PREQUALIFICATION
PREQUALIFICATION OF VENDORS

COMMON ACRONYMS
PQ, PQQ

COMMON STANDARDS OF PRACTICE

1. National Public Procurement Policy Framework.
2. National Procurement Strategy
3. Public Sector Procurement
4. The Chartered Institute of Procurement & Supply (CIPS)
5. The Institute of Supply Management (ISM)

DEFINITION
This is the process (in Procurement) of screening for potential contractors, vendors, or suppliers. This also shows to the owners/ employers the vendors interest/ willingness in participating in the procurement process. Prequalification process can be done in two stages.

1. Technical Pre-Qualification: This process allows the employers/ owners to evaluate the technical capabilities of vendors or contractors. The following aspects maybe considered/ questioned by the owners.
   1. Capability to Mobilise in the prescribed time
   2. Experience relevant to the nature and complexity of the scope of work
   3. Corporate/ Organisational Structure suitable for the nature and magnitude of the scope of work
   4. Resources (Manpower, Equipment, Subcontractors, Suppliers) required for the scope and schedule
   5. Adherance with Employers General requirements
   6. Adherance with Employers Health and Safety requirements
   7. Adherance with Employers Quality requirements
   8. Adherance with Employers Environmental and Sustainability requirements
2. Financial Pre-Qualification: This process allows the owners to evaluate the financial standing and the capacity of the vendors according to the magnitude of the scope of work. This process is also used to ascertian if the vendor is a legal entity with a valid registration to participate according to the laws of the land and Authorities having jurisdiction.

WHY
Having a good prequalification system can shorten the procurement process and reduce the cost of tendering for both the client and the Supplier. It also helps minimise the risk of contract failure as substandard or non-compliant vendors would already have been barred from entry. Ultimately, the process helps to develop a short list of qualified bidders who will then receive the invitation-to-bid (ITB) documents or invitations to Tender (ITT). A good prequalification system ensures the following.

1. Right Source
2. Right Quality
3. Right Quantity
4. Right Delivery
5. Right Location
6. Right Price

WHEN
Pre-Qualification is done before asking for proposals or bids.

HOW
The following steps are followed while implementing a prequalification process.

1. Identify Objectives of the planned procurement
2. Develop a scope of work and deliverables to be procured
3. Prepare an Estimated cost for the scope of work
4. Acquire Budget approval
5. Ascertian a suitable Procurement Strategy/ Sourcing business model, such as usning unit rates or acquiring lumsum price or paying cost plus premiums
6. Develop a criteia for preparing a long list (such a top 100 in the ENR list, or list of well-known entities for constructing Airports etc.)
7. Research to develop a long list of vendors, suppliers, contractors suitable for delivering the scope of work as per Procurement strategy
8. Develop a Criteria for Technical Prequalification and a scoring/ evaluation mechanism. Establish a total score required to pass/ pre-qualify
9. Develop a Criteria for Financial Prequalification and a scoring/ evaluation mechanism. Establish a total score required to pass/ pre-qualify
10. Develop a Criteria for any other method of Prequalification (such as local content etc) and a scoring mechanism. Establish a total score required to pass/ pre-qualify
11. Identify team members to form the technical evaluation panel
12. Identify team members to form the financial evaluation panel
13. Develop a prequalification package for issuance to vendors, suppliers, contractors with the following.
    1. Cover letter/ document requesting the vendors for Prequalifications
    2. A techncial prequalification questionnaire (TPQQ) according to the Criteria to be attached to the cover letter
    3. A financial prequalification questionnaire (FPQQ) according to the Criteria to be attached to the cover letter
    4. Any other prequalification questionnaire (XPQQ) according to the Criteria to be attached to the cover letter
14. Develop a Prequalification Evaluation Plan (PQEP) document and acquire sign-offs/ approvals from Departmental Heads as per Procurement Policy in force. Attach all documents such as.
    1. The Estimate
    2. The Budget Approval
    3. Scope of Work
    4. Long List of Bidders
    5. All technical and financial evaluation criteria and scoring mechanisms
    6. Overall passing/ selection criteria, with proportionate scoring, such as allowing 30% for techncial evaluation and 70% for financial evaluation, etc.
    7. Include in the PQEP the option to ask for clarifications after the answers are received and if some information is found missing or is deemed misunderstood by the vendors
    8. Allow or do not allow options to vendors to provide deviations, exclusions, inclusions, if needed.
15. Send the prequalification package to the long list of vendors, suppliers, contractors with a target date to receive answers. Ask the vendors to reply with techncial, financial and any other answers in separate sealed envelopes
16. Receive answers on the prescribed date and check if they are complete with all necessary answers/ attachments etc. Do not receive or open answers received after the target date. Do not entertain open or tampered envelopes
17. Send the answers to the members of the techncial evaluation Panel with a target date to receive techncial evaluations. Members should use the scoring mechanism to evaluate the answers as per criteria approved in PQEP
18. Send queries to biddders if some techncial information is found missing or is deemed misunderstood by the vendors, within a prescribed time span, normally one to two days are allowed.
19. Prepare a comparatrive (side by side) analysis of all scores received from the members of the technical evaluation panel, and prepare a list of vendors which passed the techncial evaluation. Develop a report and acquire signatures from evaluators and approving authorities. This step can be omitted and only a Final Prequalification Report can be prepared after financial evaluations.
20. Send the financial answers to the members of the financial evaluation Panel with a target date to receive financial evaluations. Members should use the scoring mechanism to evaluate the answers as per criteria approved in PQEP
21. Send queries to biddders if some financial information is found missing or is deemed misunderstood by the vendors, within a prescribed time span, normally one to two days are allowed.
22. Prepare a comparatrive (side by side) analysis of all scores received from the members of the financial evaluation panel, and prepare a list of vendors which passed the financial evaluation. This list should form the short list. Develop a (FPER) Final Prequalification Report (with proportinate scoring if agreed) for the technical and financial evaluations and acquire signatures from evaluators and approving authorities.

EXAMPLES