Public Procurement & Government Contracts 2020 Comparisons

In recent years, due to various constitutional reforms, there has been a great fragmentation of the representative institutions of public power. This fragmentation was aimed at establishing greater autonomy for these institutions and preventing them from being contingent on the effects resulting from the changes that were previously experienced with government transitions, especially every six years when there is a new administration. Such fragmentation and the constant search for autonomy has permeated the public procurement regimes, creating as many regimes as institutions and making public procurement regulation in Mexico even more complex.

The legal basis for public procurement in Mexico is Article 134 of the Federal Constitution, which provides the principles pursuant to which public procurement is governed.

Despite the complex scenario on public procurement in different sectors, the most common public procurement can be divided according to the type of authority at the federal level and the sub-federal level; there are as many local contracting regimes as there are states in the country.

The federal level is ruled by the Law on Procurement, Leases and Services by Public Sector (LAASSP) and the Law on Public Work and Related Services (LOPSRM), both with their respective regulations.

The sub-federal level comprises state government and municipal authorities. The sub-federal level is autonomous under its own constitution and therefore has its own regulation – although in most cases it is similar to the federal legislation – and must be analysed on a case-by-case basis.

The regulating procurement procedures at local level sometimes reveal important discrepancies in the areas and stages of procurement. However, there are also great similarities, and sometimes even total correlation in the rules that regulate such procedures.

There are also special regimes, such as those applicable to productive state enterprises – eg, Petroleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) – as well as those applicable to autonomous constitutional bodies.

Other specific regimes apply to:

• concessions granted for works and services, which are regulated by different laws (depending on the work or service); 
• public-private partnerships for long-term contractual relationships between the public and private sectors for the provision of services to the public sector or the final user, which are regulated by the Public-Private Partnership Law; and
• legislative and judicial powers, which follow their own public procurement rules. 

According to the public procurement laws, the entities that are subject to those regulations are:

• the Presidency's administrative agencies;
• federal ministries of State and the Legal Executive Office;
• the Federal Prosecutor;
• federal state-owned companies or trusts; and
• Mexican states, municipalities and public agencies that totally or partially use federal resources.

The contracts that are mainly subject to the LAASSP are:

• the acquisition and leasing of movable goods;
• the acquisition of movable goods that are intended to be incorporated into immovable goods for the fulfillment of public works;
• the acquisition of movable goods that will be installed into immovable goods under the responsibility of public agencies or bodies; and
• the hiring of services related to consultancy, advisory and investigative work.

On the other hand, the contracts that are subject to the LOPSRM are mainly those whose main purpose is to build, install, extend, remodel, restore, preserve, maintain, modify or demolish immovable goods.

According to the LAASSP and the LOPSRM, it is possible for foreign suppliers to take part in Mexican bids under two specific type of procedures: (i) public tenders covered by international treaties that comprise a specific chapter on public procurement; and (ii) international open tenders that allow any national or foreign supplier to participate in the bids even if they have not signed an international treaty with Mexico. This option is available when a national tender has been declared uncontested or when it is being financed with foreign credit.

On a case by case basis, there could be some limitations for specific sectors like hydrocarbons or electricity.

There is no special requirement or obligation that foreign companies or private parties shall comply with in order to participate in tenders or other public procurement processes, provided that foreign suppliers are allowed to participate under the law.

Nevertheless, there are some restrictions for any private party intending to participate in the public procurement procedures and award of contracts, established in both LAASSP and LOPSRM, as well as in other pieces of legislation, such as the Federal Anti-Corruption Law on Public Procurement (FACLPP). The main prohibitions under FACLPP are the following:

• to promise, offer or deliver money or any other gift to a public servant or a third party, in exchange for said public servant performing or refraining from performing an act related to his or her functions or to those of another public servant, for the purpose of obtaining or maintaining a benefit or advantage, regardless of the acceptance or receipt of the money or the gift or the result obtained;
• to execute any actions that imply or have the purpose or effect of obtaining an undue benefit or advantage in federal public procurement;
• to perform acts or omissions that have the purpose or effect of participating in federal public procurement, despite being prevented from doing so by law or administrative resolution;
• to perform acts or omissions that have as their object or effect to evade the requirements or rules established in federal public procurement or to simulate compliance with them;
• to intervene on his or her own behalf in the interests of another person or persons who are prevented from participating in federal public procurement, so that the latter may obtain, totally or partially, the benefits derived from contracting;
• to unlawfully oblige a public servant to give, subscribe, grant, destroy or deliver a document or any good, in order to obtain an advantage or benefit for him or herself or a third party;
• to promote or use its influence, economic, political or social power over any public servant, with the purpose of obtaining for him or herself or a third party a benefit or advantage, regardless of the acceptance of the public servants or of the result obtained; and
• to file false or altered documentation or information for the purpose of achieving a benefit or advantage.

Moreover, according to LAASSP and LOPSRM, it is important to consider that government bodies shall refrain from receiving proposals or awarding any contract with among others, the following persons:

• those in which the public servant who intervenes at any stage of the hiring procedure has a personal, family or business interest;
• those suppliers that, for reasons attributable to themselves, the calling agency or entity would have administratively rescinded more than one contract, within a period of two calendar years commencing from the notification of the first termination;
• those who submit proposals in the same item of goods or services in a contract procedure and that are linked to each other by a common partner or associate;
• those who intend to participate in a contract procedure and have previously performed or are performing, by themselves or through companies that are part of the same business group, under another contract, quality analysis, control and monitoring, budgeting or the preparation of any document related to the procedure in which they are interested in participating, when on the occasion of the performance of said work they would have had access to privileged information that will not be made known to bidders for the preparation of their proposals;
• those that, by themselves or through companies that are part of the same business group, intend to be hired for the preparation of decisions, expert opinions and appraisals, when they are to be used to resolve discrepancies arising from contracts that said persons or companies are part of;
• those that enter into contracts on matters regulated by this law without being entitled to make use of intellectual property rights;
• those who have used privileged information, improperly provided by public servants or their relatives by blood or civil contract, and by affinity up to fourth degree;
• those who hire advisory, consulting and support services from any type of person on matters of government contracts if it is verified that all or part of the consideration paid to the service provider, in turn, is received by public servants  or by an intermediary, regardless of whether or not those who receive them are related to hiring (DOF 07-07-2005. DOF Reformed 05-28-2009);
• those bidders who, unreasonably and for reasons attributable to themselves, have not formalised a contract previously awarded by the awarding authority;
• tenderers who, unreasonably and for reasons attributable to themselves, have not formalised two or more contracts awarded to them by any agency or entity within two calendar years;
• suppliers who have rescinded contracts in two or more units or entities within three years;
• suppliers that do not fulfill their contractual obligations for reasons attributable to themselves and that, as a consequence, cause serious damage or harm to the agency or entity in question; and
• suppliers that deliver goods or services without meeting the specifications established in the contract.

Under public procurement regulation, the authority has the obligation to disclose and publish the call for public tenders via the electronic platform CompraNet: https://compranet.hacienda.gob.mx/web/carta.html

This free-access platform is the electronic system administrated by the Secretariat of Public Function where all the information related to the call for competition on public tenders and all the activity related to the process can be found.

Among other things, the call for bids must include:

• the name of the calling entity;
• the type and nature of the bid (ie, either national or international under international treaties or open) and the languages (besides Spanish) permitted for the proposals;
• the description of the contract and the specific requirements;
• the schedule for each of the stages of the procedure;
• the requirements that the competitors must fulfill to qualify for the bidding process;
• in certain cases, the requirements and conditions for trials;
• the criteria for the evaluation of proposals;
• the address of the Secretariat of Public Function or any other authority where competitors can challenge the outcome;
• the criteria for disqualifying a proposal; and
• the draft framework contract.

Tenders financed entirely or partly by foreign credit are published according to the guidelines of the authorised credit institution.