2.7.5 What criteria should I use to select

suitable economic operators?

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This paragraph, after an analysis of the nature, characteristics and functioning of the criteria for selecting suitable economic operators, will discuss the issues to be addressed in the evaluation strategy formulation phase and will provide guidelines to assist the adoption of appropriate choices. Finally, guidelines and instructions will be given concerning how to make use of the possibility to limit the number of suitable candidates to be invited to tender under the restricted procedure.

Nature, characteristics and functioning of the qualitative selection criteria

The purpose of the qualitative selection stage is to check the suitability of economic operators. This check is performed using criteria which must concern the personal situation and characteristics of candidates or tenderers.

Qualitative selection criteria can be grouped in 4 categories. These categories are defined in Law 11(I)/2006 and Law 12(I)/2006, and include criteria concerning:

1.the personal situation of the candidate or tenderer (exclusion criteria)
2.the candidates or tenderers suitability to pursue professional activity (exclusion criterion)
3.the economic and financial standing of the candidate or tenderer
4.the technical and/or professional ability of the candidate or tenderer.

The individual criteria under each category are detailed in a following paragraph.

The above criteria categories are not indicative but exhaustive, and the suitability of candidates or tenderers may be examined only by using qualitative selection criteria that belong to one of these 4 categories.

The individual criteria under all of these four categories are of the type “YES/NO”, i.e. they lay down conditions/requirements the fulfilment of which economic operators must establish by producing appropriate documents, data or information. The outcome of the examination by the Evaluation Team of whether a particular criterion is fulfilled is positive (“YES”) if the data submitted by the economic operator is found to document the fulfilment of the conditions set for the corresponding criterion, otherwise the outcome is negative (“NO”).

The qualitative selection criteria do not offset one another: in order for an economic operator to be selected as suitable, the outcome of the examination of that economic operators qualifications must be positive (“YES”) in all of the qualitative selection criteria specified for the particular tender.

The qualitative selection criteria may be given marks and may be used for ranking candidate economic operators in the case of the restricted procedure, with a view to limiting the number of candidates to be invited to tender.

The individual criteria in the four categories function in two different ways:

The nature of the individual criteria under categories 1 and 2 is such (exclusion criteria) that the Contracting Authority need only to select those which are more appropriate in each case, without having to also set minimum levels. For example, if the criterion of category 2 is selected, then it is enough to mention that candidate economic operators must prove their enrolment on a professional or trade register; or, if the criterion selected from category 1 is the criterion of fulfilment of social security obligations, then it is enough to mention that candidate economic operators must prove the fulfilment of their obligations relating to the payment of social security contributions in accordance with the legal provisions of the country where they are established.
The nature of the individual criteria under categories 3 and 4 is such that a good practice for the Contracting Authority, after first deciding on which criteria to select depending on the particular case, would be to also decide the specific minimum capability levels that it will require for each one of the selected criteria. For example, if the Contracting Authority selects from category 3 the criterion of overall turnover, then it should also specify the minimum turnover required in order for economic operators to qualify as suitable; or, if the Contracting Authority selects from category 4 the criterion of similar projects which have been carried out in the past, then it should decide the minimum number of projects that it will require in order for economic operators to qualify as suitable. 

Definition of the evaluation strategy for the qualitative selection stage

The issues to be addressed at the level of formulation of the evaluation strategy are the following:

Selection of the criteria categories to be used for qualitative selection.
Selection of the specific criteria to be used from each category selected.
Decision on whether to make use of the possibility to limit the number of suitable candidates to be invited to tender (applies only in cases where the tender procedure chosen is the restricted procedure).

To conclude the planning of the qualitative selection stage, two additional issues must be addressed:

Definition of the minimum capability levels to be set for the criteria selected under categories 3 and 4.
Specification of the data, documents and other information to be requested from economic operators to document the fulfilment of the requirements of the selected criteria.

This last issue is not a strategic decision and it is recommended to be addressed in the context of the tender documents preparation phase, by the Procurement Team. As regards the issue of determining the minimum capability levels, this is also recommended to be examined in the context of the tender documents preparation phase, without however excluding cases where, due to the crucial nature of the project being put out to tender, the Contracting Authority may consider this issue to be of strategic importance. Instructions on how to address these two issues are given in Chapter 3 of the Guide.

In what in particular regards the case of the restricted procedure, and if the decision is taken to make use of the possibility to limit the number of candidates to be invited to tender, then to conclude the planning of the prequalification stage two additional issues must be addressed:

Definition of the maximum number of candidates to be invited to tender, and
Definition of the criteria to be used for limiting the number of candidates.

These two issues will be examined in the context of the tender documents preparation phase. Instructions on how to address them are given in Chapter 3 of the Guide.

The figure below presents all the decisions which must be taken for planning the qualitative selection stage, and indicates the level at which they are taken.

 

Figure 2-7: Decisions of the qualitative selection stage and level at which they are taken

Selection of qualitative selection categories and criteria

The following Tables provide guidelines to assist Contracting Authorities in their decisions regarding the categories and the individual criteria under each category, which they will have to select in each case.

 

Table 2-19: Guidelines on the selection of criteria regarding

the personal situation of the candidate/tenderer


FACTORS AFFECTING THE DECISION TO USE THE CRITERIA

CRITERIA CATEGORY 1:
PERSONAL SITUATION OF THE CANDIDATE/TENDERER

(EXCLUSION CRITERIA)

Use of this criteria category is considered necessary in all cases, as it protects the Contracting Authority from awarding contracts to economic operators who are guilty of grave professional misconduct or have not fulfilled important obligations or are having serious problems with their business activity.

Individual Criteria under Category 1

Absence of a final judgement against the economic operator for:

Participation in a criminal organisation, as defined in Article 2(1) of Council Joint Action 98/733/JHA.
Corruption, as defined in Article 3 of the Council Act of 26 May 1997 and Article 3(1) of Council Joint Action 98/742/JHA, respectively.
Fraud within the meaning of Article 1 of the Convention relating to the protection of the financial interests of the European Communities.
Money laundering, as defined in Article 1 of Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering, as amended by Directive 2001/97/EC of the European Parliament and of the Council..

According to Law 11(I)/2006 and Law 12(I)/2006, fulfilment of these criteria is mandatory.

Any economic operator must not:

Be bankrupt or in the process of being wound up, have his affairs administered by the court, have entered into an arrangement with creditors, have suspended business activities or be in any analogous situation arising from a similar procedure under national laws and regulations.
Be the subject of proceedings for a declaration of bankruptcy, for an order for compulsory winding up or administration by the court or of an arrangement with creditors or of any other similar proceedings under national laws and regulations.
Have been convicted by a judgment which has the force of res judicata of any offence concerning his professional conduct.
Have been guilty of grave professional misconduct proven by any means which the contracting authorities can demonstrate.
Have failed to fulfil his obligations relating to the payment of social security contributions in accordance with the legal provisions of the country in which he is established or with those of the Republic of Cyprus.
Have failed to fulfil his obligations relating to the payment of taxes in accordance with the legal provisions of the country in which he is established or with those of the Republic of Cyprus.
Be guilty of serious misrepresentation in supplying the information required under this Section or have failed to supply such information.

According to Law 11(I)/2006 and Law 12(I)/2006, use of these criteria is not mandatory but optional.

It is recommended that these criteria be used in all cases of tender procedure, as they protect Contracting Authorities from entering into agreement with economic operators who are having serious problems with their business activity and professional conduct and are not able to meet key financial obligations, resulting in doubts being raised as to their reliability and their capability to carry out public contracts.

Finally, the use of these criteria contributes to maintaining healthy competition.

 

Table 2-20: Guidelines on the selection of the criterion regarding the

candidates/tenderers suitability to pursue professional activity

CRITERIA CATEGORY 2:
SUITABILITY TO PURSUE PROFESSIONAL ACTIVITY

(EXCLUSION CRITERION)

Individual Criteria under Category 2

FACTORS AFFECTING THE DECISION TO USE THE CRITERIA

Enrolment on a professional or trade register.

 

(Annexes VIIIA, VIIIB και VIIIC of Law 12(Ι)/2006 specify the professional or trade registers in each Member State for public works contracts, public supplies contracts and public services contracts, respectively).

According to Law 12(I)/2006, use of this criterion is optional.

It is recommended that this criterion be used in cases where enrolment of economic operators on a professional or trade register may also serve as a criterion of their technical and professional ability e.g. in the case of public works contracts, enrolment in a specific class under a category of projects at the Council of Registration and Control of Buildings and Civil Engineering Constructors, or at the Register of Contractors in Greece.

In connection with public supplies contracts and public services contracts no special registers exist in Cyprus, therefore the selection of this criterion would be meaningful for economic operators established in other Member States.

If this criterion is intended for use simply as proof of lawful establishment of economic operators, then it may be replaced equally well by the documents, as applicable in each case, serving as proof of establishment of the operators.

 

Table 2-21: Guidelines on the selection of criteria regarding the

economic and financial standing of the candidate/tenderer


FACTORS AFFECTING THE DECISION TO USE THE CRITERIA

CRITERIA CATEGORY 3:
ECONOMIC AND FINANCIAL STANDING

Use of this criteria category is considered necessary in most cases, as it protects the Contracting Authority from awarding contracts to economic operators whose volume of activities does not correspond to the size of the contract being put out to tender and/or whose financial data do not guarantee the successful completion of the project.

Use of this criterion may not be necessary in cases of contracts for common supplies or of supplies and services contracts with a low budget.

Individual Criteria under Category 3

Overall turnover.

Depending on the particular case, the criterion selected may be that of the overall turnover of economic operators or that of the turnover in activities similar to those of the contract being put out to tender.

This last solution may be selected when the contract scope is so highly specialised so as to result in a serious probability of the overall turnover of candidate economic operators being shaped to a large extent by other activities of little to minimum relevance to the scope of the contract being put out to tender.

Use of this criterion allows Contracting Authorities to match easily the size of the contract being put out to tender with the volume of activities of interested economic operators, and to ensure that the candidate economic operators do not rely on the particular contract for their survival.

Use of this criterion is recommended in most cases, with the possible exception of public contracts for simple supplies or of low-budget public contracts for general services.

Attention should be paid when using this criterion (the turnover volumes required should not be disproportionately high in relation to the size of the contract), to avoid the risk of placing undue barriers to SMEs.

Operating Results.

Use of this criterion allows Contracting Authorities to form an opinion about the viability of candidate economic operators, by assessing their profitability.

Use of this criterion is recommended in cases of large projects (in terms of implementation duration as well as in terms of budget), given that in such cases the need to assess the financial viability of the contractor in order to safeguard the projects successful completion is more imperative.

Various liquidity and financial structure indices, depending on the specific case.

These may be used in cases of important large projects, where Contracting Authorities may wish to limit suitable candidates only to those for whom short-term and long-term financial stability may be substantiated.

 

Table 3-22: Guidelines on the selection of criteria regarding the

technical and professional ability of the candidate/tenderer


FACTORS AFFECTING THE DECISION TO USE THE CRITERIA

CRITERIA CATEGORY 4:
TECHNICAL AND PROFESSIONAL ABILITY

Use of this criteria category is considered necessary in most cases, at it protects Contracting Authorities from awarding contracts to economic operators who do not possess the required experience, means and infrastructure to carry them out successfully.

Individual Criteria under Category 4

Experience in the implementation of projects with a scope which is of relevance to the scope of the contract being put out to tender.

This is the most important criterion for assessing the technical and professional ability of candidate economic operators, and its use is recommended in all cases, with the possible exception of simple or low-budget supply contracts.

Experience of Project Team members.

This is an important criterion for checking the suitability of candidate economic operators, mainly in cases of public works contracts and public services contracts where human resources largely shape the technical and professional ability of economic operators and determine in principle their capacity to carry out the contract successfully.

In contrast, in the case of public supplies contracts the importance of this criterion diminishes significantly.

Number of personnel employed.

Depending on the particular case, this may refer to all personnel or to the personnel in particular specialisation areas of relevance to the scope of the project being put out to tender.

This criterion aims to check the suitability of candidate economic operators mainly in cases of public works contracts and public services contracts where implementation requires a large Project Team.

Requirements regarding the suitability  of products, technical equipment, equipment and means of study and research, organisation and staffing of technical bodies, machinery, facilities and other infrastructures.

This criterion can be further specified in terms of detailed requirements in cases of special contracts, such as e.g. public harbour works contracts where the availability of relevant specialised equipment is considered necessary.

Compliance with quality assurance standards.

This criterion is a serious indication of the effectiveness of the measures taken by economic operators to ensure the quality of their activities.

Contracting Authorities may use this criterion in cases of particularly important and complex contracts.

Compliance with environmental management standards.

This criterion should be used in cases of contracts whose implementation might pose a risk to the environment, thus necessitating the adoption of measures to protect the environment during their implementation. An example of such a specific environmental management measure would be a contract for the construction of a bridge in a protected area, which would require a series of specific environmental management measures to be determined, aimed at ensuring the effective protection of the indigenous flora and fauna during the construction of the bridge.

Where tenders are submitted by consortia formed by economic operators, the personal situation criteria must be fulfilled by each individual member of the consortium, whereas the economic and financial standing criteria and the technical and professional ability criteria must be fulfilled jointly by the consortium members.

As regards the fulfilment of the economic and financial standing criteria and the technical and professional ability criteria, an economic operator may in general or for a particular contract rely on the capacities of other entities, regardless of the legal nature of the links it has with them.

Restricted procedure: Limiting the number of suitable candidates to be invited to tender

In the restricted procedure, the Contracting Authorities must indicate in the contract notice the minimum number of candidates they intend to invite to tender, while they also may, if they so deem necessary, to also indicate the maximum such number of candidates.

The minimum number of suitable candidates to be invited to tender is five (5). Similarly, where a Contracting Authority chooses to limit the number of suitable candidates that it will invite to tender, then this number may not be less than five (5).

If the Contracting Authority chooses to limit the number of suitable candidates to be invited to tender and the number of candidates meeting the specified qualitative selection criteria is higher than the maximum predetermined such number, then the suitable candidates are selected based on their ranking according to their performance in one or more of the qualitative selection criteria. Detailed guidelines on the way in which the number of suitable candidates may be limited are given in Chapter 3.

The decision on whether or not to limit the number of suitable candidates to be invited to tender should be taken after carefully considering the advantages and disadvantages as these apply in each case. The Table below is an easy-to-use tool to assist Contracting Authorities in taking this decision.

 

Table 2-23: Advantages and disadvantages of limiting the number

of candidates to be invited to  tender in a restricted procedure

DECISION TO LIMIT THE NUMBER OF CANDIDATES TO BE INVITED TO TENDER UNDER A RESTRICTED PROCEDURE

Disadvantages

Advantages

Diminished competition, which may result in:

Relatively higher prices being offered.
A higher likelihood of lack of tenders or of submission of a few tenders only, leading to a high risk of cancellation of the tender procedure.

Facilitation of the procedure of evaluation of tenders at the contract award stage (advantage to the Contracting Authorities).

This facilitation concerns both:

The shortening of the time that will be required for conducting the evaluation, and
The reduction of the workload to levels that will lead to improved evaluation results, in as much as the Evaluation team will have to examine a reasonable number of tenders.

Securing higher  probability of awarding the contract to the economic operators to be invited to tender (advantage to the interested economic operators), a prospect which is expected to encourage candidates to prepare better tenders in terms of technical content.

N.B.:

The relative importance of the two advantages above against the disadvantage of diminished competition increases in direct proportion to the nature of the contract being put out to tender being such as to require complex and complicated technical solutions.
Where the contract is to be awarded using the criterion of the lowest price, the risk of comparatively higher prices being offered increases if the number of candidates to be invited to tender is limited.

 


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