Joint Venture Arrangement

A joint venture arrangement is an association of two or more parties that combine money, property, knowledge, skills, time or other resources in a joint business enterprise. The parties agree to share profits and losses, and each retains some degree of control over the enterprise. This is the definition used in a Canadian government invitation to tender on CanadaBuys.

In procurement, the term describes two or more businesses that bid or perform together as a single commercial enterprise. A federal request for proposals also describes a joint venture as an association, sometimes called a consortium, formed to bid together. The label matters because solicitations attach specific identification, signature and bidding rules to it.

How a joint venture differs from a prime contractor with subcontractors

Canadian solicitations separate a joint venture from an ordinary subcontracting structure. Where Canada contracts directly with a prime contractor that retains subcontractors, the tender document states that this is not a joint venture arrangement. The prime contractor holds the contract and the subcontractors work under it.

A joint venture is different in kind. The members pool resources, share profits and losses, and keep some control over the enterprise. That shared risk and shared control is what the definition turns on, not simply the fact that more than one company is involved in the work.

Where joint ventures appear in Canadian federal procurement

Joint ventures show up across several federal buying channels:

• Tenders and requests for proposals: bidders on CanadaBuys may propose a joint venture and must keep it distinct from a prime and subcontractor arrangement.
• Professional services supply arrangements: CanadaBuys contract history records an award under the ProServices Supply Arrangement to Symbiotic Group Inc. and Akkodis Canada Inc., in joint venture. It also records a Task-Based Supply Arrangement award to MapleStream Inc. and Cofomo Inc., in joint venture, following a competitive request for supply arrangement.
• Standing offers and supply arrangements: government procurement records identify joint-venture suppliers, including under Temporary Help Services.
• Departmental contracts: an Open Government record lists CANADRILL-CBCL JOINT VENTURE as the vendor on a Fisheries and Oceans Canada standing offer or supply arrangement agreement.

What a joint venture bid must include

The federal solicitation cited above sets out the following requirements for joint-venture bidders:

• Clearly identify that the bid is submitted by a joint venture.
• Provide the name of each joint-venture member and each member's Procurement Business Number.
• Provide the name of the joint-venture representative, if one member has been appointed to act for the others, and the joint-venture name if applicable.
• Have the proposal and any resulting contract signed by all joint-venture members, unless one member has authority to act for all members.
• Observe limits on multiple bids, since a restriction can apply to every person or entity participating in the joint venture.

A separate tender document adds that bidders must comply with the provincial or territorial law governing joint ventures in the jurisdiction where the project is located.

An allied defence example

The term is also used for formal industrial arrangements in allied defence work. The United Kingdom's Defence Electronics and Components Agency reported a joint venture with BAE Systems and Northrop Grumman, incorporated as Sealand Support Services Limited. It provides maintenance, repair, overhaul, upgrade and sustainment services for F-35 components, as described in the agency's corporate plan.

What it means for a supplier bidding on Canadian public contracts

If you plan to bid with another firm, decide first whether the relationship is a joint venture or a prime and subcontractor arrangement, because solicitations treat them differently. If it is a joint venture, collect each member's legal name and Procurement Business Number early, agree on whether one member will act as representative, and settle who signs. Check the multiple-bid rules before any member bids separately, and confirm the provincial or territorial law that applies to the project location.