Selection of Contractor

Prequalification and post

qualification

Prepared and Presented by:

Prof. Khem Dallakoti

Pre-qualification

ADBs Procurement Guidelines require prequalification

for large or complex works contracts, or in any other
circumstances in which the high costs of preparing
detailed bids could discourage competition, such as
custom-designed equipment, industrial plant,
specialized services, some complex information and
technology contracts and contracts to be let under
turnkey, design and build, or management contracting.
Prequalification is followed by a closed competitive
bidding procedure in which only those firms meeting
specified prequalification criteria are invited to submit
a bid. Prequalification should not be used for limiting
competition to a predetermined number of potential
bidders. All applicants meeting the specified criteria
shall be allowed to bid.

Requirement for
prequalification

The successful execution of contracts for large buildings, civil engineering, supply and
installation, turnkey, and design-and-build projects requires that contracts are awarded
only to firms, or ombinations of firms, that are suitably experienced in the type of work
and construction technology involved, that are financially and managerially sound, and
that can provide all the equipment required in a timely manner. The assessment by an
implementing agency of the suitability of firms to carry out a particular contract prior to
being invited to submit a bid is a process called prequalification.

Prequalification is followed by a closed competitive bidding procedure in which only those

firms meeting specified prequalification criteria are invited to submit a bid. Prequalification
should not be used for limiting competition to a predetermined number of potential
bidders. All applicants meeting the specified criteria shall be allowed to bid.

Benefits of
Prequalification

the process enables prospective bidders, who may be insufficiently qualified on their own,
to avoid the expense of bidding, or to form a joint venture that may give a better chance
of success;

with prequalification, well qualified firms will price their bids with the knowledge that they
are competing against other qualified bidders meeting realistic minimum competence
criteria, and with the assurance that inadequately qualified competitors will be excluded
from submitting unrealistically low bids, leading contractors are encouraged to bid;

prequalification enables Executing Agencies to assess the interest from qualified firms
generated by the contract and, in the event that only a limited number of applications are
received, to make any necessary adjustments in the procurement process;

it helps to expose potential conflicts of interest of an applicant with other parties involved
in this prequalification process;

it reduces the amount of work and time involved by Executing Agencies in evaluating bids
from unqualified contractors;

it encourages local firms to form joint ventures with other local or international firms,
thereby benefiting from their resources and experience; 2 Introduction Users Guide
Prequalification of Bidders ADB Standard Prequalification Document

it enables the Executing Agencies to assess the likelihood of contractors eligibility for
domestic bidder price preference in borrowing countries where this is applicable; and

it reduces significantly, if not eliminates, problems of rejection associated with low-priced

bids submitted by bidders of doubtful capability.

Disadvantages of
Prequalification

scheduling, for example, undertaking the prequalification process

while bid documents are being prepared;

the Executing Agencies are required to review all prequalification

applications whereas under postqualification the review of the
qualifications can be reduced to the lowest evaluated bidder only;
and

collusion and the possibility of price-rigging is easier among a

limited number of identified bidders, particularly if they are of the
same nationality

The Prequalification
Process
Advertisement

and Notification
Preparing and Issuing a
Prequalification Document
Preparation and Submission of
Applications
Opening and Evaluation of
Applications
Updating and Confirmation of
Bidders Qualifications

Advertisement and
Notification

The Invitation for Prequalification (IFP) shall be advertised in ADBs

ADB Business Opportunities as well as in a newspaper of general
circulation in the borrowers country (at least one English-language
newspaper if available).

A copy of the IFP shall be submitted to ADB for approval and for
publication in the ADB Business Opportunities in accordance with
the provisions of the Loan Agreement and the Guidelines for
Procurement under ADB Loans.

For large or specialized contracts, ADB may additionally require that

the IFP be advertised in well-known technical magazines or trade
publications, or in newspapers of wide international circulation, in
sufficient time to enable prospective Bidders to prepare and submit
Applications.

Preparing and Issuing a

Prequalification
Document

The Employer is responsible for preparing and issuing the Prequalification

Document.

The Employer shall use ADBs Standard Procurement Document for the
Prequalification of Bidders, as this is a mandatory requirement for contracts
to be financed by ADB.

The Employer shall prepare the Prequalification Document using the

published version of the SPD without suppressing or adding text to Section
I. Instructions to Applicants (ITA). All information and data particular
to each individual prequalification process must be provided by the Employer
in the following sections of the Prequalification Document:

Section II. Application Data Sheet

Section III. Qualification Criteria

Section IV. Application Forms

Section V. Eligible Countries

Section VI. Scope of Contract.

The Employer shall allow Applicants a minimum period of 42 days to

study the Prequalification Document;
prepare complete and responsive Applications, and
submit their Applications.

Preparation and
Submission of
The Applicant is solely responsible for the preparation and
submission of its Application. During this stage, the
Applications
Employer shall

promptly respond to requests for clarifications from

Applicants and amend, as needed, the Prequalification
Document,

amend the Prequalification Document only with the prior

approval of ADB.

Opening and Evaluation

of Applications

The Employer is responsible for the opening and evaluation of applications,

which is a critical event in the prequalification process. The Employer shall
appoint experienced staff to conduct the evaluation of applications. Mistakes
committed at evaluation may later prompt complaints from Applicants,
requiring re-evaluation of the applications, with consequent delays and
waste of resources.
The Employer, in observance of best practices, shall

maintain the evaluation process strictly confidential,

reject any attempts or pressures to distort the outcome of the evaluation,

including fraud and corruption,

strictly apply only and all of the qualification criteria specified in the
Prequalification Document, and

notify all applicants in writing of the names of those applicants who have
been prequalified.

Updating and
Confirmation of Bidders
Information pertaining to a bidders eligibility, pending litigation, and
financial situation shall be updated during bidding. Additional
Qualifications
qualifying requirements not examined during prequalification such
as

current contract commitments;

cash flow capacity;

equipment to be allocated for the particular contract; and

personnel to be fielded for the particular contract,

shall form part of the bidding document and will be assessed during
bid evaluation.

Post qualification

For the procurement of simple and unsophisticated

works contracts the Employer may apply postqualification by requiring bidders to submit the
information pertaining to their qualification together
with their bids. In this event, it will be necessary to
ensure that a bidders risk of having its bid rejected
on grounds of qualification is remote if due diligence
is exercised by the bidder during bid preparation.

For that purpose, clear-cut, fail-pass qualification

criteria need to be specified by the Executing Agency
in both the Invitation for Bids as well as the Bidding
Document in order to enable bidders to make an
informed decision whether to pursue a specific
contract and, if so, either as a single entity or in joint
venture.