This section covers a broad range of considerations for selling to the Mexican public sector. We start with an overview of the size and process of Mexican government procurement, followed by a section on project financing to help exporters bid on major Mexican government projects.

Selling to the Government

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 on December 1, 2018, the López Obrador Administration announced a new system of centralized procurement to support government anti-corruption efforts, to increase transparency and accountability, and to reduce costs. Significant aspects of the centralized procurement system are 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 the U.S.–Mexico–Canada Agreement (USMCA). In practice, we have seen the government turn away from the use of open international tenders in favor of invitations to bid, which are then followed by direct awards. 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.

On December 2018, the Mexican Government assigned the Comptroller General (Oficial Mayor) as the centralized authority for all procurement. It also signed an agreement with the United Nations Office for Project Services (UNOPS) to advise on tenders for strategic projects, to provide technical assistance on tracking contracts, and to increase transparency.

The new system was inaugurated in May 2019 as the Integrated Strategy for the New National Public Procurement System (Estrategia Integral del Nuevo Sistema Nacional de Contrataciones Públicas). This strategy sets forth two main objectives: (a) to improve the transparency of the federal government’s public procurement process; and (b) to contribute to national economic development by promoting a procurement system incorporating improved strategic planning, an enhanced focus on social responsibility, and a greater, more diverse number of potential suppliers. In this context, 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:

• Strengthen the procurement planning process
• Support small- and medium-sized companies (SMEs) with social responsibility programs
• Establish strong coordination with procurement units
• Consolidate procurements
• Adopt technology tools
• Improve transparency in public administration through training, certification, and evaluation of public servants
• Create a flexible legal framework

Government Budgets and Spending

Mexico’s 2022 overall federal budget authorization is MXN 7,088 billion, or approximately USD 346 billion (up from MXN 6,295 billion in 2021). This does not include state or municipal spending, nor does it count private investment in public-private infrastructure projects. However, it does incorporate direct federal spending, spending tied to state-owned enterprises such as Mexican Petroleoum (Petróleos Mexicanos or Pemex), and transfers to state and municipal governments. The budget includes increased spending for social programs, but also channels funds to security and the energy sectors.

This table depicts some of the public entities and state-owned enterprises that have traditionally held the largest procurement budget—as a percentage of the total approved federal budget—from 2020 to 2022.

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.

Navigating Mexican Government Procurement

The U.S. Commercial Service Mexico is working on updating its guide to Public Procurement in Mexico given the evolving centralized procurement system. Please contact us to inquire about a 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 Federal 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 a preferred method; however, there are 20 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-sourced 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 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 tender’s 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 in Mexico’s Official Gazette.

Tracking Tenders and Bidding

The Mexican Government uses an online procurement information management tool called CompraNet, similar to the United States’ FedBizOpps system. CompraNet is a repository for all official tender information and documents by all bidders. CompraNet stores each tender listing, procurement procedure, and procurement type (e.g., purchase, lease or service, contracts), records on submissions, and announcements.

While users may consult/keep track of procurement processes (uploaded tender documents, timelines, etc.) without needing to register in CompraNet, if they represent a company that is interested in participating, it is necessary to register in the platform. 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 documents 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. You should receive your account information and a digital certificate in no more than eight calendar days.
6. Access CompraNet.

The system offers a PDF guide to register in Compranet as a company.

As part of the Secretariat of Finance and Public Credit’s (Secretaría de Hacienda y Crédito Público or SHCP) integrated strategy, it issued a decree to incorporate in CompraNet the Federal Digital Store (Tienda Digital del Gobierno Federal), a system for federal government agencies to procure goods or services electronically.

We encourage U.S. firms to carefully analyze tender specifications. They may differ from entity to entity as well as in 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.

Sector-Specific Procurement Developments

As noted at the beginning of this section, the new centralized public procurement mechanism is still evolving. However, we have observed significant changes in key procurement-heavy sectors.

Defense. The Mexican Secretariat of National Defense (Secretaría de la Defensa Nacional or SEDENA), including the Mexican Air Force (Fuerza Aérea Mexicana or FAM), and the Mexican Navy (Secretaría de Marina or SEMAR) will handle the defense procurement process through their internal offices. Each entity’s General Comptroller’s Office (Oficial Mayor), rather than through SHCP, leads these procurements. SEDENA and SEMAR operate more independently in their procurement decisions than other cabinet agencies and government offices. Both institutions will use the annual budgets assigned by SHCP and will follow the requirements of the Public Procurement Act and Public Works Act, outlined above. The criteria to register new suppliers on CompraNet remains the same as in past administrations. SEDENA has also been managing the procurement to equip the new National Guard.

CS Mexico notes that under the current López Obrador Administration, the Mexican military—much more so than in the past—is utilizing the option of direct assignments (sole source/provider), which is allowed under the current Mexican Acquisition Law. We have noted that in the last few years, SEDENA and SEMAR often use the mechanisms of per invitation only and direct assignments for their acquisitions processes. International open tenders are less common and have had more limited use. See our Aerospace and Safety & Security sections for more information and contacts for our team.

Health. The public healthcare sector has been evolving throughout the López Obrador Administration, including with respect to addressing a shortage of medicines that has been an ongoing issue for more than two years. The Mexican Government is also pursuing a more transparent process for the procurement of healthcare products. Additionally, the replacement of the Seguro Popular program by the National Welfare Institute (Instituto de Salud para el Bienestar or INSABI) has resulted in the fragmentation of the consolidated purchases of medicines when passing from the IMSS to SHCP. Please see our Healthcare Products and Services section for an overview of the industry.

The official government purchasing lists have changed, and the current tender process is centered on making consolidated purchases of medicines for 2022 through a joint strategy undertaken by the Government of Mexico and the United Nations Office for Project Services (UNOPS) to fill immediate and short-term needs. The U.S. Commercial Service Mexico is actively monitoring these developments and communicating with the Mexican Government to support the implementation of fair procurement practices that ensure the purchase of quality-controlled and efficacious products from reputable suppliers.

Infrastructure. As outlined in the Construction and Modernization Program and the Economic Reactivation Agreement, Mexico is planning a wide variety of infrastructure projects for the 2018–2024 period (see our sections on Transportation Infrastructure, Water, Energy, and Oil & Gas for more details). It appears that tenders for these projects will be advertised in CompraNet. However, we have seen indications that agencies managing the various projects may opt for direct award solicitations when directed by President López Obrador, or when there is an interest in focusing on preferred identified suppliers.

In November 2021, the Mexican government published a decree intended to accelerate federal infrastructure projects which are deemed to be in the public interest and critical to national security.  The decree raised concerns that by putting these projects under the “critical to national security” category, it would make transparency/obtaining information about project procurement processes more difficult.  In February 2022, Mexico’s Supreme Court Justice suspended the decree.

We encourage you to contact the U.S. Commercial Service Mexico for assistance.

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. Consult Advocacy for Foreign Government Contracts for additional information.

Project Financing

For large infrastructure projects, several financing instruments are available. Project consortia often develop a finance mix between development banks, multilaterals, commercial banks, and national export credit agencies, such as the U.S. Export-Import Bank.

U.S. Export-Import Bank

The Export-Import Bank of the United States (EXIM), an independent agency of the U.S. Federal Government, offers various short-, medium-, and long-term export finance and insurance programs. Of specific interest to U.S. exporters are the guarantees for medium-term loans to foreign buyers of capital equipment. Most loans are made by U.S. banks with EXIM’s guarantee. More than 85 percent of EXIM’s transactions in recent years directly benefited small businesses. In Fiscal Year 2018 EXIM Bank’s total exposure in Mexico was USD 4.45 million and guarantee authorizations were USD 47 million. Mexico remains one of the largest markets in EXIM’s portfolio as the 2nd largest country in terms of exposure, followed by Mozambique and Saudi Arabia.

Much of EXIM’s activity is under so-called bundling facilities. A bundling facility is a large medium-term loan made to a Mexican bank by a U.S. bank with the guarantee of EXIM. The Mexican bank then makes loans to Mexican companies for the purchase of American capital goods. There also are several U.S.-based banks that extend EXIM bank credits in Mexico. The major Mexican commercial banks have signed agreements with EXIM to grant lines of credit to Mexican firms that purchase U.S.-made products. Many major Mexican banks have Master Guarantee Agreements. Such credits generally are available only to Mexican blue-chip companies and to their suppliers with firm contracts.

Additionally, EXIM has made financing for renewable energy a top priority since the inception of its Environmental Exports Programs in 1994, offering competitive financing terms (up to 18 years in some cases) to international buyers for the purchase of U.S. origin environmental goods and services. Please visit www.exim.gov for more information on EXIM.

Development Finance Corporation (DFC)

The U.S. International Development Finance Corporation (DFC) works in partnership with the private sector to finance solutions to the most critical challenges in the developing world.  It does so through a number of tools, including equity financing (direct and indirect), debt financing (direct loans and guarantees), political risk insurance, and technical development (feasibility studies and technical assistance).  At the moment, special emphasis is being given to supporting projects that focus on areas such as gender equity, technology, climate change/clean energies, critical infrastructure and global health. 

DFC does not offer equipment or trade financing, refinancing, or sovereign loans.  Selected partners must be majority-owned and controlled by the private sector (less than 50 percent government ownership).

U.S. Trade and Development Agency

The U.S. Trade and Development Agency (USTDA) provides grant funding for infrastructure project planning activities (including feasibility studies, technical assistance, pilot projects, and front-end engineering and design) to help promote U.S. exports. By assisting U.S. firms to become involved in the early stages of project development, USTDA increases awareness of upcoming projects among the U.S. business community, enhancing the probability that U.S. exports will be used during the implementation stages. USTDA works closely with multilateral development banks, including the World Bank and the Inter-American Development Bank, to help U.S. firms take advantage of projects financed by those entities. Additionally, USTDA organizes reverse trade missions to introduce Mexican project sponsors to U.S. technology and companies. USTDA has an active program in Mexico, funding projects in a wide range of sectors, including energy, transportation, information, and communications technology, the environment, and, most recently, healthcare.

USTDA has published a comprehensive Resource Guide for U.S. companies on Priority Infrastructure Projects in Mexico. Please visit https://www.ustda.gov/ for more information on USTDA.

U.S. Small Business Administration

The U.S. Small Business Administration (SBA) provides financial and business development assistance to encourage and help small businesses develop an export component to their businesses. The SBA assists businesses in obtaining the capital needed to explore, establish, or expand in international markets. SBA’s export loans are available under SBA’s guaranty program. Prospective applicants should tell their lenders to seek SBA participation if the lender is unable or unwilling to make the loan directly.

SBA also offers an Export Revolving Line of Credit (ERLC) program that is designed to help small businesses obtain short-term financing to sell their products and services abroad. The program guarantees repayment to a lender in the event an exporter default. The ERLC protects only the lender from default by the exporter; it does not cover the exporter should a foreign buyer default on payment. Lenders and exporters must determine whether foreign receivables need credit risk protection. Please visit https://www.sba.gov/ for more information on SBA.

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 (MDB). A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks. The U.S. Department of Commerce’s International Trade Administration has a Foreign Commercial Service Officer stationed at each of the five different MDBs: the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.

Learn more by contacting the Multilateral Development Banks: Locations and Liaison Contacts.

Resources

Inter-American Development Bank (Information on IDB sovereign projects)

Export-Import Bank

Country Limitation Schedule

Development Finance Corporation

Trade and Development Agency

SBA’s Office of International Trade

USDA Commodity Credit Corporation

U.S. Agency for International Development

Federal Trade Commission

World Bank (Guidance on Finding Business Opportunities)

Trade Finance Guide for U.S. Exporters