Consortium bids, subcontracting and relying on others' capacities

Many public contracts are bigger than a small company can handle alone, or ask for references and turnover you don't have yet. EU procurement law gives you three ways to team up: a consortium (joint bid), subcontracting and relying on another company's capacities. Used well, they are the fastest way for SMEs to access larger tenders.

What is a consortium bid?#

A consortium (also called a joint bid, bidding group, joint venture or temporary association) is when two or more companies submit one bid together. National names include UTE in Spain, RTI in Italy, groupement in France and Bietergemeinschaft in Germany.

Article 19 of Directive 2014/24/EU says:

• groups of economic operators may take part in procurement procedures;

• the buyer cannot require a specific legal form to submit a bid;

• the group may be required to take a specific legal form once awarded, if that's necessary for the contract;

• any conditions for groups must be justified and proportionate.

The members are usually jointly and severally liable for performing the contract, and the documents often ask you to name a lead member and state each member's share or tasks.

Example: two SMEs bid for a school renovation#

A construction SME with strong building references teams up with an HVAC installer. Alone, neither meets the turnover requirement or covers the whole scope. Together they bid as a group: the builder leads, both sign the offer, each fills in its own ESPD, and the combined turnover and references are counted for selection.

What is subcontracting?#

With subcontracting you bid alone as the main contractor and buy part of the work from other companies. You remain fully responsible to the buyer for the whole contract.

Article 71 of the directive covers subcontracting. In practice:

• the buyer may ask you to state in your bid which share of the contract you plan to subcontract and to whom;

• the buyer can check subcontractors against the exclusion grounds and require you to replace one that falls foul of them;

• national law may allow direct payment of subcontractors by the buyer;

• some documents limit subcontracting or reserve critical tasks for the bidder itself.

Example: a small IT firm wins a support contract and subcontracts the 24/7 night shift to a partner. The firm is liable if the night shift fails.

What does "relying on the capacities of other entities" mean?#

This is a middle way, called avvalimento in Italy and Eignungsleihe in Germany. You bid alone (or as a group) but use another company's financial standing or technical and professional ability to meet the selection criteria (Article 63).

The rules:

• You must prove that you will actually have the resources, typically with a written commitment from that company.

• If you rely on someone's qualifications or professional experience (for example their references), that company must perform the works or services for which the capacity is required.

• The buyer checks the other company against the selection criteria and exclusion grounds, and can require it to be replaced.

• If you rely on economic and financial standing, the buyer may require joint liability for performance.

• For works, services and siting/installation operations, the buyer may require certain critical tasks to be performed directly by the bidder or a group member.

Which option should you choose?#

What should a consortium agreement cover?#

Even when the buyer doesn't ask for it, put the essentials in writing before you bid:

1. 1

   Scope split

   who delivers which tasks and lots, and the share of the price.

2. 2

   Lead member

   who communicates with the buyer and signs on behalf of the group.

3. 3

   Liability and insurance

   how losses and penalties are shared internally.

4. 4

   Decision-making

   how you decide on price, changes and disputes.

5. 5

   Confidentiality and exclusivity

   whether members may bid for the same lot with others.

6. 6

   Exit

   what happens if a member becomes insolvent or is excluded.

How does the ESPD work for groups and partners?#

In the ESPD, Part II asks whether you bid as part of a group, which entities' capacities you rely on, and which subcontractors you use.

• Every consortium member fills in its own ESPD.

• Every company whose capacities you rely on fills in its own ESPD covering the relevant parts.

• Subcontractors you don't rely on are often listed only, but the buyer may ask for more.

Teaming up across borders#

Partnering with a local company is one of the most effective ways to bid in another country: the partner brings language, local presence and knowledge of the buyer's habits, while you bring specialist capacity. See the cross-border guide for language, signatures and platforms.

Common mistakes#

• Joining a consortium without checking that every member is free of exclusion grounds.

• Relying on a partner's references without involving them in delivery.

• Forgetting each partner's ESPD or signature.

• Unclear internal split of work and price, leading to disputes after the award.

• Changing partners after the bid deadline without the buyer's approval; changes to a group's composition are tightly limited.