GUIDANCE NOTE FOR CONTRACTING AUTHORITIES ON PRODUCING PRE - QUALIFICATION QUESTIONNAIRE (PQQ)
What is the purpose of this guidance note?
This guidance note has been produced to help contracting authorities produce a pre qualification questionnaire (PQQ) for use in restricted, negotiated and competitive dialogue procedures. The guidance should be used alongside the core-PQQ template that has been developed for use by the public sector in Scotland. [link to core PQQ]
The core-PQQ has been developed as a standard document, but contracting authorities will have to request information relating to their specific contracts in part E, and may wish to tailor requests regarding financial information depending on the nature of the contract in question.
The information gathered by the PQQ is also required when the open procedure is used. Contracting authorities should base the selection element of an open procedure on the questions contained in the core PQQ however this guide focuses on the use of PQQs in restricted, negotiated and competitive dialogue procedures.
What is the purpose of the PQQ?
The process for awarding contracts under the restricted, negotiated and competitive dialogue procedure entails two distinct phases:
- The qualification stage, which involves an examination of the capability of the potential suppliers to perform the contract; and
- The award phase, which involves examination of the merits of the bids.
The qualification stage is usually carried out by sending a pre-qualification questionnaire (PQQ) to potential suppliers who have responded to the contract notice.
The PQQ is used to identify potential suppliers that are most capable of performing a contract. This is done by assessing the financial status and technical or professional ability of a potential supplier, considering issues such as the experience of potential suppliers and qualifications of their staff. The composition of and assessment of the PQQ must be carried out keeping the EU Treaty principles of transparency, non-discrimination and equal treatment in mind. These issues are touched upon later in the document. The PQQ also asks questions about a range of offences which may preclude a potential supplier from being considered for a contract.
The PQQ is the only stage in the process where contracting authorities are allowed to ask questions relating to financial status, and professional and technical ability. These issues should not be revisited at the award phase. Similarly, questions relating to how a potential supplier would deliver the contract requirements should not be asked at the qualification stage. Such issues are dealt with at the tender evaluation stage, and are assessed according to the award criteria laid down in the contract notice or tender documents.
For contracts that have to be advertised in Official Journal of the European Union (OJEU) the evaluation criteria used to assess a PQQ must be consistent with the information contracting authorities put in the contract notice.
Questions in the PQQ
Part A - Background Information
These questions ask for background information on the potential supplier and do not seek to assess the technical ability of the potential supplier. Consequently, the questions in Part A should not be scored.
Part B - Financial Standing
The questions in Part B seek to ascertain if the potential supplier's financial standing is sufficient to allow it to be able to deliver the contract requirements. It asks for the potential supplier's annual turnover and audited accounts or equivalent for the preceding two years. However contracting authorities should ask for information based on the circumstances of individual contracts. For example, for low value or low risk contracts, 1 year of financial information may be sufficient.
Where a contract has to be advertised in the OJEU, if minimum standards relating to financial standing are to be used, these must be included at section III.2 (Conditions for Participation) of the contract notice and potential suppliers that do not meet the minimum standards should be excluded automatically. If the contracting authority has not laid down minimum standards in the contract notice, it can only take this information into account if it is listed as an objective non-discriminatory criterion in section IV.1.2 of the notice.
It is appropriate to include information on financial standing as a minimum standard, but it should not be weighted, as there is the potential to discriminate against smaller organisations which are nevertheless capable of performing the contract in favour of larger ones. If the potential supplier's resources are deemed to be inadequate, it should be excluded from the process at this point. It may be beneficial for the contracting authority's accountants to make such an appraisal.
Part C - Conviction of criminal offences
Where the Public Contract (Scotland) Regulations 2006 (PCSR) apply, contracting authorities are obliged to ask the questions in part C. If potential suppliers answer "yes" to any of the questions, they must be excluded automatically unless there are overriding requirements in the general interest which would justify a decision to include them.
This exception to the general rule of exclusion should only be used in the most serious of circumstance, for example in the case of a national emergency. In such cases the Accountable Officer or Minister, as appropriate, should be satisfied that the circumstances are such that they will justify the exception and that the contracting authority will be in compliance with the Regulations.
It is good practice to ask these questions even in situations where the regulations have only limited application, for example, where the value of a contract is below EU threshold levels.
Part D - Business Probity
Where the PCSR apply, contracting authorities are obliged to ask the questions in part D. If a potential supplier answers "yes" to any of the questions then further information should be sought to enable the contracting authority to take an informed decision as to the suitability of the potential supplier. Any remedial action taken by the potential supplier must be considered, along with other factors such as how long ago the incident occurred and the seriousness of it. Any decision should stand up to scrutiny in terms of non-discrimination, equal treatment and transparency.
It is good practice to ask these questions even in situations where the regulations have limited application, for example, where the value of a contract is below EU threshold levels.
Part E - Technical or professional ability
The questions in Part E seek to ascertain whether the potential supplier has the technical or professional capability to deliver the contract requirements. Where the PCSR apply there is an exhaustive list of questions that can be asked. The list can be found at regulation 25 (2). Any questions that are asked in this part must be related to the contract in question.
Similar to the questions on financial status, where a contract has to be advertised in the OJEU, the contracting authority may choose to lay down minimum standards in section III.2 of the contract notice which should detail conditions for participation. These may include relevant accreditations, qualifications or experience of providing similar contracts, etc. Where the answers to the PQQ questions reveal that potential suppliers do not meet the minimum standards, they should be disqualified automatically.
Where no minimum standards have been laid down, the contracting authority must include technical ability in the list of objective non-discriminatory criteria in section IV.1.2 of the contract notice, for example, past experience, technical accreditations, professional qualifications, etc.
Limiting numbers of potential suppliers to be invited to tender
In order to limit the number of potential suppliers to be invited to tender where a contract has to be advertised in the OJEU, a contracting authority should follow a 2 stage process. Firstly, minimum standards must be included in the contract notice at section III.2. This allows the rejection of potential suppliers that do not meet these standards. Secondly, if a contracting authority wants to set an upper limit on the number of potential suppliers invited to tender, this number must be entered in section I.V.1.2 of the contract notice. The contracting authority must also put a range of objective non-discriminatory criteria in section IV.1.2 of the contract notice. These objective non-discriminatory criteria are then used to select, from those meeting the minimum standards, the potential suppliers to be invited to tender. Following these steps should help contracting authorities to justify the decisions they make on inviting interested parties to tender.
Where the PCSR apply, contracting authorities must invite a minimum of 5 candidates to tender when using the restricted procedure, and at least 3 when using the negotiated or competitive dialogue procedures. Where fewer potential suppliers are assessed as being suitable to progress to the award phase contracting authorities can take forward a lesser number as long as they do not include any potential suppliers that did not respond to the original notice, or any potential suppliers that did not meet the minimum standards as set out in the contract notice.
Scoring the PQQ
A scoring methodology should be drawn up in advance of issuing the PQQ. In the interests of transparency the scoring methodology should disclose relative weightings: case law suggests that where scoring methodologies, including sub criteria and weightings are to be used, they must be decided prior to the issue of the PQQ and they must be disclosed. In any case, a potential supplier may be entitled to see any documentation dealing with the PQQ should it make a Freedom of Information Request.
When scoring the PQQ, it is important to observe the EU Treaty principles of transparency, non-discrimination and equal treatment:
Transparency: the criteria used by the contracting authority to score the PQQ must be the same as the minimum standards and/or objective non-discriminatory criteria laid down in the contract notice. If the contracting authority fails to state either minimum standards or objective non-discriminatory criteria in the contract notice there will be no grounds relating to capability and capacity on which interested parties can be excluded and the contracting authority will be obliged to invite all contractors that submitted a PQQ to tender for the contract.
Non discrimination: Potential suppliers must not be excluded or receive less favourable treatment on the basis that they are not based in the UK. Consequently, European standards should be cited where possible and, in the event that the relevant EU standards do not exist and the UK standards are required instead, equivalents from other EU and EEA Member States should be accepted.
Similarly, while it may be justifiable to require the winning potential supplier to have a UK presence in the form of an office or branch when performing the contract, it would be discriminatory to demand such a UK presence at the time when the potential supplier submits the PQQ.
Equal treatment: All potential suppliers should be given the same opportunity to win the contract. This means that contracting authorities should not treat some potential suppliers more favourably than others without an objective reason.
For example, if two organisations have adequate financial resources, demonstrated by meeting the minimum standards specified in the contract notice, to deliver the contract, they should receive the same score for that question. It would breach the principle of equal treatment to give a higher score to the larger organisation which may have better financial figures. The principle of equal treatment is also breached where an organisation which has only been trading for one year is disqualified because it cannot provide financial information for the preceding two years. In this and similar situations, the contracting authority must be prepared to consider alternative evidence of financial stability, although they are not compelled to accept the evidence offered by the potential supplier.