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Pre-qualification Frequently Asked Questions
11/6/2002
 This article pertains specifically to the Pre-qualification process currently being utilized by an un-named Indianapolis-based company that is referred to as 'Owner' throughout this document. However, it serves a good example of how contractors can successfully traverse the pre-qualification process.
' Why are contractors safety pre-qualified'
As part of their Contractor Safety Management Process, the Owner requires contractors to provide proof of their corporate position on safety. Many Owners exercise a strong commitment to safety and desire that all contractors working on their site be just as committed. The goal for the Owner is to use only those contractors who have a good safety record that can be verified through the contractor safety pre-qualification process.
' What are the minimum safety requirements necessary for a contractor to be approved to bid work'
Pre-qualification requires that a contractor first have a Safety Program/Manual in effect that contains mandatory program elements in sufficient detail to meet the high safety standards set for working safely on-site. Hurdle rates for the OSHA Recordable Rate (REC) and Lost Time Accident Rate (LTA) have been chosen based on the Standard Industrial Classification Code 17 (Construction), using the lowest number of the previous three years as estimated by the Bureau of Labor Statistics. The Experience Modification Rate (EMR) hurdle rate is 1.0.
' What are the mandatory safety program elements'
Elements that should be included in a company's safety program include (but are not limited to):
- Management Policy Statement
- Clearly Defined Responsibilities
- Designated Safety Director
- Safety Orientation
- Disciplinary Action Program
- Supervisor OSHA 10-Hour Training
- Hazard Communication
- Substance Abuse Program
- Safety Inspection Program
- Emergency Response Plan
- Designated Healthcare Facility
- Accident Investigation Procedure
- Light Duty/Return to Work Policy
- Personal Protective Equipment Policy
Additionally, activity-specific programs based on the work performed by the contractor will need to be in place (i.e., scaffolding safety, welding and cutting safety, confined space entry training, etc.)
' How are Incident Rates calculated'
There is no magic involved in calculating incident rates. The Owner utilizes the same method prescribed by the Bureau of Labor Statistics to create a rate based on 100 full-time employees:
- Recordable Rate: (Total Number of Recordable Cases + Lost Workday Cases + Fatalities) X 200,000 divided by the Total number of hours worked
- Lost Time Rate: (Total Number of Lost Workday Cases + Fatalities) X 200,000 divided by the Total number of hours worked
' What does 'total number of hours worked' mean specifically'
The Owner requires all hours worked by the company to be included in the incident rate calculations. If the company has operations located outside Indiana, the hours (and incidents) that occur company wide are to be included in the incident rate calculations. The Bureau of Labor Statistics recommends companies use payroll or other time records to calculate hours worked. "Hours worked" should not include any non-work time, even though paid, such as vacation, sick leave, holidays, etc. (If actual hours worked are not available for employees paid on commission, by salary, or by the mile, etc., hours worked may be estimated on the basis of scheduled hours or 8 hours per workday.).
More information about calculating work hours may be obtained by clicking the "stats.bls.gov/iif/osheval.htm" link at the bottom of this page.
' What is an EMR'
EMR stands for Experience Modification Rate, a tool used by insurance companies to determine premiums for workers' compensations insurance. It is a ratio of actual losses over expected losses. The fewer losses your company suffers due to work-related injuries and illnesses, the lower the EMR is. The average EMR is 1.0. Anything above 1.0 indicates a company is suffering more losses than other companies in the same industry. Conversely, an EMR below 1.0 suggests a company is controlling its losses. Your workers' compensation insurance provider will be able to provide you your company's EMR and additional information about this rate.
' Where do the RFI and Safety Manual need to be sent'
Submit your pre-qualification information to the following address using the United States Postal Service only:
Safety Management Group
Pre-qualification Services
P.O. Box 21308
Indianapolis, IN 46221
There is no physical address for using UPS, FedEx or any other delivery service. Your company's Safety Manual must be submitted in full, either in hardcopy format or CD-ROM.
' What are some of the common pre-qualification errors'
The most common errors contractors make during the pre-qualification process include:
- Forgetting to send the complete corporate safety manual.
- Forgetting to send supplemental documentation such as the OSHA logs or EMR verification.
- Showing up on-site to work before the pre-qualification process has been completed,
- Submitting inaccurate OSHA logs (not being aware of the intricacies of what makes an incident recordable).
- Mailing RFI and supplemental documentation to the wrong location.
' Where can I learn more about OSHA Recordkeeping Requirements'
Please visit Safety Management Group's website at www.safetymanagementgroup.com. Under the 'Resource' section is a category devoted to Recordkeeping that provides links to numerous informative websites. Or contact SMG at (317) 848-0801.
' How is the information my company submits used'
Your company's submittal for safety pre-qualification is reviewed for completion and accuracy. Your company's incident rates are calculated by using your OSHA log and total number of employee hours worked by your company. Additionally, your company safety manual is read and evaluated for content against the standards set by the Owner.
' What happens to the copy of my safety program (and other submitted documents) once pre-qualification is completed'
Most contractors choose to allow their document submissions to be archived in a locked library on the Owner's property. Upon request, documents may be returned (at the contractor's expense). All contractor safety pre-qualification information pertinent to the Owner is compiled in an Owner-managed database. Since information contained in the prequalification assessments is considered sensitive, access to this database is reserved for Owner representatives and SMG employees only.
' How do I know if my company has been pre-qualified'
Once the RFI is evaluated, the company will be notified in writing whether or not they have been pre-qualified. If the information meets minimum requirements, an approval letter will be issued. If minimum requirements are not met, a 'failed minimum requirements' notification will occur.
' Why did my company receive a 'Failed Minimum Requirements' letter'
There are a variety of reasons why a 'Failed Minimum Requirements' letter is sent. First, the required information submitted may not have been complete or detailed enough to meet the pre-qualification standards in place. Minimum requirements would also not be met if your company:
- Had an occupational fatality within the past three (3) years.
- Has Incident Rates that exceed the hurdle rates in place for the current year.
- Does not submit a letter from your insurance carrier certifying your EMR.
- Has an Experience Modification Rate at or above 1.0.
- Does not submit all information required in the Request for Information (RFI).
- Does not submit OSHA 300 Logs for the past three years.
- Submits a safety program that doesn't contain the mandatory components.
' How does the Owner know my company's pre-qualification status'
The Owner has access to the Contractor Safety Pre-qualification Database. The database contains a recap of the prequalification results for each company that submits information for consideration and informs the Owner whether or not a company has successfully passed the pre-qualification process. If a company is still 'in process,' details regarding what is occurring to complete the evaluation will be contained in the database.
' What if my company was pre-qualified to bid work last year'
If your company was approved last year, you will automatically receive a letter prompting your response for safety re-qualification. Re-qualification requires that your company only submit a Safety Manual if it has been updated since the original submittal. Re-qualification will also require the submittal of another RFI, current copies of OSHA 300 Logs, certification of your company's current EMR, and a copy of the pre-qualification approval letter issued for the previous year.
' How can my company request the necessary pre-qualification paperwork to complete and submit for bidding consideration'
Contractors are asked to contact either their prime contractor or an Owner representative to request to be pre-qualified. Upon receipt of this request, Safety Management Group will initiate the process by transmitting a Request for Information (RFI) document to the company. Note: Safety Management Group is not authorized to issue RFIs without the consent of an Owner representative.
' How often does my company need to be pre-qualified to bid work'
Safety pre-qualification is renewed annually. Contractors who bid work for the Owner must be pre-qualified.
' Can my company perform work even if it failed to meet minimum pre-qualification requirements'
The Owner reserves the right to conditionally approve contractors for a specific project. This conditional approval is typically of short duration and requires the contractor to present job-specific safety programs to counteract any issues that may have resulted in their failure to meet the minimum requirements of pre-qualification. Contact your Owner representative for more information about conditional approvals.
' What if I need to speak with a SMG or Owner representative'
Please call the automated messaging system at 317-433-5927, press * 6 and leave a detailed message. This voice mailbox is checked periodically throughout the day, and messages are returned immediately.
For a printable version of this article, click "Prequal FAQ 2nd draft.pdf" link below.
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