It would also be illegal unless the contract terms specifically required a bidder to satisfy some objective measure of viability (but so would giving contracts to a troubled company to keep it afloat, if they didn't win according to the scoring criteria in the invitation to tender).
I'd be interested to hear any refutations of this view, provided they also give reasons why you think I'm wrong.
When we receive tenders, we do undertake basic financial checks to ensure that the bidders are of sufficient size to undertake a contract. For example, if a company's turnover was £1m, we wouldn't offer them a contract for £5m - the risk is potentially too great. (Which then begs the question, given the large scale projects Carillion was involved in, there are not that many companies large enough to undertake the work (hence the number of Joint Ventures), so if Carillion was barred from bidding, would the other large companies have enough capacity to take the work on?)
We also review the last three years' accounts of the bidders. This has the benefit of being based on fact, rather than share prices which can fluctuate for reasons unconnected to the company being considered. However, it can relate to a period of time 18 months ago, during which time a lot could happen.
At the end of the day, unless the financial checks identify clear reasons why a company is not financially strong, the bidder will go through to the next round, and the decision will effectively be based on non-financial factors.