Mo Farah and Jessica Ennis - and all of Team GB’s medallists come to that - did not succeed solely because of their individual talent. Of course it was vital, but to win the big prizes you need to collaborate with others: teammates, coaches, nutritionists, psychologists, even family. It’s a long list.
Social enterprises trying to win business need to learn from the Olympics and Paralympics.
In Surrey, a £25m health business tendered for what was essentially a £500m contract and lost. It probably did not lose on the basis of its quality of care, but simply because it was biting off more than it could chew. Collaboration and a team was needed. It is usually obvious when you need to collaborate but key examples include:
- Where ‘scaling up’ is needed such as in a bid situation, so you can compete with larger organisations
- Where sharing knowledge, best practice and creating innovative ways of providing the service is needed
- Where you can make best use of an existing good relationship between the parties to provide a better integrated service to clients
- Where sharing, compartmentalising risk and protecting the main organisation is important.
Once you know you have to collaborate, deciding who with can be difficult. But, if you have a good knowledge of the marketplace you tend to have some natural friends.
If you do, start discussing how you might work together as soon as possible so you are ready to take the opportunity when it arises.
Tendering these days is all about seizing the moment and scrubbing up well (and quickly) and we all know that is easier said than done.
Partners must be chosen carefully. You will be spending time with them, sharing information and potentially creating future conflicts of interest as well. You do not do this lightly. When you are in a team it helps if you get on. If the chemistry is there the desired outcome is more certain.
Corporate joint venture
If you find one or more organisations to work with there are two main options for structuring the collaboration: a corporate joint venture that involves setting up a new vehicle, or a contractual joint venture, where the parties work together through a contractual relationship without forming a new vehicle.
If a corporate structure is decided, social enterprises working together would often use a community interest company, a community benefit society, or a charitable company limited by guarantee.
These models all have benefits and disadvantages, but often, particularly when there is time pressure, the parties use a form they are familiar with.
But as the primary objective of many collaborations will be to win tenders/work, it is important to have a model that commissioners are familiar with and likely to favour.
For example, chief information commissioners with asset lock and community benefit objectives have been attractive to commissioners setting up contracts with social enterprises.
Contractual joint venture
The alternative is a contractual joint venture which is flexible and avoids the relative formality and permanency of a corporate structure.
It must be decided if all parties will enter the service contract as joint lead contractors, or whether one party will take the role of lead contractor and subcontract with the others. Generally commissioners will require one party to enter into the contract.
Under the Public Procurement Regulations 2006 the exclusion of consortium/partnership bids on the grounds that the partnership/consortium has not formed a legal entity for the purposes of tendering for or negotiating the contract is prohibited.
Therefore, the parties do not have to have set up a joint venture company to bid jointly for the services at the early stages but commissioners might require this on award.
However, bid submissions usually require partnership/consortium bidders to provide details of the relationship between the parties. A consortium agreement, memorandum of understanding or ‘shareholders’ agreement (or even a draft) will demonstrate to commissioners that the parties have a properly regulated relationship.
Whichever structure the parties decide to adopt, strong governance arrangements, good systems of communication, decision making and accountability are all essential components of a successful joint venture.
In any strong team, it has to be all for one and one for all. And don’t forget to focus on the terms of the legal documentation at the outset. It will help ensure you look at the right issues, understand what is happening, and have a robust contractual base for the joint venture to operate and succeed.
Chris Brophy, partner, Capsticks
- An exhaustive list of pros and cons of the different joint venture approaches can be found at LGCplus.com/5048070.blog