Procedures under selective tendering

If an employer is not subject to any of the restrictions outlined in the previous section, he may make a selected list of contractors from those who have served him satisfactorily in the past or those recommended to him. However, for public authorities in the EC, EC rules will apply for contracts above a certain value as described in the Section 6.2, and elsewhere in-country rules or rules set by an international funding agency may apply. For selective tendering, lists of potentially suitable tenderers who have pre-qualified under a previous selection process can be compiled. These can be standing lists reviewed perhaps annually, or lists compiled for specific types of work. Under EC regulations, selecting a list of pre-qualified tenderers on ‘a framework basis’ is also possible (see Section 1.12). The ‘framework’ either provides for such tenderers to bid for future contracts of a given kind, or permits direct selection of a tenderer on the basis of competitive rates already tendered.
Contractors wishing to be placed on a standing list may either answer the employer’s advertisements or apply direct to the employer. This pre-qualification  will usually seek to establish three categories of information about a contractor as follows.

• The contractor’s organization and resources. Details of his ownership, details of staff available for the contract, and information concerning any special equipment or skills available for the particular type of work proposed.
• Experience and performance record. The experience the firm has of projects similar in type and size to the intended project, and what performance thereon was achieved. Some of this information may have to be obtained by asking the contractor to provide references from previous employers, the references being taken up. It is not always desirable to restrict the list to contractors who have done work of a similar kind and magnitude before, as this could unnecessarily restrict the choice of contractors and exclude competent contractors who have growing resources and skills.
• Financial standing. Acontractor must be able to show he has sufficient funding to carry out the proposed contract without over-stretching his financial resources. The contractor may be asked for his turnover and recent financial history and data with respect to his current financial commitments. Some of this information may be available from annual financial reports or other sources; but it may be important to check that all relevant data has been supplied. An accountant may be employed to enquire into these matters.
In order to collect the necessary data in an organized manner it is preferable for standard forms to be issued to contractors, otherwise comparison and analysis may be hindered. Aformat suitable for international tendering is available from FIDIC, and guidance is also given by the World Bank in their Standard Bidding Documents. If the purpose of pre-qualification is the construction of a specific project, then applicants should be told the grounds on which their suitability will be assessed. Care is needed in defining these grounds. On the one hand the criteria applied need to be sufficient to keep those qualifying to a reasonable number; on the other hand, they should not be so tight as to exclude potentially suitable contractors who just fail to meet one of the criteria applied.
For works of a value up to about £1 million, a list of four to six pre-qualified tenderers would usually be regarded as sufficient; for larger value contracts it is seldom desirable or necessary to have more than eight pre-qualified contractors invited to bid. For design and build contracts a list of only three or four may be sufficient. Where a standing list is maintained, this can be divided into lists of contractors best suited to certain kinds and magnitudes of work, but contractors should be given reasonable opportunity to change their listing on supplying additional information. Once a selected list has been produced and approved by the employer, it is advisable that contractors on the list are approached individually shortly before sending out tender documents, asking them to confirm they are still interested in and capable of tendering. This is important if there is any substantial lapse of time between the pre-qualification of contractors and the sending out of tender documents. Contractors’ commitments
can change in a relatively short time. Those pre-qualifying should be informed of the expected timing of the issue of tender documents and start of  construction, so that they can plan their tendering work and consider their response to other opportunities.