the process Evaluating proposals in accordance with the rules established in the solicitation documents significantly impacts the integrity of procurement processes Evaluation mechanisms can stimulate innovation among suppliers A standstill period can diminish the impact of potential ineffectiveness claims Setting up a formal mechanism for debriefing Proposals for action Notes References Chapter 13. Procurement data and performance management systems: Towards evidence-based decision making in Petróleos Mexicanos’ public procurement Procurement data Performance monitoring mechanisms for PEMEX suppliers Proposals for action Notes References Chapter 14. Ensuring results for Petróleos Mexicanos: Implementing robust post-award contract management By aggregating various sources of information, PEMEX can monitor the performance of its suppliers A comprehensive contract management framework is necessary to ensure the maximisation of suppliers’ value added Frameworks for contract management can reinforce strategic relationships between PEMEX and its suppliers Performance assessment frameworks should be proportionate to the complexity and criticality of goods and services delivered by suppliers Proposals for action References