This presentation summarises the findings of this 2016 OECD report on procurement rules and regulations in PEMEX (Mexico's state-owed petroleum company) and makes policy recommendations to promote competition and fight bid rigging in accordance with international best practices. The full report available in English and Spanish can be downloaded at oe.cd/fbrmex.

1. Fighting bid rigging
in public procurement:
A review of the
procurement rules
and practices of PEMEX
2016

2. Why fight bid rigging?
Bid rigging involves groups of firms conspiring to raise
prices or lower the quality of the goods or services offered
in public tenders.
Although illegal, this anti-competitive practice is
widespread and costs governments and taxpayers across
the world billions of dollars every year.
Mexico has partnered with the OECD to improve its
procurement practices and step up its fight against bid
rigging in several public entities.

3. Fighting bid rigging and the OECD
2012 OECD
Council
Recommendation
and
2009 Guidelines
on Fighting Bid
Rigging in Public
Procurement

4. Lessons learned in OECD projects
to fight bid rigging
• Successful collaborations require high-level
commitment, sufficient resources and a willingness to
be open.
• Commitments must be long-term.
• Procurement officials are eager to be part of the
solution.
• Training and education of public procurement officials
is necessary and pays immediate dividends.
• Recommendations to procurement agencies must be
tailored to them.
• Implementation plans are critical. 4

5. • one of the largest oil companies in the world
• around 150 000 employees
• annual budget in 2015 of about MXN 570 billion
• the largest purchaser of goods and services in
the Mexican public sector.
PEMEX-OECD partnership
Energy reform opens the oil sector to competition.
A new PEMEX law includes rules that aim to render
procurements more efficient and effective.
OECD and PEMEX agree to work in close co-operation to
improve PEMEX’s procurement processes.
OECD completes its analytical report and makes
recommendations.
2013
2014
2015
2016

6. Some positive developments
• Market analysis, which is the main source of information for procurement
decisions, now takes into consideration a wider set of sources.
• A new methodology to identify procurement strategies that get the best
deal in terms of value for money is in place.
• New electronic tools allow PEMEX to know better its suppliers.
There is still room for improvement…
• PEMEX does not have a specialised department to conduct market analysis.
• It often uses exceptions to open public tenders .
• There are no tools to detect red flags for bid rigging.
The OECD recommendations are focused on addressing the limitations of
PEMEX’s procurement regime.
6
Key findings about PEMEX’s
procurement

7. 27 recommendations to PEMEX
• Market analysis to identify markets prone to collusion
• Open procurement: less exceptions to public bids; more foreign
bidders and SMEs; less joint bids and subcontracts
• E-procurement
• Focus on results: functional requirements, innovation;
• Comprehensive procurement database and red flags
• Hotline to ask about and report bid rigging
• The Annual Procurement Programme should include general or
aggregate descriptions (e.g. aggregate estimated amounts for
future procurements) and not all available information
• No disclosure of the identity of all bidders to everyone
• No physical clarification meetings or site visits
7

8. Statistical Highlights

9. Number of employees and budget of Mexico’s
largest public entities, 2014
Sources: CFE (2014), “Informe anual 2014”, Comisión Federal de Electricidad, PEMEX (2013), PEMEX Anuario Estadístico
2014, Centro de Estudios de las Finanzas Públicas, Recursos asignados a PEMEX en el Presupuesto del Ejercicio Fiscal
2014, IMSS (2014), Memoria estadística 2014, Instituto Mexicano del Seguro Social, ISSSTE (2015), “Presupuesto del
ISSSTE 2014”, ISSSTE (2014), Anuario estadístico 2014.
0
100 000
200 000
300 000
400 000
500 000
600 000
CFE PEMEX IMSS ISSSTE
Employees 2014 Budget 2014 (millions of pesos)

10. PEMEX’s budget, 2014
Source: Based on data provided in PEMEX’s reply of 31 August 2015 to the OECD’s questionnaire for the project.
0
100 000
200 000
300 000
400 000
500 000
600 000
Estimated expenditure (MXN million) Acquisitions of goods and services
(MXN million)
Acquisitions to SMEs (MXN million)

11. Use of different types of contracting
procedures (by volume), 2012-15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015
Direct award Restricted invitation Public tender
Source: Based on data provided in PEMEX’s reply of 28 March 2016 to the OECD’s questionnaire for this project.

12. Use of different types of contracting
procedures (by value), 2012-15
Source: Based on data provided in PEMEX’s reply of 28 March 2016 to the OECD’s questionnaire for this project.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015
Direct award Restricted invitation Public tender

13. Percentage of national and international public
tenders in relation to all PEMEX public tenders
(in volume) 2010-2014
Source: Based on data provided in PEMEX’s reply of 31 August 2015 to the OECD’s questionnaire for this project.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014
Percentage
National public tenders International public tenders

14. Percentage of national and international public
tender in relation to all PEMEX public tenders
(in value) 2010-2014
Source: Based on data provided in PEMEX’s reply of 31 August 2015 to the OECD’s questionnaire for this project.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014
Percentage
National public tender International public tender

15. Participation of SMEs in PEMEX’s procurement
11385
12500
14000
17000
17680
15145
17023
19180 19279 19087
2010 2011 2012 2013 2014
Objective Contracted
Source: Based on data provided in PEMEX’s reply of 31 August 2015 to the OECD’s questionnaire for this project.

16. Access the full report and
view more work on the
Mexican-OECD partnership
to fight bid rigging at:
oe.cd/fbrmex
More on OECD competition work at
www.oecd.org/daf/competition/