Collective tendering and procurement

The problem

Public sector bodies and larger corporates that need to procure new services using some form of tender process are often keen to ensure that smaller businesses, social enterprises and cooperatives have a chance to bid and win. Procurements will often make it clear that bids from consortia are welcome and that innovation is encouraged.

And yet typical bidding processes act against these aims:

Smaller and social businesses acting alone do not have the resources to write winning bids, and often simply don’t qualify on matters such as turnover or accounting history.  Social enterprises and cooperatives find themselves unable to compete with the promises conjured up by bidding teams in large, profit-motivated corporates.

Consortium bids rarely succeed because the procuring authority is looking for a single lead that will take responsibility. Once identified, the lead ends up being treated as if it were the bidder and is required to meet the criteria by itself. An alternative approach using a consortium vehicle is complex, and is often viewed as high risk by the procuring authority.

Innovative ideas typically involve some challenge to the assumptions underpinning the procurement specification, so that innovative bids fall foul of the scoring mechanism or disqualify themselves. The only way to avoid this is to remove the innovation.

The impact

Contracts are awarded to larger bidders. Often this means less innovation. Opportunities to keep the benefits local are lost.

The solution - the Innovation Cooperative

The Innovation Cooperative is itself a single legal entity, able to enter into contracts, and with a growing record of past delivery.

Members are able to contribute to a shared solution.

The cooperative mediates the legal contract between an external procuring client and an internal ‘virtual’ consortium. It fulfils the role of consortium vehicle, but can be used again and again.

The relations between the participants, how risks and rewards are shared, is a matter of governance with the cooperative.

Procuring bodies can themselves join the cooperative and engage in collaborative innovation with members that is open and transparent, leading to improved, informed specifications.

The process is inherently open because membership criteria are not onerous, so anyone can take part.