Consortia and subcontracting

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Contracts can seem too large for some smaller providers. If you can’t successfully lobby for smaller sized contracts and you still want to tender for the contract, you will need to consider methods of scaling up. This might be through investment or some form of partnership with other providers.

You may be able to feed into another organisations bid as a sub-contractor.

Alternatively you may want to partner with one or more other organisations. Partnerships can be hard to get right and take time and money, but they can be beneficial.

Consortia

The two main models for larger consortia partnerships:

• the formation of a new corporate structure - this has the advantage of all organisations having an equal say in the company but the potential disadvantage that the new company will have no accounts and no financial or business record (eg in the delivery of public service delivery contracts). It will therefore be seen as very risky in the tender appraisal.
• the Lead Contractor model, whereby one of the consortium members takes the lead in the negotiations with the commissioner. Under this model, the nature of the relationships between the other consortium members and the Lead Contractor, and their respective liabilities, needs to be clearly defined.

There will almost certainly be a need to get legal advice on the working arrangements for the consortium, but there are funds available such as the Consortia Fund run by Futurebuilders England to help with these kinds of costs.

More generally, the Office of the Third Sector’s guide to ‘Working in a Consortium’ provides helpful advice.

Sub-contracting

If an organisation bidding for a contract has a gap in the range of services it can offer to meet a particular specification, then sub-contracting part of the service to a specialist organisation could be a way of addressing this.

Sub-contracting can provide an opportunity for smaller organisations to become involved in a contract. They can provide access to particular communities or to people in a particular client group or they can offer particular skills eg counselling, brokerage or training. They, in turn, can also benefit from the experience of the larger/national organisation in tendering and in managing contracts.

Some organisations are wary of this approach, because of the danger that the main contractor will ‘cream off’ most of the money in the form of a management charge. However, sub-contractors are often in a potentially strong negotiating position to combat this, because their involvement could be the deciding factor in determining whether the contract is won or lost.

Case studies

Bassac has examples of collaboration and consortia.

Have your say

Have you worked in a consortium or been involved in sub-contracting?

Share your experiences on our Commissioning and procurement forum.