Gwerth Cymru Value Wales

Supplier Selection

Nick SullivanNick SullivanGwerth Cymru/Value WalesGwerth Cymru/Value Wales2 Gorffenaf/July2 Gorffenaf/July

Selection

• Requirement for suppliers to satisfy minimum levels of economic & financial standing and/or technical or professional ability

• Focus on the suitability of a supplier in principle to deliver the contract

Selection

• Selection Criterion are those that will apply to select supplier to be invited to tender/participate/negotiate

• Based on:

Economic and Financial Standing

Technical and Professional Ability

Selection

• Open Procedure – all supplier which pass the selection stage will be eligible to proceed to award stage

• Restricted, Negotiated & Competitive Dialogue Procedure – all suppliers which pass the selection stage will be eligible to proceed to award stage unless the contracting authority has clearly communicated the objective and non-discriminatory criteria by which it will limit the number selected to participate. Must also clearly specify the minimum number of suppliers to be selected.

Selection

• Mandatory Exclusion– Paragraph 23 of the Public Contract

Regulations set out criterion for Mandatory Exclusion of suppliers

– Financial Impropriety

Award

• Contracts awarded on the basis of one of two options:– Lowest price, i.e. the lowest priced tender

wins. No other element of the tender may be taken into account; or

– The most economically advantageous tender (MEAT).

IMPORTANT

• Contracting organisations MUST ensure that selection and award criteria are not confused.

• Transparency –Contracting Authorities must be transparent on selection and award criteria, sub criteria and associated weightings

Lianakis – The requirement to clearly distinguish between selection and award stages. Rules that use of past experience must not be used as award criterion – selection criterion only

Amaryllis – Transparency of criterion including sub criterion and any associated weightings.

Case Law

Supplier Selection Options

Two options for evaluating responses:

• Go/no go

• Scoring/ranking responses

Supplier Selection Options

• Personal Situation/Grounds for Rejection – definitely go/no go

• Economic/Financial Standing – both go/no go and ranked approaches used

• Technical/Professional Ability – possible to combine go/no go and ranked approach

Selection With Go/No Go

• Criterion pass marks to be risk assessed

• Clearly communicates required selection standard – allows suppliers to deselect

• Pass marks must be justifiable

• Completely objective

Ranked Selection

• Requires clearly defined method for ranking PQQs

• Allows differentiation of bidders

• Doesn’t clearly communicate pass requirements

• Can become subjective

An example..Financial Appraisal

OGC - Financial Appraisal Guidance

• financial appraisal is a selection criterion• analyse financial position…determine the level of risk• business judgement to assess risk• turnover can be a useful indicator• financial appraisal is part of broader, holistic assessment• Opening Doors is consistent with this guidance

A £5m Contract

Go/No Go approach• Risk assessed minimum £18m turnover required• SME, £20m turnover, multinational, £500m turnover =

both pass

But……

Ranked Approach• Scores allocated based on overall turnover• Multinational £500m turnover, 10 points• SME, £20m turnover, 5 points

Financial Appraisal

Risk based assessment

• set a higher financial standard where risk and consequences of failure are high

• set lower financial thresholds where risk and consequences of failure are less significant

Important to get it right!

Getting Selection Right

• Selection criteria should be set for each project

• Ideally combine both go/no go and ranked approach

• Can we develop a more consistent go/no go approach?– Financials – what data is required to make an assessment? How

will it be assessed?– Health and Safety – what data is required to make an

assessment? How will it be assessed?

Questions