Infrastructure & Energy in Public Procurement

FAST FACTS

Public procurement is used by governments to invest in public infrastructures which requirements are estimated at USD 71tn by 2030.

Sound public procurement management can lead to substantial savings, enhanced productivity and improved services.

IN FIGURES

• Total global infrastructure investment requirements by 2030 will come to USD 71tn (3.5% of the annual world GDP from 2007 to 2030).
• Sub-national governments, defined as states, regions and other municipalities, undertook 72% of total public investment in 2013 across OECD countries in terms of volume.
• In the energy sector 40 cents of every dollar earned is spent on raw materials and services; procurement systems are thus central to a company’s competitiveness. 

INFRASTRUCTURE PROCUREMENT AND PROCUREMENT IN THE ENERGY SECTOR ARE COMPLEX AND VULNERABLE TO CORRUPTION

• If infrastructure projects are not strategically managed, projects may falter because of the “four Cs”: Inadequate Cost recovery; Corruption; Insufficient Competition and Low Credibility of institutions.
• In the energy sector, procurement frameworks are needed to safeguard the companies from mismanagement and corruption. Furthermore, fierce competition among international companies requires flexible and agile frameworks to unlock the innovation potential of the market.

OECD SUPPORT

• The OECD has trialled a new evidence- based tool to inform procurement decisions on major projects called Support Tool for Effective Procurement Strategy or STEPS. The tool was applied on two major road projects in Norway.
• There are 12 principles included in the 2015 Recommendation of the Council on Public Procurement that can apply to infrastructure and energy projects. 
• The OECD is contributing to the effective delivery of large infrastructure projects, such as the New International Airport of Mexico City (NAICM), by assessing its governance, procurement, integrity and communication.
• The OECD conducted a review of PEMEX, the state run oil company in Mexico. The review assessed the alignment of different yet complementary dimensions of procurement, such as organisations, strategies, people and tools in key areas from governance to integrity and procurement strategies, including supplier relationships.