Why collaborate?

There are a number of reasons why SMEs should consider collaborating to bid for tenders, particularly public sector tenders:-

  • The opportunity to get involved in larger contracts
  • The increasing trend by the public sector to aggregate contracts means that smaller enterprises on their own could not cope with the resulting demands
  • The “20% rule”. Some public sector buyers will be checking that the tender contract value does not exceed 20-30% of the tendering company’s turnover (NB this is a guide, not a rule). This is because the buyer wants to be sure the contract value will not be too much for the company to handle. The size of your company dictates the maximum size of contract it is likely to win. Small companies on their own will often be precluded from even bidding.
  • The opportunity to widen the pool of resources and skills available – complementary or supplementary
  • Sharing of costs, burden, hassle – for example with the PQQ process
  • Being able to look and act bigger
  •  Ability to focus on your core strengths
  • Opportunity for organizational learning
  • More eyes to spot opportunities

There are of course also potential downsides as well:-

Risks of Collaboration

  • Less profit if it has to be shared
  • Possibility of disputes
  • High level of commitment
  • Can be overwhelmed by partner(s)
  • Blocking of possibilities to develop relationships with alternate partners not in team
  • Exposure/Disclosure – ie you make your aspirations, capabilities known to other businesses and disclose potentially sensitive pricing and other information about yourself.

In every case it is of course for each organisation to weigh the advantages and risks. Subsequent articles will attempt to provide an idea of what will be involved if collaboration is to be considered.

Nothing in this awareness article is intended as legal advice. If you have a specific legal requirement or query you should consult a solicitor directly.