Subcontractor Selection
Procurement & Subcontractor Selection
Overview
The Procurement & Subcontractor Selection process at BEC Arabia ensures that only the most qualified, financially stable, and compliant subcontractors are engaged for projects. This structured approach minimizes contractual, financial, and operational risks, ensuring successful project execution in alignment with BEC Arabia’s quality, safety, and commercial objectives.
This process is designed to:
Ensure fairness and transparency in subcontractor selection
Mitigate risks by prequalifying subcontractors based on financial, legal, and technical standards
Optimize cost efficiency by selecting the most competitive and technically capable subcontractors
Ensure compliance with KSA regulations, project requirements, and BEC Arabia’s procurement policies
The procurement process involves multiple stakeholders, including:
✅ Procurement Team – Manages tendering, bid evaluations, and contract negotiations ✅ Project Management Team – Reviews subcontractor capabilities based on project needs ✅ Legal & Contracts Team – Ensures compliance with contractual and regulatory requirements ✅ Finance Team – Verifies subcontractor financial stability and payment terms ✅ HSE & QA/QC Teams – Ensures subcontractors meet safety and quality standards
Step-by-Step Procurement & Subcontractor Selection Process
📂 1. Identifying Subcontractor Requirements
Before initiating the procurement process, the Project Team provides the Procurement Department with the following:
Scope of work and project specifications
Estimated budget and cost parameters
Required certifications and compliance standards
Project timeline and subcontractor mobilization schedule
Once requirements are confirmed, the procurement team identifies potential subcontractors from the Approved Vendor List (AVL) or issues a prequalification process to assess new suppliers.
📂 2. Tendering & Bid Invitation Process
The procurement team issues a formal Request for Quotation (RFQ) or Request for Proposal (RFP) to prequalified subcontractors. This process includes:
Issuing bid documents with project scope, technical specifications, and submission deadlines
Conducting pre-bid meetings to clarify project requirements
Establishing a clear evaluation criteria, including technical, financial, and compliance factors
Subcontractors must submit:
Detailed technical proposal outlining work methodology
Financial proposal with cost breakdowns
Work experience and previous project references
HSE and quality compliance documentation
📌 Template: Request for Proposal (RFP) Template
📂 3. Bid Evaluation & Subcontractor Selection
Once bids are received, they are evaluated based on the following:
Evaluation Area
Criteria
Weightage
Technical Capability
Experience, resources, and ability to execute work
40%
Financial Proposal
Cost competitiveness and payment terms
30%
Compliance & HSE
Adherence to KSA laws and safety regulations
20%
Previous Performance
Past project success and client references
10%
The Procurement and Project Teams review the top-ranked subcontractors, conducting interviews or site visits if necessary.
📌 Template: Bid Evaluation Report
📂 4. Negotiation & Contract Finalization
After selecting the preferred subcontractor, the contract negotiation phase begins, ensuring:
✔ Finalized pricing, scope, and timeline agreements ✔ Review and inclusion of risk mitigation clauses ✔ Legal and financial due diligence completion ✔ Clarification of key contractual terms, including payment schedules, retention, and penalties
📌 Template: Subcontractor Contract Negotiation Checklist
Once all terms are finalized, the contract is signed and stored in SharePoint for tracking and compliance.
📂 5. Issuance of Work Orders & Mobilization
Upon contract execution, the subcontractor receives a Work Order (WO) outlining:
Project-specific instructions
Site mobilization requirements
Start date and key milestones
Safety and compliance guidelines
Project teams verify subcontractor mobilization readiness through:
✔ Submission of labor and equipment mobilization plans ✔ Completion of HSE induction and compliance training ✔ Submission of all technical submittals before work starts
📌 Template: Subcontractor Work Order Form
6. Risk Management in Procurement & Subcontractor Selection
To minimize procurement risks, BEC Arabia follows a structured risk assessment process:
Risk Type
Mitigation Strategy
Subcontractor Financial Instability
Require performance guarantees and advance payment bonds
Poor Quality Work
Enforce strict QA/QC approvals and penalties for defects
Safety Non-Compliance
Immediate suspension and financial penalties for violations
Delayed Work Execution
Apply liquidated damages for project delays
Each subcontractor must sign a Risk Acknowledgment Agreement, committing to BEC Arabia’s performance standards and compliance requirements.
📌 Template: Subcontractor Risk Acknowledgment Form
Common Procurement & Subcontractor Selection Issues and Solutions
Subcontractor Submits an Unclear or Incomplete Proposal
❌ Issue: Proposal lacks detail on execution methodology or cost breakdown. ✅ Solution: Request a proposal revision or eliminate the bidder from consideration.
Multiple Bidders Meet Selection Criteria
❌ Issue: Several subcontractors qualify for the project. ✅ Solution: Conduct an interview or site visit to determine the best fit.
Subcontractor Requests a Price Increase Post-Award
❌ Issue: Subcontractor claims increased material costs. ✅ Solution: Reject unapproved cost escalations unless a valid variation order is approved.
Subcontractor Fails to Mobilize on Time
❌ Issue: Delays in labor or equipment mobilization. ✅ Solution: Issue a Notice of Default and enforce contract penalties.
📌 Template: Subcontractor Default Notice
Documentation & SharePoint Storage
All procurement and subcontractor selection documents must be securely stored in the Procurement SharePoint Folder for reference and audit purposes.
📂 Key Documents Stored in SharePoint
Document
Purpose
Access Link
Prequalified Vendor List
Approved subcontractors database
Open Folder
Bid Evaluation Reports
Assessment of subcontractor proposals
Open Folder
Finalized Subcontractor Agreements
Signed contracts for each subcontractor
Open Folder
Work Orders & Mobilization Reports
Verification of subcontractor readiness
Open Folder
Risk Assessment Reports
Procurement risk mitigation records
Open Folder
Final Notes & Key Takeaways
All subcontractors must pass the bid evaluation and selection process before contract award.
All procurement-related documents must be stored in SharePoint for compliance tracking.
Subcontractor financial risks must be mitigated with guarantees and payment terms.
HSE and QA/QC compliance is a key factor in subcontractor selection.
Contract negotiations must include clear scope, payment, and penalty clauses.
For any procurement-related inquiries, contact [email protected] or the Contracts and Legal Team.
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