What does bidding consortium mean?
A bidding consortium (Bietergemeinschaft, also called an applicant consortium or Bewerbergemeinschaft in the participation phase) is a temporary association of two or more legally independent companies that submit a joint bid in a public tender. Forming a bidding consortium lets companies pool their skills, capacities and references to meet suitability requirements that a single company could not meet on its own.
The members of a bidding consortium are usually jointly and severally liable to the contracting authority, which means each partner is responsible for performing the entire contract. The bidding consortium must appoint an authorized representative who handles communication with the contracting authority and can make legally binding declarations. The internal division of tasks and each partner's share of the work usually have to be set out in the bid already.
The admissibility of bidding consortia follows from the procurement law principle of open competition. The contracting authority may not exclude bidding consortia as a matter of principle, but it can set certain organizational requirements. Under antitrust law, forming a bidding consortium is unproblematic as long as the participating companies could not each perform the contract on their own, because otherwise there may be a suspicion of an agreement that restricts competition.
Relevance for bidders
For small and medium-sized companies, bidding consortia offer the chance to take part in tenders that exceed their individual capacities. This is especially relevant for large contracts with high requirements for turnover, headcount or references. However, working together in a bidding consortium requires careful coordination among the partners, especially regarding pricing, the division of tasks and liability arrangements.
Bidders should note that membership in a bidding consortium usually rules out a simultaneous individual application or participation in another bidding consortium in the same procedure, because this could distort competition. In addition, the bidding consortium declaration is often a formal mandatory document, and if it is missing, this can lead to exclusion.
Legal framework
The admissibility of bidding consortia follows from Section 43(2) VgV (Public Procurement Ordinance) and Section 42(1) UVgO (Sub-Threshold Procurement Rules). The contracting authority can require the bidding consortium to adopt a certain legal form if it wins the contract, where this is necessary for performing the contract. Admissibility under antitrust law is assessed under Sections 1 and 2 GWB (German Act against Restraints of Competition). Joint and several liability is usually agreed in the bidding consortium declaration.