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Legal Arrangements When Collaborating: How Welsh SMEs can Win More Tenders

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A key challenge for any business looking to win contracts with the public sector is getting the tendering process right. Whether you are a large multi-national, or a small micro-business employing less than 10 people, your tender needs to give the buyer absolute confidence that you have the necessary capacity, capability and control in place to deliver the contract effectively.

This can be particularly challenging for SMEs (95% of Welsh businesses fall in to that micro-business category) simply because of the scale of the contracts and the extent of requirements. Many contracts within the public sector tend to be large in nature, both in terms of financial value as well as contract length. Add to this the increased pressures on the public sector over recent years to seek value for money and reduce costs, it makes sense for buyers to work together and jointly buy goods, products and services. The direct implication of this however, is that it tends to increase demands on the delivering organisation. For example, there may be a requirement to service larger geographical areas, or to provide a broader range of services or expertise as part of the contract.

This does not mean that SMEs are not able to compete for the contract. Teaming up with other like-minded SMEs who offer a complementary skill, or who have an operational presence across a region that you don’t currently cover, can have the makings of a very compelling and competitive offering that can help make your bid stand out.

The biggest stumbling block with this more often than not, is not preparing sufficiently when producing a bid to make sure that the key considerations and concerns of the buyers are addressed, giving full reassurance and confidence that the contract will be a success. A big factor in this is also time. Until the tender or specification has been released, businesses often won’t know what the contract requirements will look like and what the expectations will be, and a 15 to 30 day window to complete a PQQ or Tender is not going to give sufficient time to adequately address the finer detail of the consortia arrangement.

Explore options as early as possible

It is good practice to research and identify your potential customers, by looking through resources such as the sell2wales website, as well as looking through the pipeline projects that many organisations such as the National Procurement Service or Local Authorities will have openly available on their websites indicating upcoming contracts and anticipated dates.

Early discussions with potential collaborative partners is also essential. You need to identify other businesses that have the right attitude, a willingness to make the agreement work, and whom you can trust.

Likewise, the best collaborative bids are going to be those that have evidently been well thought out in advance. For that reason, getting to work 6-12 months before a contract is released will give you time to properly thrash out the details of how the contractual relationship will work.

What are the options?

There are multiple options that can be taken, each with its own merits and drawbacks. The best place to start for any business considering this is the Welsh Government’s Joint Bidding Guide. This document sets out comprehensive guidance for both suppliers as well as buyers of what to consider in regards to collaborative arrangements, and provides a number of excellent tools and templates to help address key areas, such as:

  • Structure – will one business be the lead the consortium, or is it an equal partnership between two or more businesses, or are you intending on eventually merging both businesses in to a single legal entity?
  • Assessing opportunities and deciding whether to bid
  • Mapping the strengths and weaknesses of the consortium members in comparison to key customer requirements
  • Risk planning
  • Governance

Many of the building blocks for a collaborative agreement can be put in place at an informal level, and this is often the starting point for most. However, as with all commercial relationships, it is best to get proper advice and guidance from the onset to ensure that you have a robust agreement in place. Not only to reassure your potential customers, but to also ensure that the interests of your business is safeguarded.

 

Key contractual considerations:

  • Is there a clear legal agreement in writing?
  • How is liability shared between the consortium members?
  • How will confidentiality and intellectual property rights be maintained?
  • How are contractual responsibilities divided, and how are payments divided?
  • What happens if the contract is terminated or there is a failure to perform?
  • Is the collaboration a longer term arrangement, or a one-off arrangement for the purposes of the contract? What happens if there is a disagreement before the end of the contract?
  • If the contract is short term, how will the relationship be wound down without negatively effecting the contract?

While some of the above may risk sounding negative, it is worth highlighting that there are countless examples of excellent collaborative ventures in operation across the world that are making a success of it. Getting the foundations of the agreement right in the first place will give you the platform to gain the full benefits of collaborative bidding, which include:

  • Increased competitive advantage
  • Opportunity for business growth
  • Better use of resources
  • More integrated and co-ordinated approach to meeting the end customer’s needs
  • Sharing of risks
  • Mutual support between organisations

Mabis, in partnership with legal frim Darwin Gray LLP, is running a series of seminars across Wales exploring legal considerations around numerous aspects of tendering, collaborating and subcontracting agreements.

Click here to view dates and book a place: http://mabis.eventbrite.co.uk/

For support and advice with any aspects for bidding and tendering for work, Mabis can be contacted on 02920 467 417 / [email protected]