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What is the relevant legislation regulating the award of public contracts?
Mexico is a federation. Therefore, there are 33federal and state procurement regimes: one for each of the 32federative entities and one applicable to the federal public administration. There are also procurement guidelines for the federal legislature and judiciary, as well as an independent procurement regime that regulates the activities of the state-owned companies Petróleos Mexicanos (Pemex) and Comisión Federal de Electricidad (CFE) respectively, which are known as the ‘productive companies of the state’, and major players in the Mexican economy. There is also the Law on Public-Private Partnerships (PPPs) and its regulations.
For reasons of space, this chapter addresses and explains only the rules applicable to the federal public administration. However, some minor details of the Pemex and CFE Law and the PPP regimes may be explained. The relevant federal procurement legislation in Mexico is as follows.
Article 134of the Mexican Constitution
This provision establishes the obligation of any contracting authority or entity in Mexico (as a country) to carry out any buying of goods, leasing, provision of services, contracting of public works and services related to public works through public bids in public events, so that the state can guarantee such contracting under the best conditions on price, quality, financing, opportunity, efficiency, equal treatment and opportunity, among other issues. This Article also foresees that the special laws that regulate procurement may establish ways of procurement other than public bids (restrictive bids, direct awards, etc) when the public bid is not the most efficient procurement procedure, and foresees the correct application of public financial resources.
This Article is the constitutional ground for all public procurement in Mexico, and any law or action that contradicts this article is considered null and void.
Mexico has signed several free-trade agreements (FTAs) and economic association agreements with different countries and regions. Most of these agreements include international public procurement chapters.
In accordance with Article 133of the Mexican Constitution and the Mexican Supreme Court interpretation, international treaties are the supreme law of the nation if they are in accordance with the Mexican Constitution. FTAs that include procurement chapters are, among others:
- NAFTA, executed between Mexico, the US and Canada;
- EUFTA, executed between Mexico and the European Union (EU); and
- the Economic Partnership Agreement between Mexico and Japan.
Provisions of procurement chapters in FTAs apply whenever different issues considered in the same agreements are covered and satisfied (eg, lists of buying entities; amount thresholds; lists of goods, services and construction activities).
The Procurement Laws
The Public Works and Related Services Law (PWRS) and the Buying of Goods, Leasing and Rendering of Services of the Public Sector Law (BGLRS), together the Procurement Laws, are the two main laws that apply in most federal government procurement procedures; except in those issued by the judiciary and legislative branches, and those that regulate the activities of Pemex and CFE and PPP projects. These laws were issued by the Mexican Congress and are enforced, depending on the matter, by the Ministry of Public Function, the Ministry of Economy and the Ministry of Finance, or the corresponding contracting entities in the case of Pemex, CFE and PPPs.
In the event of a violation of legal provisions, the executive power, through regulated bid protests procedures, has the obligation to investigate possible violations and enforce the provisions. As a further resource, federal courts may be competent to solve disputes and matters that arise from the application of these laws.
Administrative regulations of the PWRS and the BGLRS
The PWRS and BGLRS regulations are issued by the Ministry of Public Function and are intended to provide further details and interpretation for the application of the Procurement Laws at the administrative level. As a general and non-waivable principle, administrative regulations must not establish any provisions that contradict, violate or exceed the rights and obligations defined by the law that they are regulating.
The regulations of the Procurement Laws may be enforced by the Ministry of Public Function, the Ministry of Economy and the Ministry of Finance in relation to administrative matters, and in accordance with the ministries’ own powers.
If these regulations are violated, these authorities can initiate diverse procedures and, as a further resource, different federal courts, such as the Administrative Federal Justice Tribunal and the Federal Judicial Power, will enforce them.
Pemex and CFE regimes
A relatively recent modification of the energy sector in Mexico has changed the nature of Pemex and CFE, and now they are called ‘productive companies of the state’. Thus, their public procurement procedures are established in special laws, such as the Hydrocarbons Law, Pemex Law, CFE Law and the Law of the Industry of Electricity, and their respective regulations. Therefore, public procurement procedures regarding these two companies, or the energy sector in general, follow a different and independent regime.
The government authorities in charge of the regulation and enforcement of the laws of the energy sector are the Ministry of Energy, Ministry of Finance, the Commission Regulatory of Energy and the National Commission of Hydrocarbons.
This is the interpretation that federal courts give to the provisions of procurement rules as a result of litigation (case law). It is important to be aware of the jurisprudence since it gives the official interpretation of a law or declarations that a law is unconstitutional. The federal courts are increasingly issuing different decisions regarding procurement regimes, which means that bidders, suppliers and contractors have faith in the judicial system, and that many issues that might not be clear at the administrative level may be clarified and corrected in this instance.
Is there any sector-specific procurement legislation supplementing the general regime?
As mentioned above, Pemex and CFE have a totally independent public procurement regime, following the specific rules for the energy sector. In addition, we can emphasise that the Mexican Army and the Mexican Navy, as military authorities, must comply with the Procurement Laws. Nevertheless, these authorities have the power to apply articles 41and 42of PWRS, as well as articles 41and 42of BGLRS, to award directly (without a bidding process) any construction of public works, services related to public works, purchase of goods and leasing and provision of services if the goods and services are for military purposes.
In addition to these laws, the military authorities have their own internal rules, according to their structure, organisation and objectives. All these rules can be found at the relevant service’s website or may be requested in accordance with the transparency principles that apply to all public administration, unless this information jeopardises national security.
Also, different laws regulate works or services concessions, depending on the work and service, while PPPs are regulated by a specific piece of legislation.
Finally, it is important to mention that the judicial and legislative branches follow their own public procurement rules.
In which respect does the relevant legislation supplement the EU procurement directives or the GPA?
Mexico is neither a part of the EU nor a part of the World Trade Organization’s Agreement on Government Procurement (GPA). Nevertheless, considering that Mexico has signed an FTA with the EU and other countries that are subscribers to the GPA, it is important to be aware of the rules related to international procurement with the corresponding regions when participating in a procedure in the countries that are part of such integrated regions.
Are there proposals to change the legislation?
There have been several proposals to modify the legislation. One of them is an initiative that was drafted and supported by the National Chamber of the Construction Industry some years ago, in order to submit to Congress and to improve the PWRS provisions that affect productivity and competitiveness. This initiative was discussed in Congress but the Chamber of the Senate did not approve it. During February 2017, the Chamber of Senate issued an initiative to enact a new PWRS and to abrogate the current law. The first and second initiatives seem to have common items, but this is a new and independent initiative. The main objectives of the initiative are the prevention of corruption during the procurement procedures, to have more transparent procedures, and a more effective and efficient procurement procedures. Such an initiative is still being discussed in Congress.
There are also some attempts to modify the BLGRS, but at the time of writing, they were still being discussed internally.
There is also an ongoing renegotiation of NAFTA, which could affect Chapter 10of the agreement, which concerns government procurement. Furthermore, negotiations to modernise the Mexico-EU are nearly concluded, and the result could also impact public procurement procedures.
Applicability of procurement law
Which, or what kinds of, entities have been ruled not to constitute contracting authorities?
The PWRS and the BGLRS define the entities and authorities that must apply the procurement legislation. These are:
- the Office of the President;
- all the ministries of state, administrative departments and the legal office of the president;
- the Attorney General’s office;
- all government entities with their own personality and patrimony;
- all entities with major public participation as well as public trusts;and
- states of Mexico that use the federal budget for buying goods or the development of projects, even if they are destined for statepurposes.
Public entities with autonomy given by the Constitution, such as the Banco de México or the Human Rights Commission, must only apply criteria and procedures under these laws when the latter do not contradict their own internal regulations. In other words, these authorities are not subject to the law, but their regulations must be guided by the principles of the law.
Any entity or authority that is not considered in the list established in any of the Procurement Laws is not obliged to apply these laws; nevertheless all of them must comply with the principles established in article 134of the Mexican Constitution.
Are contracts under a certain value excluded from the scope of procurement law? What are these threshold values?
According to the PWRSL and the BGLRS, contracting entities can make exceptions to public bids (restricted tendering and direct award), attending criteria such as urgency, public security and specialisation, but not depending on the value of the goods, leases, services, etc, and only when the amount of each operation does not exceed the maximum amounts established in the Budget Programme of the Federation and the total amount of contracts awarded under these exception procedures does not exceed 30per cent of the annual budget authorised for the contracting entity.
These thresholds are independent of those established for public procurement procedures issued under FTAs.
Amendment of concluded contracts
Does the legislation permit the amendment of a concluded contract without a new procurement procedure?
BGLRS expressly states that contract amendments are permitted if the following conditions pertain:
- the amendment is made during the contract term;
- the amount to be extended does not exceed globally 20per cent of the amount or quantities of the concepts and volumes that were established originally; and
- that the price of the goods, leasing or services is not modified.
PWRS establishes that the contracts may be modified, as long as the amendments do not exceed 25per cent of the amount and term originally agreed. Both PWRS and BGLRS, through the Federal Civil Code (supplementary to these laws), refer that the amendment of a contract has to take place within the contract term or during the validity of such contract. In other words, if the term of the contract has expired, the contract no longer exists and no amendments can be made. If the term ‘concluded contract’ refers to the services or works object of the contract being terminated, such a contract could be modified if the term of the contract is still valid, and according to the conditions referred in this paragraph. Otherwise, a new procurement procedure would berequired.
Has there been any case law clarifying the application of the legislation in relation to amendments to concluded contracts?
There is no case law regarding this matter since the ‘concluded contract’, understood as when the term is no longer valid or when the services or works object of the contract are terminated, is regulated clearly by the Federal Civil Code, therefore no case law is necessary.
In which circumstances do privatisations require a procurement procedure?
Privatisation in Mexico requires two steps: the government has to pass a political procedure in order to modify the Federal Constitution to allow private entities to exploit certain industries, sectors or services that the Constitution refers to as reserved for the state, and then the modified text regulates the implementation of such modifications and the new procedures and laws to be enacted, including the procurement procedures. However, when the service or function is transferred to a private entity, procurement procedures have to be followed according to the Federal Constitution.
In which circumstances does the setting up of a public-private partnership (PPP) require a procurement procedure?
In general, any PPP project must be carried out through a procurement process applying the Law on Public-Private Partnerships and its regulations. Procurement procedures for this kind of project include a public tender, an invitation to at least three entities or a direct award. Such provisions establish the general principles and details for a procurement procedure of these particular contracts. Even if there is a non-solicited proposal, a public procurement procedure must be carried out in order to award a PPP project.
PPPs are not been widely used in Mexico at a federal government level. The majority of PPP projects have been performed by the states. In any case, transparency, efficiency, effectiveness and rule of law are the principles that shall be considered.
Advertisement and selection
In which publications must regulated procurement contracts be advertised?
The Public Electronic Information System (CompraNet) is a system controlled and administrated by the federal public administration, through the Ministry of Public Function, in which all stages of the federal procurement procedures are published, from the public call to the award of the contract. Such a system guarantees the transparency of the procedures. Simultaneously, every public call issued under the PWRS and BGLRS is also published in the Federal Official Gazette.
Furthermore, the annual programmes of public works and related services of the agencies and entities, must be available through the entity’s website and CompraNet no later than 31January of each year.
Are there limitations on the ability of contracting authorities to set criteria or other conditions to assess whether an interested party is qualified to participate in a tender procedure?
According to the Procurement Laws:
- any bid that complies with the tender documents from a technical and economic point of view must qualify;
- a contracting authority must not ask for requirements or disqualify the bidders for requirements that do not affect the technical or economic solvency of the proposals;
- any unjustified assessment of the bids that may result in a disqualification is subject to an objection or a challenge under the Procurement Laws; and
- any unjustified qualification or disqualification of a proposal may even be a matter of administrative, civil and criminal liability of the public officials, depending on the nature of their unlawful actions.
Is it possible to limit the number of bidders that can participate in a tender procedure?
It is not possible to limit the number of bidders in a bidding procedure, but, as mentioned before, there is a possibility to have a restricted tendering (one of the exceptions to public bids), in which at least three bidders must be invited to participate in the procedure.
Regaining status following exclusion
How can a bidder that would have to be excluded from a tender procedure because of past irregularities regain the status of a suitable and reliable bidder? Is the concept of ‘self-cleaning’ an established and recognised way of regaining suitability and reliability?
According to the Procurement Laws, a bidder can be excluded from a tender procedure only when it falls into the categories established by law (conflict of interest, breaching of a contract, etc), or whenever such bidder has been debarred after a successful debarment procedure.
In the first case, as a general principle, the bidder is excluded on a case-by-case basis, so the status of a suitable and reliable bidder depends on not falling into the respective categories.
In the second case, the debarment means that such bidder shall not participate in any bid of the federal government, until the penalty imposed by the Ministry of Public Function has elapsed. According to the Procurement Laws, the period for which a person or company can be debarred cannot be less than three months and not more than five years. A fine shall also be imposed; until such fine is paid, even if the time of debarment has passed, debarment shall not finish.
The concept of ‘self-cleaning’ is not expressly established but a bidder that has been debarred, and has completed the imposed penalty, can participate again in public procurement procedures.
The procurement procedures
Does the relevant legislation specifically state or restate the fundamental principles for tender procedures: equal treatment, transparency and competition?
Yes. Article 134of the Federal Constitution establishes the obligation of public entities to consider price, quality, financing, opportunity, economy, efficiency, equal treatment and competition in the procurement process. There are special provisions and mechanisms in all the processes of the state to guarantee transparency, so these fundamental principles expressly apply to the procurement system and actions contrary to them can be challenged. In addition, the judiciary has confirmed the existence and significance of these principles through its jurisprudence. Article 134is invoked and used as the basis for all public bids and awarding procedures.
Finally, it is important to mention that due to the National Anticorruption System, which was issued in June 2016and entered into force in June 2017, several laws and offices were created in order to impose more penalties to those involved in corrupt acts during procurement procedures, and to have more transparency on such procedures.
Independence and impartiality
Does the relevant legislation or the case law require the contracting authority to be independent and impartial?
Yes. All the legal structures tend to formally enforce this situation. In addition, there are certain rules to avoid any problems occurring in practice: any supplier, provider or contractor that has a direct relationship or interest with any person from the contracting authority or entity is considered ‘not able’ or ‘not capable’ of signing a contract with the contracting entity. The Federal Criminal Code and the new General Law of Administrative Responsibilities establish the penalties and liabilities of contractors and public officers, respectively, if their actions throughout public procurement procedures are not according to the law. (See question 17for conflicts of interest matters.)
Also, as mentioned before, the National Anticorruption System includes new laws and offices that were created in order to impose more penalties to those involved in corrupt acts during procurement procedures, and to have more transparency on such procedures. Such new laws and procedures entered into force on June 2017.
Conflicts of interest
How are conflicts of interest dealt with?
There are specific provisions under articles 52to 54of the Anti-Corruption Act dealing with a situation where officials of a contracting entity have a direct or indirect interest in the procurement procedure or connection with the contractors and suppliers interested in the procurement procedures. In this case, the Procurement Laws prohibit the contracting entity from receiving any bids from the contractors and suppliers in which officers are related, involved or have an interest.
The new General Law of Administrative Responsibilities, which was created due to the issuance of the new National Anticorruption System, establishes the liabilities and penalties for public officers and private entities involved in procedures in which there are conflicts of interest.
In autumn 2015, the Ministry of Public Function issued the rules for the issuing of codes of conduct by contracting entities of the federal public administration, as well as the format to disclose conflicts of interest. The same ministry created a special office whose powers are to keep control over, and issue, guidelines on ethics in the federal public administration, as well as matters of conflict of interest.
Bidder involvement in preparation
How is the involvement of a bidder in the preparation of a tender procedure dealt with?
The Procurement Laws and the General Law of Administrative Responsibilities expressly forbid the involvement of a bidder in the preparation of a tender procedure. Such conduct can lead to debarment and economic sanctions.
There is a mechanism in the Procurement Laws called ‘project of invitation to bid’, which is issued by the contracting entity and allows interested participants to give their opinions and comments in order to feed the invitation to bid with such input. This was widely used some years ago, but it has not been used in recent times, since the objectiveness of such input was of great concern.
What is the prevailing type of procurement procedure used by contracting authorities?
As established by article 134of the Federal Constitution, public open tendering is the prevailing type of procurement procedure. Other methods of procurement (eg, invitation to at least three persons or a direct award) can be used in the case of justified exceptions such as emergencies, force majeure, acts of God, public health and national security reasons, among others.
Separate bids in one procedure
Can related bidders submit separate bids in one procurement procedure?
The law uses the terms ‘associated partner’ or ‘common associate’ in order to explain that they are not allowed to participate in the same public procurement procedure. In this sense, an associated partner or common associate is a person that has an equity participation in more than one company, and has powers of direction and representation on those companies.
This conduct can lead to disqualification or debarment and penalties to the companies that breach this principle.
Negotiations with bidders
Is the use of procedures involving negotiations with bidders subject to any special conditions?
Mexican legislation (the PWRS, BGLRS and the new General Law of Administrative Responsibilities) strictly forbids any negotiation between a contractor or a supplier and the contracting entity during a procurement procedure, before the award of a public contract and during the execution of the contract. It is even forbidden for a bidder to communicate with the entity during the procurement procedure, if such communication is intended to influence the contracting entity’s decision on the award of the contract. Breaching this obligation makes the procedure null and void, and the private entity or the public officer may incur penalties.
In the case of the new Pemex and CFE Laws, it is established that these contracting entities can have limited negotiations during the procurement procedure, as well as the negotiation of contracts below certain limits.
Finally, regarding PPPs, although it is not strictly a negotiated procedure, the PPP Law allows the parties to redefine some aspects that modify the balance of the contract as it was signed, in order to avoid causing harm to the interests of the parties.
If the legislation provides for more than one procedure that permits negotiations with bidders, which one is used more regularly in practice and why?
Competitive dialogue, as understood under the EU directives and US regulations, is not considered, applied or accepted in the Procurement Laws. Therefore, it is forbidden in Mexico.
What are the requirements for the conclusion of a framework agreement?
Framework agreements are relatively new in public procurement in Mexico. There are certain rules for implementing and executing framework agreements under the BGLRS and its regulations. Basically, the promoter of the framework agreement is the Ministry of Public Function, and several industries and providers of services and goods are invited to submit general conditions for the goods to be sold. Once the scope and price of such services and goods is determined, the companies subscribe to the framework agreement that allows goods and services to be bought through a direct award.
Public information has shown the benefits of this procedure, but the public sector cannot yet ascertain its absolute benefit or the conflicts that may arise.
May a framework agreement with several suppliers be concluded?
A framework agreement with several suppliers can be concluded. The award of a contract under the framework agreement requires a new procedure equivalent to the one that was initiated to obtain the firstone.
Changing members of a bidding consortium
Under which conditions may the members of a bidding consortium be changed in the course of a procurement procedure?
The Procurement Laws do not foresee that a consortium member can leave the group in the course of a procurement procedure once the bid has been presented to the contracting entity (if the bid has not been presented, the members can be substituted, or the consortium could leave the procedure). This prohibition also applies during the performance of the contract. However, in practice, and in justified cases, some contracting entities have allowed such changes, to try to avoid putting the contract at risk and to comply with the law at the same time.
Participation of small and medium-sized enterprises
Are there specific mechanisms to further the participation of small and medium-sized enterprises in the procurement procedure? Are there any rules on the division of a contract into lots? Are there rules or is there case law limiting the number of lots single bidders can be awarded?
The Procurement Laws establish specific provisions that promote the participation of micro, small and medium-sized companies (SMEs). Also, the laws establish that if two bidders comply with the requirements and bid a similar price, the SME will have preference.
There are provisions on the division of contract into lots. The general rule is that lots shall not be established in order to limit the participation of the bidders in the public procurement procedure. When SMEs participate, they may have certain preferences.
There is no restriction on the number of lots single bidders can be awarded.
What are the requirements for the admissibility of variant bids?
Variant bids may only be considered if the contracting authority has requested them. Nevertheless, the laws do not consider this possibility, and, therefore, it is never used at a federal level, since they have an implied risk related to the evaluation of the bids.
Must a contracting authority take variant bids into account?
If such variant bids were not requested on the bidding instructions, there is no obligation for the contracting authority to consider them. As the bidder can be disqualified for not respecting the bidding rules, this action is not suggested in any case.
Changes to tender specifications
What are the consequences if bidders change the tender specifications or submit their own standard terms of business?
If a bidder changes or amends the tender specifications established by the contracting authorities in the tender documents or submits its own standard terms of business, contrary to the specifications requested by the contracting authorities, the bidder would be disqualified (unless the contracting authority establishes in the tender documents that the bidder has the liberty to offer any specifications that it considers appropriate - in practice, this is not seen in bid documents).
What are the award criteria provided for in the relevant legislation?
The Procurement Laws consider three main evaluation methods:
- binary: subject to compliance with the requirements of the bid documents. In this case, the lowest bid in price shall prevail;
- points and percentages: the contracting entity will establish certain requirements, and will grant points and assign percentages to such complied requirements. The bid with the best evaluation based on points and percentages shall be awarded; and
- cost-benefit procedure.
Abnormally low bids
What constitutes an ‘abnormally low’ bid?
There is no express concept or definition of an ‘abnormally low’ bid in the Mexican procurement system. There is a concept of ‘not acceptable price’, which is defined as:
... such price that is a consequence of the market research that has been done, and is 10per cent lower than the one that has been offered with regard to the middle-known prices of the bids that have been submitted in a procurement procedure.
Rules define that the contracting authorities must verify that the offered resources and prices are in accordance with market costs, and other related matters. In the procurement chapters of the FTAs, there are provisions that if a contracting entity or authority has a suspicion that the offered price is not adequate for the contract to be carried out, a states may contact the bidder to be sure that such price is adequate.
It can be said also, that an abnormally low bid, according to the Mexican procurement system and practice, is the one that is under the authorised budget for the intended construction project or purchase of goods. This can be a problematic situation, since during the bidding process the contracting entities and authorities have no obligation to say what the budget limit is.
What is the required process for dealing with abnormally low bids?
In general terms, the contracting entity prepares market research that will serve as a basis for reference related to the acceptable price. Once the bids are presented, besides all technical, administrative and economic requirements, the contracting entity must compare the price vis-à-vis the budget and the market research in order to determine if the price is acceptable. If the price is not acceptable, the proposal shall be rejected.
Which authorities may rule on review applications? Is it possible to appeal against review decisions and, if so, how?
The authority that rules on a bid objection or an award challenge is the Ministry of Public Function, through special offices within the contracting entities or authorities called ‘internal comptroller bodies’. The Ministry of Public Function also has a special department called the ‘bid objections general office’, which rules on the most important bid objections or bid objections by certain entities whose internal comptroller bodies do not have the power to resolve bid objections or if the bid objection raises a matter of importance.
Both reviewing bodies have the same competence and apply the same laws, but may have different criteria for the cases, which is a problem that suppliers, contractors and litigators face on a daily basis.
There is a procedure called ‘revision’, in which the private entity challenging the decision asks the same Ministry of Public Function to review the decision issued.
If such procedures are not favourable to the private entity, it may still challenge the resolution of the Ministry of Public Function (internal comptroller bodies) before the Federal Tribunal of Administrative Justice (TFJA). The final judgement of such tribunal may be challenged before the Federal Judicial Branch.
If more than one authority may rule on a review application, do these authorities have the power to grant different remedies?
The only remedy that may be obtained either from the Ministry of Public Function, from the TFJA or the Federal Judicial Branch is the annulment of the award of the contract, and the replacement of the procurement procedure. The contracting authority will issue a new award of contract.
The private entity may also initiate administrative procedures in order to investigate liabilities of public officers, or could sue the contracting entity if there is an irregular activity by such entity and the private entity was damaged.
Timeframe and admissibility requirements
How long do administrative or judicial proceedings for the review of procurement decisions generally take?
The period that an affected party has to file a bid objection is six business days in national bids and international bids, and 10business days in international bids under FTAs, from when the party receives notice of the procurement decision. The authority has 15business days after the closure of instruction stage to issue a resolution (the closure of instruction stage could be issued a long time after the procedure was initiated). Nevertheless, currently the authorities take a long time to resolve matters (approximately four months), a situation that affects bidders and users.
The Ministry of Public Function issued a 2014-2015report in which it was established that the approximate time to issue a final decision is 93.8business days. The 2016-2017report has not been released.
In the case of a judicial proceeding, it is impossible to determine the minimum or maximum time that the process would take, considering its nature and complexity, but a reasonable standard time would be two years.
What are the admissibility requirements?
According to the PWRS and the BGLRS a review proceeding (bid objection or award challenge) can be filed against:
- the invitation to bid, whenever such invitation is not in accordance with the Procurement Laws and regulations (or the invitation to at least three persons);
- the answers in the clarification meetings, whenever such answers are not in accordance with the Procurement Laws and regulations;
- the final award;
- the cancellation of the procurement procedure; and
- the lack of signature on the contract by the contracting entity or authority, whenever the contracting entity or authority does not sign the contract during the time established in the law or the bid documents.
The time frame to file the bid or award objection is six days after the issuance of the act to be challenged, and 10days if it is a procurement procedure based on an FTA.
Having complied with the above, the document in which proceedings are filed must comply with the requirements that are requested by the Administrative Procedures Law, which are to be in writing and toinclude:
- the name of authority;
- the name of person that requests the proposal;
- the address to be notified;
- the basis of the case; and
- the evidence.
For the bid objection to be admitted, the affected party must file it on time and the complaint or application must meet the requirements. The Procurement Laws refer that the bid objection would not be admitted if:
- it is not related to one of the acts mentioned above;
- if the affected party consented such acts;
- if the act being challenged or the object of the public procurement no longer exists; or
- if the bid was presented by a consortium and the appeal or review was filed individually.
Finally, the law refers that if the bidder did not present a ‘statement of interest to participate’, or a tender, during the procedure, it may not file a bid objection.
What are the time limits in which applications for review of a procurement decision must be made?
The deadline to file a bid objection is six days in the case of a national public bid and 10days in the case of an international public bid after:
- the last clarification round, where the interested person has requested an objection related to the invitation to bid, the tender documents, or the clarification rounds;
- the presentation of bids or the contract award; or
- any acts or omissions of the contracting entity or authority that impede the conclusion of the contract in the terms of the tender documents or the law.
The deadline to file an administrative appeal of ‘revision’ in order to review the decision of the bid objection is 15working days after the review decision has been notified to the interested party, and 45business days for a judicial appeal before the Federal Tribunal of Administrative Justice.
Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure or the conclusion of the contract?
An application for a bid objection does not have an automatic suspensive effect, nor does it block the continuation of the procurement procedure, unless such suspension is declared by the authority because of a request by the affected party; in which case the authority will consider the convenience of suspending the procurement procedure for public interest reasons, requesting a guarantee to the filing party for possible damages caused to the party that was awarded the contract and if the review procedure was initiated for the purpose of hindering the procurement process. (Nevertheless, it must be said that in many cases the authorities do not require the guarantee.)
The party who was awarded the contract may present another guarantee in order to continue with the execution of the contract.
Approximately what percentage of applications for the lifting of an automatic suspension are successful in a typical year?
See question 38. There is no public record, but it is more common to not grant the suspension than grant it. Therefore, approximately 90per cent of suspension requests are denied.
Notification of unsuccessful bidders
Must unsuccessful bidders be notified before the contract with the successful bidder is concluded and, if so, when?
Unsuccessful bidders are notified during the award event of the reasons why the contracting entities and authorities did not select their bid. In the same event, such entities and authorities state that the successful bidder complied with all the requirements established by the bid instructions. After such event, the contract is signed.
The PWRS and the BGLRS include very transparent award procedures that describe all the characteristics of the winner and the bidders that did not win the contract.
Access to procurement file
Is access to the procurement file granted to an applicant?
Access to the procurement file is always granted to an applicant during a bid objection, unless the procurement file contains confidential information or any other material protected by copyright that may not be divulged to the public. In recent cases, certain authorities have released confidential information and copyright-protected material.
A bidder can also access the procurement file using the Transparency Law, which allows any person to request any information that is not confidential relating to the procurement procedure.
Is it customary for disadvantaged bidders to file review applications?
Yes. Nevertheless, it is an ethical duty of procurement lawyers to advise their clients if a review has grounds or not, and to explain the penalties that the bidder could incur if the review is only made with the intention of delaying the procurement procedure.
The National Institute of Statistics and Geography (INEGI) implemented a system called INCONET in which the bid objections must be registered. However, such system is not used in practice.
The Ministry of Public Function issued a report from 2014-2015in which it was established that during that period, 1,394bid objections were filed. There is no 2016-2017report yet.
Violations of procurement law
If a violation of procurement law is established in review proceedings, can disadvantaged bidders claim damages?
Yes. Our opinion is that, under the Liability of the State Law, bidders that are affected by the illegal decision of a contracting entity, in an administrative or judicial review, can claim damages and losses. Nevertheless, affected parties usually have to get to the final instance to be successful.
May a concluded contract be cancelled or terminated following a review application of an unsuccessful bidder if the procurement procedure that led to its conclusion violated procurement law?
Yes. In fact, review processes in Mexico have the effect of declaring null and void any act after the one that was considered unlawful as a result of the review or objection (award and signing of contract). If this happens, a procedure for termination for convenience of the contract (anticipated termination) has to be initiated.
Is legal protection available to parties interested in the contract in case of an award without any procurement procedure?
Considering that any award that does not comply with the law can be subject to a review, any de facto award can be subject to a review where the objector demonstrates that it has a legal interest in thecase. Nevertheless, according to the current rules, bid objections only proceed in some specific cases.
What are the typical costs of making an application for the review of a procurement decision?
The administrative or judicial bodies may not charge anything for a litigation or procedure before them (constitutional right). The only costs the companies incur are the lawyers’ fees, and administrative fees such as photocopies, etc.
Update and trends
Update and trends
Are there any emerging trends or hot topics in public procurement regulation in your country? In particular, has the scope of applicability of public procurement law been broadened into areas not covered before (eg, sale of land) or on the contrary been restricted?
The National Anticorruption System has led to a series of important cases that show lack of integrity and bad use of economic and financial resources by the federal government.
One of the cases is the ‘The Great Fraud’ - an investigation carried out by Animal Político (an online news publication) and Mexicans Against Corruption and Impunity, showing how public contracts are awarded illegally. The report is available online at the Contra la Corrupcion website.
Recently, the Mexican Institute of Competitivenes (IMCO) issued a document called ‘Index of Corruption Risks: the Mexican System of Public Procurement’ that shows the weak elements of the public procurement system. This can be seen on the IMCO’swebsite.
Finally, there can be some modifications to the existing Public Works Law, as a consequence of the work of anticorruption organisations, to include integrity and transparency measures in the Law. The construction sector does not agree with all of these modifications and is fighting to have a precise law without ambiguous provisions that allow for distortions, rather than an anticorruption law regarding public works.