If you run a small business, you may need to consider working with other businesses to increase your chances of winning a government tender. Listed below are the advantages and disadvantages of collaborative bidding.

Advantages of collaborative bidding

• Collaboration potentially improves the competitiveness of your contract bids through shared resources, skills and knowledge, and the increased capacity to deliver.
• The businesses involved would have a lesser or no chance of winning the tender if they were to bid on their own.
• Collaboration gives you an opportunity to tender for larger more lucrative contracts, which you may not be able to win or have capacity to deliver on your own.
• Collaborating with the right partner can have the collective benefits of shared skills, experience and expertise. This may influence the buyer when they are assessing tender submissions.
• Collaborating with other businesses means that any one business does not have to try to be 'all things to everyone'. They can instead focus on their areas of strength and expertise.
• By collaborating on a tender response, businesses can pool their resources. This can make the process of developing a tender bid easier and less expensive.
• Responsibility for writing the tender response is shared among the businesses. Each section is allocated on the basis of a partner's strength in that particular area.
• It is less likely that future tender opportunities will be missed, as collaborating businesses will be on the lookout for more tender opportunities.

Disadvantages of collaborative bidding

• There may be an imbalance of effort and workload between collaborating businesses.
• There may be disputes, conflicts and culture clashes between the collaborating businesses.
• There may be financial problems (e.g. cash flow difficulties and payment problems and how that impacts on the collaboration business model).
• Businesses involved in the collaboration may be reluctant to share information, leading to a lack of openness.
• Communication, project management and planning may become more complicated.
• One business may promote its own business agenda rather than the collaboration's objective (i.e. self-interest).
• Collaborating businesses may over-sell or over-estimate their capacity or abilities, and be unable to deliver to the required standard of the tender response.
• Personal conflicts and egos may get in the way of progress during contract delivery.
• Power struggles may exist between collaborating business partners or individuals.
• There may be conflicting values or ethics.

Also consider...

• Find out where to search for tender opportunities.
• Learn more about analysing tender requests.
• Find out how to write a competitive bid.

Successful business collaborations require alignment of values, commitment, understanding, planning and communication. Take the time to fully explore the following aspects of your proposed partnering arrangement.

Bid writing

Successful business collaborators have invested time evaluating the potential contract. They plan the bid writing process fully, including allocation of duties and responsibilities. The time invested at this stage can lead to a more effective bid writing process.

Change management

For many businesses doing it for the first time, collaboration will be a new way of working; therefore, there is a need to manage that change carefully.

Clear goals and commitment

Effective collaboration requires clearly defined and shared goals. All parties involved must have a commitment to achieving these shared goals.

Communication

Communication is the key to making any collaboration work, so make sure there is regular, open and respectful communication between all the businesses involved. Some communication should be formal (e.g. progress reports).

Culture of openness, trust and sharing

Effective collaborations thrive on a culture of openness and mutual trust, as well as the sharing of skills, knowledge and expertise.

Manage expectations

It is important to define and manage the expectations of all businesses in­volved in the collaboration as the partnership commences. These can be evolved over time.

Planning

All aspects of the collaboration, including bid writing, should be carefully planned and moni­tored.

Policies and procedures

Develop and implement relevant and consistent policies and procedures that will make the collaboration work.

Regulations

Make sure to follow all laws and regulations (including taxation) as part of setting up and managing the collaboration.

Risk management

Collaboration does bring risks and problems. It is important to identify ways take to mitigate or avoid these risks through a risk register and risk mitigation plan.

Roles and responsibilities

Make sure roles and responsibilities are clearly identified and agreed on based on a skills assessment.

Teamwork and skills

Create an environment that facilitates effective teamwork and maximises the exper­tise of partnering organisations and individuals.

Working relationships

Invest time in nurturing and developing relationships among individuals involved in the collaboration, and with external partners. Use agreements (e.g. memorandum of understanding) to ensure working relationships are well-defined.

Also consider...

• Find out where to search for tender opportunities.
• Learn more about analysing tender requests.
• Find out how to write a competitive bid.

Subcontracting is a popular collaborating option that is available to most businesses. It is also a good way to enter government supply chains.

Government buyers seek value for money from their procurement activities. They often tender to larger businesses and expect smaller businesses to play a part in delivering these contracts, usually as a subcontractor. It may be that the main contractor is looking for specialist skills or experience that you are able to provide.

Remember, subcontracting can have implications for your business. You will need to carefully weigh up the pros and cons before making a decision to subcontract.

What are the advantages of subcontracting?

• You do not have to invest significant resources into preparing a tender response.
• For many smaller businesses, subcontracting can be the first step in gaining tendering experience. Many opportunities require previous tendering experience and subcontracting helps solve this 'catch 22' (i.e. even though you may lack experience or skills in tendering, you can still gain access to the contract).
• Private sector contractors may be keen to partner with you to help increase the level of potential social impact within the tender response.
• You can negotiate intellectual property (IP) rights with the lead contractor and buyer.

What are the disadvantages of subcontracting?

• Depending on your position in the supply chain, there could be problems managing your cash flow, particularly if the main contractor is experiencing delays in payment.
• Often the main contractor will introduce clauses into the subcontracting agreement, which may ban you from carrying out any direct business with the end customer.
• The main contractor may include clauses that prohibit you from entering into similar subcontract relationships with one of their competitors for a specified period of time.
• You may have to cut your margins to deliver better returns for private companies.
• You may not gain any practical experience in developing a tender.
• As you are not the 'lead partner' or main contractor, there may be no brand recognition for your business.
• You may have different business values and ethics from the main contractor, which could cause friction.
• There may be a breach of contract by the main contractor that will impact on your business.
• If you fail to deliver on your subcontract, the main contractor may take legal action.
• You may not be in a position to become involved in negotiations or management discussions about the tender, but your business will be impacted by these decisions.

Where can I find subcontracting opportunities?

There is no single way of finding out about subcontracting opportunities.

Government agencies may give you information about their main contractors or you might identify and contact a supplier who has won a major contract. 'Meet the supplier' events can also provide opportunities for finding out about subcontracting opportunities.

Industry Capability Network Queensland's ICN Gateway helps match relevant suppliers to project proponents who have been awarded major contracts. This is a great source for subcontracting opportunities.

The Black Business Finder is a website designed to help Aboriginal, Torres Strait Islander and multicultural-owned businesses break into major project supply chains. Registering on the website helps you to become visible to a main contractor/project proponent who is seeking Aboriginal, Torres Strait Islander or multicultural business skills and expertise.

Also consider...

• Find out where to search for tender opportunities.
• Learn more about analysing a tender request.
• Find out how to write a competitive bid.
• Supply Nation supports both Aboriginal businesses and Torres Strait Islander businesses that are looking to enter the supply chains of Australian companies and government agencies.

A consortium allows 2 or more businesses to combine their capabilities when developing and delivering a tender. The primary driver of a consortium approach is that it allows for greater economies of scale, efficiency and effectiveness. A consortium can be made up of delivery partners from different industry sectors and this offers a great source of competitive advantage.

What are the advantages of working in a consortium?

• A consortium lets its partners share relevant skills, experience and expertise in such a way that every business complements each another (i.e. in terms of the tender roles and responsibility, and in relation to service delivery).
• Being in the consortium will give you the opportunity to access partner experiences or competencies that you might not have, and which you cannot afford to 'buy in' just to secure the contract.
• Other business partners will have unique selling points (USPs) that you do not have. They may have the capability to deliver in other geographical areas or may have access to data that can give the tender submission a competitive advantage over other submissions.
• Sharing your expertise and capabilities, via the consortium, can increase your chances of success at tender evaluation.
• Business partners can share development costs, which can reduce overheads and the amount of resources required of each business.
• Risk can be spread across business partners.

What are the disadvantages of working in a consortium?

• You might find that some contractors are not open to engaging in this type of collaboration to secure a specific tender. This means that a lot more effort will be required at tendering stage to identify potential collaborators and explain why collaborating this way will help to win the tender.
• It takes time to develop a consortium. Where time is an issue, a hastily developed consortium may not be effective and may cause problems for the parent businesses.
• To ensure consistency and quality, a consortium will usually require more resource-intensive management while developing the tender and delivering the contract.
• It is likely that legal advice would be needed to ensure that the structure of the consortium or partnership is 'fit for purpose'.
• If one partner fails to deliver then your reputation may also suffer in terms of future tendering. You may also be liable, depending on what partnership arrangements are in place. If you are the lead partner then you may be responsible for 100% of the liabilities.

Questions for consortium partners

• Does each of the collaboration partners have compatible working cultures or similar business values?
• As part of developing the consortium have you set aside enough time to work through problems or issues?
• Have you reviewed your practices and discussed how things will work (i.e. if you win the contract)?
• Do you have to submit 'fit-for-purpose' documentation for all the partners? Are there any difficulties related to documentation (i.e. audited accounts, trading track record, business processes)?
• What contingency plans are in place for dealing with staff changes during the contract?
• What legal structure is your consortium going to take?
• How will you manage disagreements in the consortium? What are the governance arrangements of the consortium?
• How will you manage or allocate responsibilities/liabilities?
• Who owns the intellectual property rights?
• What are the implications if you end up in competition for other tenders?
• What processes are in place for shared learning?

Also consider...

• Find out where to search for tender opportunities.
• Learn more about analysing tender requests.
• Find out how to write a competitive bid.

Below are some of the main points, issues and topics you will need to address when creating a collaborative work agreement or a memorandum of understanding.

• objectives
• alignment of values and common goals
• structure/members
• management, contract and governance arrangements
• meetings
• fees
• confidentiality and intellectual property rights
• dispute resolution
• service delivery arrangements
• rights, obligations, warranties, liabilities
• notices, variations, termination.

Also consider...

• Find out where to search for tender opportunities.
• Learn more about analysing tender requests.
• Find out how to write a competitive bid.