Bath Christmas Market Site and Production Delivery 2026 to 2030

7Economic and Financial Standing

The supplier must be in a sound financial position to participate in the procurement. When undertaking the financial assessment, the council looks at the two most recent sets of supplier’s accounts [one if PAS91], which shows three years of financial information [two if PAS91], along with those of any parent company (if applicable and acting as guarantor).

The council cannot ask for audited accounts from suppliers who are not required to have them under the Companies Act 2006.

The financial assessment is conducted in 2 stages.

Stage 1:

The council has 4 key minimum requirements for financial considerations. If a supplier fails to meet 2 or more of the 4 requirements their bid will be excluded from further consideration. They will not proceed to stage 2 of the Economic & Financial Standing assessment.

The 4 requirements are:

(i) Relates to the contract limit, which is the maximum contract value that a supplier should be expected to tackle within its financial capacity.

The council will use a notional calculation to calculate the contract limit, based on turnover of the supplier in order to confirm whether the supplier is large enough to perform the contract. The contract limit is calculated by matching the supplier’s turnover figure in their latest set of accounts, with the annual contract value. If the annual contract figure is more than 51% of the turnover figure used it is unlikely that the supplier on its own, has adequate resources to perform the services.

By exception, the further full financial assessment may take place if a parent company guarantee or bond or deed should be obtained, provided the parent itself is suitable.

(ii) The Acid Test Ratio is a measure of financial strength, which excludes stock so that only liquid assets are included. This addresses the question of whether the supplier has enough current liquid assets to meet the payment schedule of its current debts with a margin of safety for possible losses in current assets. There will be a minimum requirement for an acid ratio of 1 to score.

(iii) If a supplier is showing continual losses in their accounts this will be deemed a fail.

(iv) If the net worth of a supplier is in a negative position this will be deemed a fail.

Stage 2:

If a supplier passes at least 3 of the 4 key criteria a full financial assessment will take place, this will include selected ratio analysis of account figures, any CCJs a contractor may have against them, and any adverse information on company Directors. The Experian check provides averages for the industry, CCJs, director information and a Commercial Delphi Score (risk rating) which is incorporated into the financial assessment.

Each ratio and other criteria will carry a points score of “0” for fail and “1” for pass, points are then tallied to give an overall score, this is then matched to a predetermined risk-based scoring model where supplier will be assessed as low, medium or high risk.

The final decision regarding the acceptability of the supplier’s financial standing relies on a degree of professional judgement from the council. If the council decides that the financial standing of the supplier is such that it does not have the ability to perform the contact and represents an unacceptable risk to the council then the supplier will be excluded from further consideration in this process.

The minimum levels relating to economic and financial standing for this tender process are summarised below:

Contract Limit £1,100,000

Acid Test Ratio 1.0

Losses Accounts must not show continual losses

Net Worth Net worth must be positive

Contract examples provided from the last 3 years which demonstrate relevant experience and proven track record in delivering services of similar scope and size relevant to the subject matter of the contract.