Joint Ventures and Teaming Agreements for Government Tenders

Joint Ventures and Teaming Agreements for Government Tenders

Some government tenders are too large, too complex, or too geographically dispersed for any single business to handle alone. Others require a combination of skills that no individual firm possesses. In these situations, partnering with another business through a joint venture, teaming agreement, or consortium can transform an opportunity you’d have to pass on into one you can credibly compete for.

Partnering arrangements are common in Australian government procurement, particularly in construction, defence, IT, and professional services. But getting the structure wrong — legally, commercially, or in how you present the arrangement in your tender response — can cost you the contract or create serious problems if you win it.

This guide covers when to team up, how to choose the right structure, and how to present a partnering arrangement that evaluators will view favourably.

When to Team vs Go Solo

Consider partnering when:

• The tender requires capabilities you don’t have — For example, a digital transformation contract requiring both software development and change management. If you’re strong on one but not the other, a partner fills the gap
• The scale exceeds your capacity — A national rollout when you only operate in two states, or a contract value that would represent too large a concentration risk for your business
• The tender mandates geographic coverage — Many federal contracts require service delivery across multiple states and territories
• Evaluation criteria favour breadth — When the tender scores demonstrated experience across multiple disciplines, a team with diverse track records scores higher
• The tender requires security clearances or accreditations you lack — Partnering with a cleared firm can be faster than obtaining your own clearances
• Indigenous procurement targets apply — Partnering with an Indigenous business can help meet mandatory requirements under the Indigenous Procurement Policy

Go solo when:

• You genuinely have the capability and capacity to deliver
• The contract is small enough that splitting it makes both parties’ shares uneconomical
• You can’t find a partner whose values, quality standards, and work practices align with yours
• The evaluation criteria don’t reward breadth or scale beyond what you already offer

Types of Partnering Arrangements

Teaming Agreement

The most common and flexible arrangement. A teaming agreement is a contract between two or more businesses to collaborate on a specific tender or group of tenders. Key features:

• One party is usually the lead or prime contractor and holds the contract with government
• The other party (or parties) are subcontractors to the prime
• Each party retains its own separate legal identity
• The arrangement is usually specific to one tender or contract rather than permanent
• Lower setup cost and complexity than a joint venture

Teaming agreements are the right choice for most government tender partnerships. They’re quick to establish, well understood by government evaluators, and don’t require creating a new legal entity.

Joint Venture (JV)

A more formal arrangement where two or more businesses create a shared venture to bid on and deliver a contract. Joint ventures can be:

• Incorporated JV — A new company is created, jointly owned by the JV partners. This is a separate legal entity that contracts with government in its own name
• Unincorporated JV — The partners agree to work together and share risk/reward but don’t create a new entity. They contract with government jointly, with each partner jointly and severally liable

Joint ventures are typically used for:

• Very large, long-term contracts (major infrastructure, defence platforms)
• Situations where the government requires a single contracting entity
• Partnerships where both parties need to share profit and risk equally rather than operating in a prime/subcontractor hierarchy

The downside is complexity. JVs require more legal setup, governance structures, and ongoing management overhead.

Consortium

Similar to an unincorporated JV but often even more loosely structured. A consortium is a group of businesses that agree to bid together, usually with one designated as the lead. Consortia are common for:

• Professional services panels where the government wants breadth of expertise
• Major projects where multiple specialist firms combine
• Research and advisory contracts

Subcontracting

Technically not a partnership but worth mentioning. In a straightforward subcontracting arrangement, the prime contractor wins the government contract and engages a subcontractor to deliver a portion of the work. The subcontractor has no direct relationship with the government client.

Subcontracting is simplest to implement but gives the subcontractor the least control and visibility.

Legal Structures and Implications

The legal structure you choose has real consequences:

Liability

• Teaming agreement — The prime contractor bears primary liability to government. The subcontractor’s liability is defined by the subcontract
• Incorporated JV — The JV entity bears liability. Partners’ exposure is typically limited to their investment in the JV, depending on the corporate structure
• Unincorporated JV — Partners are jointly and severally liable. This means the government can pursue any partner for the full value of any liability, not just their proportional share. This is the highest-risk structure

Intellectual Property

Government contracts often include IP provisions. Your partnering agreement must address:

• Who owns IP created during the contract
• What background IP each party brings and what licence rights are granted
• What happens to IP if the partnership dissolves

Insurance

Government tenders specify minimum insurance levels. In a partnering arrangement:

• The prime contractor usually needs to hold the full insurance coverage
• Subcontractors need their own policies that meet any flow-down requirements
• JV entities may need separate insurance policies

Dispute Resolution

Every partnering agreement needs a clear dispute resolution mechanism. Government contracts don’t stop because partners disagree. Include:

• Escalation procedures (project managers → executives → mediation)
• Deadlock-breaking mechanisms
• Exit provisions if the relationship becomes unworkable

How to Present a JV or Teaming Arrangement in a Tender Response

Government evaluators scrutinise partnering arrangements carefully. They need to be confident that the team will function effectively, that responsibilities are clear, and that the arrangement won’t create delivery risks. Here’s how to present it well:

Clearly Define Roles and Responsibilities

Map each partner’s role against the tender’s scope of work. Use a responsibility matrix (RACI chart) showing who is Responsible, Accountable, Consulted, and Informed for each deliverable.

Avoid vague statements like “both parties will collaborate on delivery.” Evaluators want specifics: Partner A provides software development, Partner B provides change management, Partner A’s project manager leads delivery, Partner B’s consultant leads stakeholder engagement.

Explain the Governance Structure

Describe how the partnership will be managed:

• Joint steering committee with representatives from both partners
• Reporting lines between partners and to the government client
• Decision-making authority — who can make binding decisions on behalf of the team
• Escalation procedures for issues that can’t be resolved at project level

Demonstrate That You’ve Worked Together Before

If you have prior experience delivering projects together, highlight it. If this is a new partnership, explain why you selected this partner and describe any joint planning or workshops you’ve conducted in preparing the bid.

Address Risks Proactively

Evaluators know that partnerships create coordination risks. Address them head-on:

• How will you manage quality consistency across both organisations?
• What happens if one partner experiences resourcing issues?
• How will you handle disagreements about approach?
• What are the contingency plans if one partner cannot continue?

Provide a Single Point of Contact

Government clients do not want to manage multiple relationships. Nominate one partner as the primary contact and contract holder, with clear communication protocols for the client.

Indigenous Joint Ventures Under the IPP

The Indigenous Procurement Policy (IPP) creates specific incentives and requirements for partnering with Indigenous businesses:

• Contracts under the IPP mandatory set-aside threshold can be awarded to Indigenous enterprises, including joint ventures where an Indigenous business holds at least 25% equity
• Some tenders are set aside exclusively for Indigenous businesses or joint ventures with significant Indigenous participation
• The IPP recognises Supply Nation certified businesses and their joint venture arrangements
• In some contract categories, agencies must consider Indigenous businesses or JVs first before going to open market

For non-Indigenous businesses, forming a genuine joint venture with an Indigenous firm can open access to set-aside contracts while also contributing to Indigenous economic development. The key word is “genuine” — the partnership must involve real capability transfer and meaningful Indigenous participation, not just a name on paper.

Requirements for an IPP-Compliant JV

• The Indigenous partner must hold a minimum equity share (typically 25% for JV recognition under the IPP)
• The Indigenous partner must have genuine involvement in management and delivery, not just a passive equity stake
• The JV should demonstrate a capability development plan that builds the Indigenous partner’s capacity over time
• Supply Nation certification of the Indigenous partner is typically required

Risk Allocation Between Partners

How you allocate risk between partners is one of the most important negotiations. Key principles:

• Risk should sit with the party best placed to manage it — If Partner A is responsible for software delivery, Partner A should bear the risk of software defects
• Shared risks need shared management — For risks that affect both parties (e.g., client scope changes), agree upfront how costs and effort will be shared
• Don’t leave risk unallocated — Every identified risk should have a clear owner
• Flow down government contract terms — The prime contractor’s obligations to government must be reflected in the subcontract or JV agreement. If the government contract requires 24/7 support, the subcontractor agreement must include the same obligation

Common Areas for Risk Allocation

Practical Steps to Form a Teaming Arrangement

1. Identify the capability gap — What does the tender require that you can’t provide alone?
2. Search for partners — Industry networks, Supply Nation, subcontractor databases, ICN Gateway, and your professional networks
3. Assess cultural fit — Similar quality standards, compatible work practices, aligned values. A capability match with a culture mismatch rarely works
4. Sign a non-disclosure agreement — Before sharing detailed capability information or pricing
5. Negotiate the teaming agreement — Cover scope split, pricing, risk allocation, IP, confidentiality, and exit provisions
6. Develop the bid together — Both parties should contribute to the tender response, not just the lead partner
7. Agree on pricing — The lead partner needs to understand costs from both parties to build a competitive total price
8. Submit under the lead partner’s name — With the teaming arrangement clearly described in the response

Key Contract Terms to Negotiate

Before signing any partnering agreement, ensure these terms are clearly addressed:

• Exclusivity — Is either party prevented from bidding on the same tender with a different partner?
• Termination provisions — Under what circumstances can either party exit, and what happens to the bid or contract?
• Non-solicitation — Restrictions on hiring each other’s staff
• Confidentiality — How commercially sensitive information is protected during and after the arrangement
• Pricing and payment — How the total contract value is split, when subcontractors are paid, and what happens if the government client pays late
• Variation management — How scope changes from the government client are allocated between partners
• Contract extension — If the government exercises extension options, does the partnering agreement automatically extend?
• Performance management — How underperformance by either party is addressed

Getting Legal Advice

Partnering arrangements involve binding legal commitments. While this guide covers the key considerations, the specific terms of your agreement should be reviewed by a lawyer experienced in government contracting. The cost of legal advice upfront is trivial compared to the cost of a partnership dispute during contract delivery.

For a broader guide to winning government tenders, including how to structure your response and address evaluation criteria, see our step-by-step walkthrough.

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