here's what the panthic rehet maryada has to say on the subject:
b. At the place where ambrosial baptism is to be administered, the holy Guru Granth Sahib should be installed and ceremonially opened. Also present should be six committed baptised Sikhs, one of whom should sit in attendance of the Guru Granth Sahib and the other five should be there to administer the ambrosial baptism. These six may even include Sikh women. All of them must have taken bath and washed their hair
c. The five beloved (Panj Piyare) ones who administer ambrosial baptism not include a disabled person, such as a person who is blind or blind in one eye, lame, one with a broken or disabled limb, or one suffering from some chronic disease. The number should not include anyone who has committed a breach of the Sikh discipline and principles. All of them should be committed baptised Sikhs with appealing personalities.
in addition to this, (based on my observation) at AKJ organized amrit sanchars, the panj are required to keep strict sarbloh bibek and strong rehet (100% solid amrit vela, etc). they should obviously be of high avastha as well, selecting someone for their rehet alone when there's no spark of naam within them would be kind of pointless.
as to how they're chosen, i'm not sure. in some instances there is a single well respected gurmukh who selects them. in other cases it seems to be decided by committee. technically the sangat is supposed to have some say, but i'm not sure how that is put in to practice.
i do know that singhnees who meet the criteria are almost always looked over in favor of singhs (even if the men seem less qualified), but that seems to be a cultural issue rather than a religious rule.
ਸਤਿਗੁਰਬਚਨਕਮਾਵਣੇਸਚਾਏਹੁਵੀਚਾਰੁ॥