A.49 Authorities will typically include questions within the pre qualification questionnaire ("PQQ") to elicit information on the financial robustness of bidders. Throughout the procurement period it is essential that Authorities and their financial advisers continue to monitor the financial health of critical members of each bidder's supply chain, including sponsors, key sub-contractors and lenders.
A.50 Authorities should consider:
• for key subcontractors, the size of the subcontracts relative to their balance sheets i.e. market capitalisation / tangible net worth;
• how far into the supply chain to extend their due diligence work, recognising that early in the procurement the proposed supply chain may not yet be complete;
• when to repeat their PQQ due diligence exercise in respect of the financial health of bidders, sub-contractors and lenders; and
• how to flag these requirements to bidders in bid documentation.
A.51 The historical PQQ assessment should be monitored and updated as required throughout the procurement period, subject to compliance with EU procurement rules. Financial advisers should play a key role in this activity which is likely to involve monitoring of credit ratings, balance sheet strength / tangible net worth / market capitalisation, share price volatility, investment research reports and independent financial analysis where third party assessments are not available. Particular attention is required where the supply chain includes scarce resources and Authorities should seek to ascertain if the supply chain encompasses any such participants.
A.52 In terms of responses to potential problems with the financial robustness of relevant organisations, Authorities should consider whether the most suitable response is to disqualify the bidder, amend the procurement plan or seek to remedy the potential problem, perhaps by encouraging a change to the risk allocation within the supply chain or by encouraging some form of financial support. Authorities should be mindful of the trade-off between cost and project robustness.