Joint ventures in works tenders: how a JV qualifies and what each member shows

When a joint venture may bid at all

This is general information; confirm with the tender document and your adviser.

A joint venture is a way for firms that cannot qualify alone to qualify together, and it exists in a works tender only where the tender says it does. The Department of Expenditure's Works Manual introduces its joint-venture template in exactly that register: “in certain cases of high value works procurement, the Joint venture firms are allowed to participate. The procuring entity may seek for the following requirements preferably, for the JV firms to meet.”Department of Expenditure, Ministry of Finance

Read that verb twice, because everything below turns on it. The manual is guidance to the buyer about what it may ask for, “preferably”, not a rule about what a joint venture must be. Nothing on this page is a requirement anyone is under; all of it is vocabulary for reading the paragraph your own tender prints.

The portals treat a joint venture as an ordinary kind of bidder. Chhattisgarh's e-procurement FAQ lists the entities it registers as “Public Ltd., Private Ltd., Sole Proprietorship, Joint Venture, Consortium, Partnership, Others”, so enrolling as a joint venture or a consortium is a registration question, separate from whether a particular tender admits one.

The shape the template asks for

Where a department follows the manual, the JV clause describes an entity with a shape rather than a loose agreement between bidders. Annexure 13's own words: “Ideally, a Joint Venture (JV) should have no more than three members, but a maximum of five members can be allowed. Among the members, one must be the Lead Member, holding at least 51% of the interest in the JV. Other members should have a share of at least 20% each in JVs with up to three members or 10% each in JVs with more than three members. If there are foreign members in the JV, the Lead Member must be an Indian firm/company with a minimum share of 51%.”Department of Expenditure, Ministry of Finance

Four things sit inside that paragraph. There is a size: a preferred number of members and a ceiling. There is one lead member, identified by a share, not by seniority or by whose name goes first. There are floors for everyone else, and the floor moves with the size of the joint venture. And where any member is foreign, the lead member is Indian and its share is stated.

The template also has the joint venture carry a separate identity and name of its own, which is what makes the next section's paperwork possible.

Whose experience counts

This is the question a joint venture is usually formed to answer, and the manual's template answers it in one line for the technical criteria: “The technical eligibility criteria for the contract can be met either by the Joint Venture (JV) as a whole or by the Lead Member of the JV.”

Two routes, therefore, where the tender adopts that wording: the members' credentials read together, or the lead member's read alone. Neither is automatic. What the template suggests a non-lead member should show on its own account (a share of the project value, a similar project inside a stated period) is not quoted in the sources this page is built on, and is not stated here; the tender's own JV paragraph is what sets it.

The attributes themselves are the same ones any works bidder meets: annual turnover certified by a chartered accountant, similar completed or substantially completed works, and available bid capacity where the tender asks for it. How those clauses are counted, and the figures the manual attaches to each, are on similar work and annual turnover. What changes for a joint venture is not the test but whose figures are allowed into it, and that, again, is the tender's paragraph, since “any criteria not specified in the tender cannot be used for evaluation or qualification”.

The paperwork after award

A joint venture that wins has documents to produce, and the template gives them a deadline with a consequence attached: “All relevant documents, including the PAN, must be provided to the procuring entity before the contract agreement is signed. Failure to comply with this requirement within 60 (sixty) days of receiving the LoA may result in contract termination. If the contract is terminated, the procuring entity may forfeit the entire Bid Security/Earnest Money Deposit and other dues owed to the Contractor under the contract.”Department of Expenditure, Ministry of Finance

Three deadlines are stacked in those sentences and they are not the same deadline. The documents come before the contract agreement is signed. The window runs from the letter of award, not from the bid opening. And the consequence of missing it reaches both the contract and the earnest money, which is also the sum a winner would otherwise expect back once the performance security is furnished, as after you win sets out.

The document the buyer is being handed is an entity: a joint venture registered as a company, a partnership firm or a limited liability partnership, with its own permanent account number, in existence before the agreement is signed rather than promised in the bid.

What the JV agreement carries, and what is not established here

The agreement between the members is the instrument all of the above is proved from. On the strength of the template's own text, it has to be able to show at least three things: who the lead member is and what share it holds; what share each other member holds; and that the joint venture will be registered, with its documents produced, on the terms above.

Two questions bidders ask are not answered by the paragraphs quoted here, and guessing at them would be worse than saying so. What happens if the members' shares change after bids are submitted (whose consent is needed, and what the buyer may do about it) is not established by the lines this page is built on. Nor is the position of a member that leaves, or is replaced, between bid and award. Both are stated, where they are stated at all, in the tender's own JV clause and in the agreement counsel drafts.

Reading a JV clause in your own tender

The template is not the clause. What binds a bid is the paragraph in the instructions to bidders and the qualification section, and a bid that meets the manual but not the tender is still non-responsive: the model tender document's note on qualification criteria is blunt about the effect: “Bids/ bidders not meeting these Qualification criteria shall be rejected as nonresponsive”.

So the reading is narrow, and it happens before the bid is built rather than after. Does this tender admit a joint venture or a consortium at all? Does it name a lead member and a share? Does it say whose experience and whose turnover may be counted, and in what proportion? Does it set a date for the entity's registration and its documents? Where the clause is silent on one of them, the pre-bid stage is where the question belongs. How a question becomes a change, and what a change has to be published as, is on how a tender changes after it is published.

The rest of what a bidder holds before any of this matters is on before you can bid. Structuring a joint venture is a lawyer's and an accountant's work: this is general information; confirm with the tender document and your adviser.