Tendering as a Consortia Training

Some key points about Consortia:

• A Consortium is two or more entities, one of which may be a sole trader.
• When does a Consortium become a Cartel? A Cartel could be seen as all organisations delivering very similar services forming a Consortium to knock out the competition. If the prime intent for forming a Consortium is about ‘knocking out’ the competition, then this could be challenged by a competing organisation on the basis of anti-competition tactics. If the organisations with the Consortia have specialisms and diversity between organisations, this is less likely to be challenged since the aim is about better quality services rather than anti-competition.
• A purchaser can legally request that a consortium become incorporated. However, setting up a new company prior to submitting a bid is a weak move since there is no track record for the new organisation.
• It takes a long time to develop a Consortium, much longer than given to tender for a bid. Therefore Consortia must be developed prior to any tender opportunities.
• A number of bids have been very successful when the Consortium has VCS & private sector members.

Forming successful Consortia:

• Managing risk is very important as a Consortium. They must identify and have mitigation plans for key risks to the Consortium. Authorities will be looking for evidence to give them confidence that the risks will be minimised whenever and wherever possible. As a rule, the more organisations in the Consortia, the higher the risk is.
• Be clear about expectations – unlike in the past where relationships could be more ambiguous, Consortia have to deliver a contract and therefore there will be certain expectations from the lead organisation about the other consortia members and visa versa.
• The relationships must be mutually advantageous – the lead organisation must be dependent upon the other consortia members and visa versa.
• A Consortium must have a constitution.
• Decide on whether you will adopt consistent policies and procedures across the organisations – remember it will need to be justified to any purchaser
• There is case law that says that even if a document has “not legally binding” stated at the top, if it has all the elements of a contract it can still be binding and enforceable.
• Show how your Consortium is going to save money.

There are 3 models that consortia can follow:

• Model 1 – Partnership. Tied together using a partnership agreement, Heads of Agreement or Memorandum of Understanding
• Model 2 – Sub contract. The majority of the service is delivered by the lead organisation with specific elements sub contracted out. (This model cannot be forced to become incorporated since the responsibility for delivery rests solely with the lead organisation)
• Model 3 – Supply chain. The lead organisation does not deliver a service, but manages the supply chain which can be a number of suppliers deep. (This model cannot be forced to become incorporated since the responsibility for delivery rests solely with the lead organisation)

What does a purchaser look for from a tendering organisation?

• An easy life
• The service to be delivered well
• Bigger contracts mean less people to deal with
• New solutions – current provision has failed, the tender must be new
• To save money
• Clear evidence
• A well laid out tender document

During the training we took part in two exercises. The first exercise listed the opportunities and risks when forming Consortia.

The second exercise listed aspects we would expect from a successful Consortia