Part 3: Award of public contracts and procedures Chapter 2: Competitive award Section 22: Conditions of participation
Subsection (1) enables contracting authorities to set conditions relating to suppliers’ participation in a procurement process, prior to the award of a public contract under section 19 (award of public contracts following a competitive tendering procedure). These conditions must be limited to those that are a proportionate means of ensuring that a supplier has the legal and financial capacity, or the technical ability to perform the contract. Proportionate conditions should help encourage market participation and avoid requirements being unnecessarily onerous for suppliers.
	Subsection (2) defines the term "condition of participation".
	Subsection (3) prohibits contracting authorities from requiring as a condition of participation (a) the provision of audited annual accounts from suppliers that are not otherwise required by the Companies Act 2006 or an overseas equivalent to have their accounts audited and (b) insurance relating to the performance of the contract to be in place before award.  This ensures that suppliers that are not required to have their accounts audited (e.g. small companies) can provide alternative evidence of financial capacity and allows suppliers to commit to having insurance in place at award, rather than before (which may incur unnecessary cost if they do not win the contract).
	Subsection (4) makes it clear that whilst conditions can include qualifications, experience or technical ability, to ensure fair treatment of suppliers and equality of opportunity, they cannot relate to a particular prior award of a public contract (e.g. public sector experience may be requested but experience with a specific public sector organisation cannot). In addition, conditions may not contravene the rules on technical specifications in section 56 (technical specifications) or require particular qualifications without allowing for their equivalents.
	Subsection (5) contains further guidance on proportionality when setting conditions of participation, having regard  to the nature, cost and level of complexity of the contract.
	Subsection (6) permits a contracting authority to require evidence that is verifiable by a third party to satisfy a condition of participation.
	Subsection (7) allows a contracting authority to remove a supplier from the competition when the supplier has not satisfied the conditions of participation. This means that whilst a supplier must satisfy the conditions of participation in order to be awarded the ensuing public contract (see subsection (2)), a contracting authority may choose the timing at which exclusion from the procedure takes place (for example, the authority may allow for suppliers to confirm they have met the conditions at a later stage).
	Subsection (8) refers to situations where a supplier has relied on another supplier (an associated supplier) in order to satisfy the conditions of participation. Where this occurs the contracting authority is to treat the supplier as having passed the conditions if the other supplier has passed the conditions. Further rules on sub-contracting can be found in section 28 (excluding suppliers by reference to sub-contractors) and section 72 (sub-contracting: directions).
	Subsection (9) explains the different relationships that can occur between two suppliers for them to be classed as associated. The suppliers could submit a tender together, for example as a consortium, or there could be an arrangement with one supplier sub-contracting or guaranteeing aspects of the contract to or by another. The contracting authority must be satisfied that the suppliers will enter into a legally binding arrangement to cover the sub-contracting or guarantee arrangement. Section 72 (sub-contracting: directions) includes more detail on sub-contracting arrangements.