Supplier Selection and Pre-Qualification Questionnaires (PQQs)
Quicklinks
Publicising the Contract
Supplier Appraisal
Points to take into account when using PQQs
Consortia
How much detail?
Assessing Responses
Publicising the Contract
In order to ensure that value for money is achieved it is essential that a sufficient number of competent, financially sound suppliers with adequate capacity to undertake the work be identified. Purchasers should bear in mind when considering the method of attracting suppliers that the ECJ judgement from the Telaustria case held that even where the EU Directives do not require advertisement of a public contract in OJEU, it must still be given adequate publicity in order to satisfy the principle of transparency. No specific level has been set to determine at what level contracts not subject to the full EU Directive should be advertised. Factors that contracting authorities should take into account include:
- The likely attractiveness of a given contract to potential supplies, at a local , national or European level. What is considered adequate publicity will depend on the specific nature of the contract and the commodity sought, and may be affected by factors such as the value of the contract or the complexity of the project.
- Where the value of the contract is likely to be below the EU Thresholds, the purchaser will nonetheless have the option of advertising in OJEU.
- If a purchase is likely to be above the relevant EU thresholds, publication in OJEU is mandatory. The EU Directives do not allow advertisements for such contracts to appear in any other media before the notice is despatched to OJEU. Neither can adverts in any other media contain information which is not included in the OJEU. For further information, see EU Guidelines in this toolkit.
Any advertisement should make it clear what the business need is so that suppliers can see what services are required. Suppliers can then assess whether they can do it/want to do it.
Procurements subject to the EU Regulations which have followed the Open procedure require the ITT to be sent to all suppliers who have expressed an interest.
Where the Restricted Procedure is to be followed, the Scottish Public sector's standard Pre-Qualification Questionnaire (PQQ) should be used to assist in Supplier Appraisal. Additional questions may be added to the standard PQQ provided that they are relevant to the subject matter of the contract.
Supplier Appraisal
Supplier appraisal is the assessment of supplier's resources and capability.
The prime aim of a supplier appraisal is to systematically assess whether a potential supplier is competent and likely to meet the buying organisation's requirements in all key respects throughout the life of a contract.
- For contracts subject to the OJEU procedures there are rules governing the selection of suppliers ( Part 4 of the Public Contracts (Scotland) Regulations 2006. ) Supplier appraisal must be conducted against clear and defensible criteria, established in advance.
- To ensure a fair procedure, the contracting authority will require to utilise a systematised process by which to appraise candidate suppliers for suitability for short-listing. This is generally achieved by means of a Pre-Qualification Questionairre(PQQ) which is issued to each of the candidates.
- This procedure allows the contracting authority to create a short-list of candidate suppliers to whom an Invitation to Tender (ITT) will be issued.
- Where a contracting authority wishes to limit the number of suppliers invited to tender a fair and transparent scoring system must be employed, and records kept so that the decision to exclude any candidate supplier from the tendering stage can be justified in the event that the decision is challenged.
- Unsuccessful suppliers in the pre-qualification process are entitled to a Debrief and must also be notified when the decision on contract award has been made as part of the Mandatory Standstill Period.
The depth of the appraisal will be dependent on the value of the purchase, its sensitivity, estimated risks, the complexity of the requirement or previous experience of contracting with known suppliers. For many small value purchases of standard items or simple services, the supplier appraisal may be no more complicated than confirming potential tenderers are experienced in their business and can supply the requirement. Equally, a small value purchase could involve some detailed supplier appraisal work should the item be of strategic importance or involve a frequent servicing commitment.
Ensure that selection criteria are appropriate to the particular procurement. An important part of pre-qualification is to remove suppliers who have weaknesses that would make them unlikely to be able to meet the business need.
It should be noted that the supplier selection process prior to the issuance of an ITT is a "backward-looking, not forward-looking" process. That is, the criteria for selection should concentrate on the general suitability of the candidate supplier for the project, as opposed to the specific means by which the candidate would implement the contract. The intention of this stage of the procurement process is to expedite proceedings by eliminating unsuitable candidate suppliers and thus save time and resources which would be unnecessarily expended on a detailed examination of unrealistic bids. The contracting authority should therefore refrain, at this stage, from asking questions that would be more appropriate for the tender stage of the process.
The questions asked in the PQQ will generally follow a similar pattern in each procurement project, and will concentrate on the finanacial and legal background of the candidate, its capacity, capability and experience in the particular field required. Other criteria, such as environmental and sustainable development issues may be considered where appropriate to the requirements of the project. The Scottish Procurement Directorate has produced a standard Pre-Qualification Questionnaire which should be used as a basis for all PQQs issued.
Please have reference to the PQQ Guidance
Points to Take into Account when using PQQs
One limitation of the PQQ approach is that it can constrain supplier's responses. They have little scope to question, suggest and adapt; they can only respond to what is there.
It is therefore vital that PQQ questions 'make sense' to the supplier; that they deal with topics, processes and services that they can readily understand, and that they do not ask for inappropriate information (or the right information in an inappropriate way). The questions asked in the PQQ must be consistent with what is allowed under the EU Directive:
- All the questions must have selection criteria associated with them (or suppliers will be put to needless work)
- All topics covered by the selection criteria must relate to the questions and other activities to be evaluated such as reference site visits (or the information on which to base the evaluation will not be available).
Market sounding can help here, by providing useful background on market-specific terms, conventions, and so on.
Consortia
Where candidate suppliers form a consortium, the prime bidder should provide a single set of responses covering all consortium members.
The track record of a consortium member should include details on performance and reliability on previous projects - those undertaken on its own account and jointly with consortium partners. This will also encompass records on short-listing and details of any contract breaches.
How much detail?
The dividing line between the information needed for selection and that which is obtained later (at evaluation or during clarification) is not always clear-cut. In some areas, it may differ in degree of detail rather than in nature. (See EU Procurement Rules)
For example, an overview of the supplier's track record will help to establish their suitability to be selected, while a more detailed examination at evaluation will fully establish that they can deliver all aspects of the requirement and provide value for money.
Some areas may require expansion or substantiation later on, perhaps through a site visit.
It is also important to avoid putting suppliers to extra work that adds no value. The following suggestions may help with this:
- only ask for information which will actually be used in assessment
- don't put scoring systems around questions that require only a "yes" or "no" answer
- consider, where appropriate, using standardised formats and word limits, particularly at selection, to level the playing field and reduce bid costs and evaluation timescales
Assessing Responses
Assess responses to Pre-Qualification in accordance with the agreed criteria. The Public Contract (Scotland) Regulations 2006 provide a finite list of criteria which can be taken into account to assess a candidate supplier's suitability including:
- Business probity and criminality
- Technical and professional ability
- Economic and financial standing
The Office of Government Commerce has produced detailed Supplier Financial Appraisal Guidance to assist contracting authorities with this process. Some of the key mesages in this guidance are:
- The key assessment of risk should be based on sound business judgement rather than just the mechanistic application of financial formulae.
- All candidates, whatever their size, should be treated fairly and with equal diligence during the financial appraisal process. Small and Medium -sized Enterproses (SMEs) should not be inadvertantly disadvantaged.
- Candidates requested are requested to provide accountsfor thre past two years of trading rather than the three previous years (which has been a trditional requirement but not required bythe EC Rules). In the absence of audited statements, other information should be requested that is considered sufficient for assessment purposes.
The Directives and the Scottish Regulations set a minimum number of candidates that can be selected for the tendering stage. When using the Restricted Procedure, the minimum number of candidates that can be selected for the tendering stage is five, although the contracting authority must still be sure that the number of candidates is "sufficient to ensure genuine competition". (See S16 (9) and (10) of the Public Contract (Scotland) Regulations 2006). It should be noted however, that so long as the authority has acted in accordance with the relevant regulations during the selection process, it will be possible for it to continue to tendering with fewer than the requisite number of suppliers, so long as it does not include any economic operator not selected, or that did not request to participate.
An evaluation report that clearly identifies reasons for rejecting suppliers should be produced to assist with debriefing.
It is helpful to identify any risks or issues arising from the responses and raise these during the next stage.
Prepare the tender list on the outcome of the supplier assessment. Seek approval of the tender list. Notify suppliers of the outcome of the selection stage. (see Debriefing)