Discusses the legal requirements for selling to the host government, including whether the government has agreed to abide by the WTO Government Procurement Agreement or is a party to a government procurement chapter in a U.S. FTA. Specifies areas where there are opportunities.
The Mexican Government purchases large volumes of raw material, repair parts, finished goods, and hired services to execute important infrastructure and construction works, not to mention supplies for the broad scope of government functions, including a government-run hospital and healthcare network, schools, defense, police, research, international affairs, and more.

Procurement Centralization

Upon being sworn in December 1, 2018, the López Obrador Administration announced a new system of centralized procurement to support government anti-corruption efforts, increase transparency and accountability, and reduce costs. As of June 2019, significant aspects of the centralized procurement system were still being worked out, including consistency of the new system with procurement provisions of the Mexican Constitution and Mexico’s obligations under its various free trade agreements including NAFTA and the still-to-be-ratified U.S.–Mexico–Canada Agreement. This section provides an overview of what we know of this new centralized system together with the government procurement system as laid out in Mexican law.

In December 2018, the Government took two actions to kick off centralized procurement. First, the then-Minister of Finance, Carlos Urzúa, assigned Raquel Buenrostro as the Comptroller General (Oficial Mayor) and centralized procurement authority for all procurement. Second, the Mexican Government signed an agreement with the United Nations Office for Project Services (UNOPS) to advise on tenders for strategic projects, provide technical assistance on tracking contracts, and increase transparency.

As noted, the Lopez Obrador Administration is still working on the new centralized procurement system. However, on May 24, 2019, Buenrostro announced the “Integrated Strategy for the New Public Procurement System” (Estrategia Integral del Nuevo Sistema de Contrataciones Públicas). This strategy sets forth two main objectives. These are (a) Improve the transparency of the public procurement process; and (b) contribute to economic development having a procurement system with strategic planning, social responsibility, and a greater, more diverse number of potential suppliers. (Supplier diversity is thought to mean reducing reliance on suppliers from the United States and other traditional source countries such as Spain.)

The strategy includes the following actions:
1. Strengthen the procurement planning process
  • Integrate annual programs for public procurement & acquisitions.
  • Improve the methodologies for market research.
  • Create procurement strategies with strategic planning.
2. Support small and medium-sized companies (SMEs) with social responsibility programs
  • Increase the participation of SMEs and cooperatives in the procurement process.
  • Develop new suppliers through a strategic plan.
3. Establish strong coordination with procurement units
  • Adopt international best practices to coordinate the procurement policies and guidelines of each Finance Administration Unit (Unidades de Administración de Finanzas or UAF)
  • Centralize the procurement system to improve the coordination and tracking of public spending.
4. Consolidate procurements
  • Consolidate 80 percent of public spending in procurement.
5. Adopt technology tools
  • Automatize the public procurement process in each step as acquisition planning, management, spending, contracting and evaluation.
  • Improve the process to increase transparency and reduce costs.
6. Improve transparency in public administration
  • Train and certify the government officials, acquisition, and contracting personnel in purchasing units.
  • Improve the culture of honesty and integrity in suppliers and government employees.
  • Evaluate and track government employees in purchasing units.
7. Create a flexible legal framework
  • Develop a more transparent framework through the automatization of the contracting process.
  • Improve tracking mechanisms.

Government Budgets and Spending

As announced in the Government’s 2019 Economic Program, Mexico’s 2019 overall federal budget authorization is MXN 5.78 trillion, or approximately USD 301 billion (up from USD 287 billion in the 2018 budget). This does not include state or municipal spending, nor does it include private investment in public-private infrastructure projects. However, it does include direct federal spending, spending tied to state-owned enterprises such as Pemex, and transfers to state and municipal governments. The budget includes increased spending for security, balanced in some instances by reductions in specific federal agencies.

A smaller subset of the budget are the amounts set aside for public contracting (as opposed to salaries, facilities, and other non-contracted expenses). This table depicts the 2019 approved budget for federal public contracting by category, roughly 17 percent of the overall federal budget:
Category2019
(MXN billions)		2019
(USD billions)		Percentage
Operating Materials & Supplies$331.2$1.6933.2%
General Services$260.7$1.3526.1%
Equipment$35.7$.1853.6%
Public Works$370.3$1.9237.1%
Total$997.9$5.18100.0%
Exchange rate (using 2018 average)19.227  
Sources: Estrategia Integral del Nuevo sistema Nacional de Contrataciones Públicas, Secretariat of Finance, May, 2019, p. 6; Central Bank of Mexico (Banco de Mexico)

Traditionally, the entities and enterprises with the largest procurement budgets have been the following public entities:
  • Secretariat of Communications and Transportation (SCT)
  • Secretariat of Public Education (SEP)
  • Secretariat of Finance and Public Credit (SHCP)
  • Secretariat of Health (SSA)
  • Secretariat of Public Security (SSP)
  • Secretariat of National Defense (SEDENA)
  • Secretariat of the Navy (SEMAR)
Certain state-owned enterprises also drive significant spending:
  • The Mexican national oil company (Pemex)
  • Federal Electricity Commission (CFE)
  • Mexican Institute of Social Security (IMSS)
  • Institute of Social Security and Services for Public Employees (ISSSTE)
State and municipal spending should not be ignored. The largest states and cities in terms of economic size include Mexico City and the states of México, Nuevo León, Jalisco, Veracruz, Campeche, and Guanajuato, which together account for more than 50 percent of national GDP.

Using Local Partners for Government Sales

For most opportunities, it is not required to have a local representative or an office in Mexico to bid on a tender and sell to the Mexican Government. However, a local office can simplify obtaining bid documents and supporting after-sales service and parts, in addition to tracking competitors and reassuring the procuring agency of your long-term commitment to the market.

Frequently, the tender requires some type of local presence and Spanish-language skills. For these reasons, we strongly recommend that U.S. companies seeking government contracts work with a partner in Mexico. The U.S. Commercial Service can assist in identifying potential partners for U.S. companies. More information about these services can be found in the Trade Promotion & Advertising section.

Navigating Mexican Government Procurement

The U.S. Commercial Service Mexico City has a guide to Public Procurement in Mexico. The guide has not been updated as we await more clarity on the evolving centralized procurement system. However, please contact us to inquire about an updated copy. Below is a summary of key points for U.S. exporters based on the Mexican procurement system as stated in existing law.

The Mexican Government Procurement Process

Mexican Government procurement and contracts are governed by Article 134 of the Mexican Constitution, the Public Procurement Act (Ley de Adquisiones, Arrendamientos y Servicios Del Sector Público, or LAASSP), and Public Works Act (Ley de Obras Públicas y Servicios Relacionados con las Mismas, or LOPSRM). The Secretariat for Public Administration (Secretaría de la Función Pública, or SFP) is responsible for defining, monitoring, and enforcing procurement and contracting rules, including managing any objections or disagreements with the legality of the procurement process. Depending on the sector, other government ministries and agencies may have oversight on the process. For example, in the energy sector the Electricity Commission (Comisión Federal de Electricidad, or CFE) and the National Electric System (Sistema Eléctrico Nacional, or SEN) significantly regulate tenders in their respective areas of responsibility.

The Mexican Government makes purchases based on a documented need. Any agency engaging in public tenders or other procurement methods is required to post all listings on CompraNet (see the section on tracking tenders, below). The government must set a procurement budget, enter its information into an Annual Procurement Program (APP) on CompraNet, consider any relevant standards for regulated products, and address the agency’s objective in the short-, medium- and long term. Prior to preparing a tender, the procuring agency must complete a comprehensive market study to establish market prices and specifications. There are three types of procurement procedures agencies can use: public tender, restricted invitation, and direct award. A public tender is the preferred method; however, there are twenty exceptions that allow for an agency to by-pass public tenders. A restricted tender is invitation-only but must include at least three bidders. A direct award is a sole-source procurement and requires approval of a specific justification such as national security. When a single supplier does not exist that can fulfill the required need, the procuring agency can offer a joint bid and/or split award.

An agency seeking to procure a product or service will evaluate the bid on point-based, cost-benefit, or binary criteria. Through a point-based process, every component of a bid is weighted differently (50 points in total), and the experience of a supplier is 10 percent to 15 percent of the final score. The cost-benefit evaluation monetizes the benefit of each component of the bid to enable cost-benefit scoring. The binary process is typically used for commodity purchases in which the procuring agency first determines bids that meet all technical requirements and then automatically awards the purchase to the lowest price bid.

Prior to the final version of the tender publication, the procuring agency has the option to post a draft tender to CompraNet for 10 days. Once this period is over, the final tender will be published. Tenders are published on the agency’s website, CompraNet, and the Official Gazette.

Tracking Tenders and Bidding

The Mexican Federal Government uses an online procurement information management tool called CompraNet (https://compranet.funcionpublica.gob.mx), similar to the United States FedBizOpps system. CompraNet is a repository for all official tender information and documents by all bidders, and it is managed with oversight by Mexico’s Secretariat of Public Administration (SFP). CompraNet stores each tender listing, procurement procedure, and procurement type (e.g. purchase, lease or service contracts), records on submissions and announcements. As of June 2019, the government is still using CompraNet to manage purchasing processes.

Companies should complete the following to pursue a Mexican Government procurement contract:
  1. Go to CompraNet and press “Register your Company” (accept the terms and conditions).
  2. Select the ‘Foreign Company’ tab (Extranjera Incorporar) and enter all corresponding data and document in the space provided.
  3. Attach the required file to process a digital certificate from the SFP.
  4. Send the form with all registration information.
  5. Wait one to two business days to receive account information and a digital certificate.
  6. Access CompraNet.
U.S. firms are encouraged to carefully analyze tender specifications. They may differ from entity to entity as well as the value of the purchase, type of goods or services, and regulatory requirements. A bid will be disqualified if not received within the specified period. Bids can also be disqualified for not meeting technical requirements—even items as small as a discrepancy in a comma between a bidder’s corporate name and the name appearing in its certifications. Likewise, each tender includes a specific schedule for participants to ask questions.
If a tender specifies a certain brand or gives preference to a supplier, a complaint can be filed with the Directorate General of Complaints (Dirección General de Quejas) at the procuring agency before the contract is awarded. Bids should only include the exact specifications listed in the tender. "Additional solutions" and/or specifications not listed in the tender request can disqualify the bid.

Finally, U.S. firms should communicate regularly with their Mexican representative and fine-tune all details related to the required documents. There have been cases of disqualification based upon seemingly insignificant omissions on the part of bidders to comply with tender requirements and procedures.

Corruption in Government Procurement

Corruption exists in many forms in Mexico, and it can, at times, influence tenders. The use of exceptions such as shortened procurement windows and sole source awards are common. Generally federal-level procurements have better oversight and anti-corruption safeguards than at the sub-national level. Despite these concerns, U.S. companies regularly win government contracts based on the strength of their bid. Please see the sections on Corruption and Regulatory Transparency in the Investment Climate Statement section.

Advocacy

U.S. companies bidding on a Mexican Government tender may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center, coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of domestic U.S. Commercial Service Export Assistance Centers and with the U.S. Commercial Service in Mexico to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Useful information about the Advocacy Center’s work in support of U.S. companies—as well as the instructions and application form to apply for advocacy—can be found at their website: http://export.gov/advocacy.

Multilateral Development Banks and Financing Government Sales

Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to the Project Financing topic in the Trade and Project Financing section for more information.

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.