I. About This Article
Participation in public tenders can be an important business opportunity for many companies. However, in practice, companies often refuse to participate as soon as they review the tender documentation because they cannot individually meet turnover, experience, technical resource or other qualification requirements.
In such cases, one important legal opportunity is often overlooked – participation in a tender through a tender joint venture.
A tender joint venture allows several suppliers to combine resources, submit a joint tender proposal and participate in a public tender as one bidder. This is a particularly practical mechanism where one company alone cannot meet specific tender requirements, but the correct combination of resources from several companies makes it possible to satisfy the tender conditions.
This article explains what a tender joint venture means in public procurement, how it works in practice, what requirements and restrictions apply, how liability is allocated between joint venture members and what mistakes businesses should avoid.
The article is based on public procurement law, practical tender experience and TB Legal’s long-standing practical experience in public procurement matters.
II. Why Do Businesses Refuse to Participate in Tenders?
Many companies refuse to participate in public tenders at the very stage of reading the tender documentation. The reason is usually non-compliance with requirements – for example, failure to meet turnover, experience, technical resource or personnel criteria.
At first glance, the logic seems simple.
In practice, however, this approach is often unreasonable. The problem is not always the tender requirements themselves. The problem is often that companies assess tender participation only through the lens of their individual capabilities.
The public procurement system does not always limit a company to its own resources. In certain cases, several suppliers may join and participate in a tender jointly.
This means that if a company alone cannot meet certain financial or material-technical requirements, this does not automatically exclude participation in the tender. With the right partner and properly structured legal framework, participation in the tender may become a real opportunity.
III. What Is a Tender Joint Venture in Public Procurement?
A joint venture is a legal form of joint activity between several entities, through which they combine efforts, resources or obligations to achieve a specific purpose.
In the context of public procurement, a tender joint venture means the union of several suppliers who participate in the tender not separately, but jointly – as one bidder.
Under this model, the tender proposal is submitted in the name of the tender joint venture. Evaluation is carried out not only based on the individual capabilities of one company but based on the joint structure created by the members of the joint venture.
A tender joint venture is especially important when one company has technical experience, another has financial resources, and a third has material-technical capacity or a specific ability to perform. In such cases, a properly structured joint venture allows each member to participate in the part where it has the real capacity to provide the relevant service or performance.
For public procurement legal matters, TB Legal also provides dedicated public procurement law services.
IV. How Does a Tender Joint Venture Change Tender Participation Strategy?
A tender joint venture changes the approach under which a company assesses a tender only by reference to its own resources.
If a tender requires high turnover, specific technical resources or experience, the company should examine whether these requirements can be met together with partners.
However, a tender joint venture is not merely a formal union. It requires real functional allocation between the participating entities. It is necessary to determine who provides which resource, who performs which work, who has the relevant experience and how performance will be organized if the tender is won.
The main advantage of a tender joint venture is that several companies can create a joint bidder that, unlike each individual member alone, is better positioned to meet the tender requirements.
At the same time, a tender joint venture increases the level of responsibility. It should not be treated as an easy way to formally satisfy requirements. If the structure is incorrectly designed, the joint venture may become a ground for disqualification from the tender or a later dispute between its members.
V. How Does a Tender Joint Venture Work in Practice?
The practical functioning of a tender joint venture is based on the combination of resources and allocation of obligations.
First, the members of the joint venture should determine what requirements the tender imposes, and which member will ensure fulfilment of each part. For example, one member may have the relevant experience, another may have financial capacity and a third may have technical resources.
The second important issue is clear allocation of obligations between the members. The tender proposal and the joint venture agreement should clearly show what performs. If this allocation is unclear, the contracting authority may suspect that the joint venture has been created only formally.
The third issue is representation. A tender joint venture usually acts through one representative. This simplifies communication with the contracting authority, but internally it requires clear decision-making rules and coordination between the members.
The fourth and most important issue is liability. As a rule, the members of the tender joint venture are jointly and severally liable before the contracting authority. This means that non-performance by one member may create negative legal consequences for all members.
VI. Experience – Why the Experience of Tender Joint Venture Members Is Not Added Together
One of the most important issues in tender participation is assessment of experience. Many companies mistakenly believe that if several members jointly have certain experience, their experience will automatically be added together, and the tender requirement will be satisfied in this way.
In practice, this is not the case. The experience of tender joint venture members is not mechanically added together. Each member is assessed within the scope of the obligation that it undertakes to perform within the joint venture.
This means that if the tender documentation requires experience in a specific type of work, service or supply, the relevant experience should be held by the member that undertakes to perform that specific part. The experience requirement cannot be satisfied merely because another member of the joint venture has similar experience if that member does not actually fulfil the relevant obligation.
Therefore, the joint venture agreement and tender proposal must define with precision which member performs which part and what experience supports that member’s participation. If the allocation of obligations is unclear or the experience does not correspond to the specific part to be performed, this may become a ground for disqualification.
For this reason, when creating a tender joint venture, it is not sufficient simply to combine resources. It is necessary to properly link the experience, technical capacity and specific obligations of each member. Otherwise, the joint venture may fail to help the companies meet the tender requirements and may instead increase the risk of disqualification.
VII. Joint Venture Agreement and Formal Requirements
Participation in a tender through a tender joint venture requires a written joint activity agreement. This agreement should be signed by all members and should define the purpose of the joint venture, the rights and obligations of the members, rules representation allocation of liability and other essential terms.
A joint venture agreement should not be general or template based. It should be tailored to the specific tender, the specific requirements and the actual functions of the participating members.
In practice, problems often arise precisely at this point. Companies use a superficial or standard document that does not reflect the tender requirements, the specific roles of the members or the performance mechanism.
Compliance with registration and document-upload rules in the procurement system is also important. If the members of the joint venture are not properly registered, the agreement is not uploaded correctly or the tender proposal is not submitted in the name of the tender joint venture, this may become a ground for disqualification.
For contract-related documentation, TB Legal also provides dedicated contract law services.
VIII. What Restrictions Apply to Tender Joint Venture Members?
Use of a tender joint venture is not a free and uncontrolled mechanism. It is subject to specific restrictions.
One important rule is that the members of a tender joint venture cannot participate individually in the same tender. If a company is a member of a joint venture, it cannot participate in the same tender separately as an individual bidder.
This rule is important from the perspective of competition and procedural fairness. It prevents entities with the same economic interest from participating in the same tender in parallel through different forms.
In addition, changing joint venture members during the tender or contract performance process generally creates serious legal risks. The partner should be selected not only for entering the tender, but also for the entire period of contract performance.
If one member fails to fulfil its obligation, this may affect the entire joint venture and its other members.
IX. Joint and Several Liability – the Main Risk in a Tender Joint Venture
The most important risk connected with the legal model of a tender joint venture is joint and several liability.
Although the members may internally allocate obligations under the joint venture agreement, before the contracting authority they are usually jointly and severally liable.
This means that if one member fails to perform its part, the contracting authority may also have a claim against the other members. Accordingly, each member of the joint venture assumes not only the risk of its own obligation, but also the risks of the overall tender obligation.
For this reason, selection of the partner is a critical issue. A business should assess not only whether the partner meets a specific requirement, but also whether it is reliable, whether it has real performance capacity and whether it is ready to share common responsibility.
A tender joint venture is not only an opportunity, but also a sharing of liability. Therefore, it should be used with a carefully planned legal structure.
X. When Is a Tender Joint Venture the Right Strategy?
A tender joint venture is the right strategy when several companies have complementary capabilities.
For example, one company may have financial resources, another may have experience and a third may have technical capacity. In such a case, their cooperation may create a structure that none of them would have individually.
A tender joint venture is also justified when the scale of the tender exceeds the capacity of one company, but joint participation of several companies makes full performance of the contract possible.
However, a tender joint venture is not the right strategy if it is created only formally, merely to satisfy a technical requirement, without real functional allocation. If a partner is not genuinely involved, does not have the relevant resources or participates only on paper, this increases both the risk of disqualification and the risk of later liability.
Therefore, before using a tender joint venture, it is necessary to analyse not only the tender requirements, but also the legal and commercial suitability of the partner.
XI. Most Common Mistakes in Practice
The most common mistake when participating in a tender through a tender joint venture is treating it as a simple formal solution. In reality, a tender joint venture is a complex instrument that, if used correctly, increases competitive opportunities, but if used incorrectly, creates additional risks.
Common mistakes include mechanically adding together experience, unclear allocation of members’ roles, a superficial joint venture agreement, improper selection of a partner, failure to comply with formal requirements, incorrect upload of documentation in the system and parallel individual participation in the same tender.
In practice, it is also common for members not to agree in advance on internal decision-making rules, financial liability, performance control mechanisms and the consequences that may follow if one member breaches its obligations.
Such deficiencies may appear not only at the tender stage, but also during performance of the contract.
XII. Disqualification of a Tender Joint Venture and Filing a Complaint Before the Dispute Review Board
When participating in a tender through a tender joint venture, the risk of disqualification should be assessed with particular attention. A mistake may relate to the joint venture agreement, the experience of members, allocation of resources, representation, registration or compliance with formal requirements of the tender documentation.
If the contracting authority incorrectly establishes a deficiency, wrongly assesses the experience or resources of the joint venture members, unlawfully disqualifies the tender joint venture, or unlawfully gives preference to another bidder, the decision may be appealed before the Dispute Review Board for public procurement disputes.
In the case of a tender joint venture, it is particularly important that the complaint is filed in the name of the correct entity. Since the joint venture participates in the tender as the bidder, the complaint should generally be filed in the name of the tender joint venture and not in the individual name of one of its members.
At the same time, when preparing the complaint, it is necessary to consider the rules of the joint venture, the authority defined by the agreement and the circumstances proving the unlawfulness of the disqualification or of the preference given to another bidder.
In such disputes, what matters is not only general dissatisfaction, but the correct formulation of specific legal and factual arguments: what requirement was violated by the contracting authority, why the identified deficiency was incorrect, why the joint venture met the tender conditions, or why another bidder should not have been given preference.
For tender complaint matters, you may also read our blog post: Tender Complaint – Anatomy of a Successful Public Procurement Dispute.
XIII. How TB Legal Can Help
TB Legal assists companies in planning a strategy for participation in public tenders through tender joint ventures, analysing tender requirements, assessing joint venture models, preparing joint venture agreements and preventing disqualification risks.
Our services include legal analysis of tender documentation, definition of roles and obligations of joint venture members, assessment of joint and several liability risks, legal support in registration and document submission, and, where necessary, representation before the Dispute Review Board.
If your company cannot individually meet tender requirements, this does not always mean that participation in the tender is impossible. With the right legal structure and properly selected tender joint venture, participation may be realistically possible.
XIV. Conclusion
Participation in a tender through a tender joint venture is an important opportunity for businesses. It allows companies to combine resources and meet tender requirements that would be difficult or impossible to satisfy individually.
However, a tender joint venture is not a simple formality. It requires a properly drafted agreement, clear allocation of functions, selection of a reliable partner, understanding of joint and several liability and precise compliance with procedural requirements.
A properly structured tender joint venture increases the chances of participation and success in a tender. An incorrectly structured tender joint venture, however, may become ground for disqualification, dispute or problems during contract performance.
Contact TB Legal if you are planning to participate in a public tender through a tender joint venture. We will help you structure the arrangement properly, prepare documentation and reduce legal risks.
XV. Sources Used
This article is based on the following sources:
- Public procurement legislation.
- Rules for conducting electronic tenders.
- TB Legal’s practical experience in public procurement and tender disputes.
Disclaimer
This article has been prepared for general informational purposes only and does not constitute individual legal advice or a legal opinion. Issues related to participation in a tender through a tender joint venture may be assessed differently depending on the specific tender documentation, requirements, capabilities of the members, terms of the joint venture agreement and factual circumstances existing in the public procurement system.
Before participating in a specific tender, it is recommended to obtain an individual legal assessment from a qualified lawyer.
