Joint Bidding Consortium

A joint bidding consortium (in German: Bietergemeinschaft, colloquially also ARGE for Arbeitsgemeinschaft) is an alliance of two or more legally independent companies that submit one bid on a public tender together. In the procurement procedure they act as a single bidder, even though they consist of several partners. If the consortium wins the contract award, the members perform the contract jointly – in the construction sector the consortium often becomes a working group (ARGE) after award.

The economic rationale is obvious: a consortium allows companies to pool competencies, capacities and references. A company that cannot meet the required eligibility criteria – such as minimum turnover, references or staffing – on its own can demonstrate them jointly with partners. For small and medium-sized enterprises in particular this is an important instrument to take part in large contracts that would be unreachable alone. Complementary specialisms (e.g. civil engineering plus electrical engineering) or regional coverage can be combined the same way.

Every consortium must designate a lead partner (authorised representative). This partner is the central point of contact for the contracting authority, coordinates the bid submission, receives legally effective declarations and represents all members externally. Internally the partners remain equal; externally the lead partner acts for the consortium.

Drawing the line to related constructions is important. A consortium is not the same as a general contractor, who acts as the sole contracting party and subcontracts partial services to subcontractors. It is also not the same as reliance on third-party capabilities, where only one bidder appears and the third party stays legally in the background. In a consortium, by contrast, all members are equal bidders and later joint contracting parties of the authority.

Liability is decisive too: the members of a consortium are jointly and severally liable to the public contracting authority. This means the authority can demand full performance from each individual member – regardless of which share that member assumed internally. The internal allocation of risk and remuneration is governed by a separate consortium agreement.

The joint bidding consortium is expressly recognised in German procurement law and secured across several regulatory levels.

Legal form: GbR. A consortium is legally a civil-law partnership (Gesellschaft bürgerlichen Rechts, GbR) under §§ 705 ff. BGB. It arises from the common purpose of submitting a bid and – if successful – performing the contract. No separate registration or minimum capital is required; the consortium agreement of the partners is what matters.

§ 43 VgV – equal treatment. § 43 VgV (legal form of enterprises and consortia) is the central provision above the EU thresholds for supplies and services. Under § 43 (2) VgV, consortia must be treated like single bidders; the contracting authority may not require the consortium to adopt a specific legal form merely to submit a bid. Only after the contract award may the authority require a specific legal form under § 43 (3) VgV, provided this is necessary for proper contract performance.

Other procurement rules. For works contracts above the EU thresholds, § 6 EU VOB/A contains a parallel equal-treatment rule. For pure below-threshold procurement of supplies and services, § 32 (2) UVgO applies. Below the thresholds, § 6 VOB/A treats consortia equally to single bidders insofar as they perform the work in their own business or that of their members.

Joint and several liability. The GbR structure entails joint and several liability of the members towards the contracting authority. Authorities regularly require an express declaration of joint and several liability as part of the bid.

Cartel-law limit: § 1 GWB. A consortium must not serve to restrict competition. Under § 1 GWB, agreements that prevent, restrict or distort competition are prohibited. Case law (including the Federal Court of Justice and the Düsseldorf Higher Regional Court) holds that consortia are generally permissible and only exceptionally impermissible. A consortium is unproblematic under cartel law if the participating companies could not submit a competitive bid alone, their capacities are otherwise committed, or only the alliance enables a promising bid when viewed as an economically reasonable decision. If two capable competitors who could each bid alone pool their bids, this may constitute an impermissible restraint of competition – resulting in exclusion. The authority must assess the cartel-law admissibility case by case.

Lot-based tendering. In tenders heavily divided into specialist lots, a consortium is an alternative to bidding on individual lots – it enables one overall bid despite missing individual capacity.

A municipality tenders the construction of a new school with an estimated value of €12 million across the EU. As eligibility criteria, the authority requires three comparable school-construction references from the past five years plus an average annual turnover of at least €20 million.

A mid-sized construction company with €15 million annual turnover cannot meet the turnover requirement alone and has only two suitable references. It decides to form a joint bidding consortium with a partner company specialising in building services. The process:

1. Partner choice and scope split. The construction company takes the shell and interior works, the partner the technical building equipment. The shares are clearly defined.
2. Consortium agreement. Both sign an internal agreement covering shares, lead partner, liability balancing and profit distribution.
3. Lead partner. The construction company becomes the authorised representative and communicates with the authority.
4. Eligibility evidence. The references of both partners are submitted and the turnovers added (€35 million), clearly exceeding the threshold. Each partner submits its own self-declaration on exclusion grounds.
5. Joint-and-several-liability declaration. Both declare joint and several liability to the municipality.

The authority assesses cartel-law admissibility – since the mid-sized company could not have bid alone, the consortium is unproblematic. It wins the award and performs the contract as an ARGE. With Patterno, you systematically find tenders where a consortium is strategically worthwhile – including the required eligibility criteria, so you can decide early on the right bidding constellation.

The consortium is a powerful but error-prone instrument. Typical pitfalls:

• Forming too late. Searching for partners just before the deadline leaves no time for a clean consortium agreement. Start the partner search as soon as you identify a suitable tender.
• Missing individual declarations. Each member must submit its own self-declaration on exclusion grounds. A single declaration by the lead partner is not enough and regularly leads to a request for clarification or exclusion.
• Unclear scope split. If it is not clearly defined which partner performs which share, you risk disputes during execution and contradictions in the bid that are evaluated negatively.
• Cartel-law problems. If two companies that could each bid on their own join forces, this may be treated as a restraint of competition under § 1 GWB – resulting in exclusion. Document why the alliance is necessary.
• Underestimated liability. Many partners overlook joint and several liability: if one partner fails, the other is liable for the full performance. Protect yourself through internal liability balancing.
• Confusion with reliance or subcontracting. A consortium is neither the use of subcontractors nor reliance on third-party capabilities. Misclassification leads to wrong declarations in the bid.

Those who set up a consortium professionally increase their chances of success and minimise the risk of exclusion:

• Choose partners early and deliberately. Identify partners whose competencies precisely fill your gaps – technically, in capacity or regionally. Check their eligibility and creditworthiness as carefully as your own.
• Make the consortium agreement written and complete. Cover at least: name and address of all partners, lead partner, scope shares, joint and several liability towards the authority plus internal liability balancing, profit/loss distribution, decision processes and rules for a partner leaving.
• Authorise the lead partner clearly. Equip the authorised representative with an unambiguous power of attorney so that all declarations towards the authority are legally effective.
• Pool eligibility evidence cleanly. Clarify early which references and turnovers may be added and which evidence each partner must provide individually. Have each member submit its own self-declaration.
• Document cartel-law admissibility. Keep a traceable record of why the alliance is necessary (missing own capacity, committed resources, economically reasonable decision). This protects against the accusation of restraint of competition.
• Check the alternative. Weigh whether reliance on third-party capabilities or the use of subcontractors is more suitable than a consortium if you want to keep the lead alone. Patterno Hit filters more than 180 portals for matching tenders and shows early where a consortium is the right strategy.