Consortium Agreement

A consortium agreement is the legal backbone of any group bid in public procurement. While EU Directives give economic operators the right to bid as a group, they say almost nothing about how that group must organise itself internally. The consortium agreement fills that gap, defining how the members will work together, who leads, and how they will be accountable both to each other and to the contracting authority.

What is a consortium agreement?

Article 19 of Directive 2014/24/EU confirms that groups of economic operators, including temporary associations, may submit a tender or request to participate. Contracting authorities may not require such groups to have a specific legal form in order to submit a tender, though they may require a specific form once a contract is awarded if that is necessary for proper performance.

This means that in most European procurements, a consortium can bid and win without being incorporated as a legal entity. The consortium agreement is the document that structures the arrangement.

A well-drafted consortium agreement typically addresses:

Lead member designation. One member is identified as the lead partner with authority to sign the contract, issue invoices, and communicate with the contracting authority. This is essential: the authority needs a single interlocutor.

Work package allocation. A clear split of the scope of work between members, aligned with what was stated in the tender. Misalignment between the bid and the consortium agreement creates contract management risk.

Financial arrangements. How revenues are received and distributed. In most consortia, the lead member is paid by the authority and then disburses to other members according to the agreed allocation and payment schedule.

Joint and several liability. EU Directives permit (and some member states require) that consortium members are jointly and severally liable to the contracting authority. The consortium agreement should address how that external liability is shared internally among members.

Governance and decision-making. How decisions are made during performance, who has authority to agree contract variations, and what happens in a dispute between members.

Exit and substitution. What happens if a member becomes insolvent, wishes to withdraw, or must be replaced. This links directly to the subcontractor substitution rules if one member effectively becomes a subcontractor during performance.

Intellectual property. Who owns and retains rights to materials, software, or methodologies developed jointly under the contract.

Why it matters for bidders

Bidding in a consortium amplifies capability and increases win probability on large or complex contracts. But a poorly drafted consortium agreement transfers that strategic gain into operational risk. Disputes between consortium members over work allocation, payment, or decision-making are common and can damage contract performance and relationships with the contracting authority.

For the lead partner, the consortium agreement is especially important because it governs your exposure. You sign the main contract and are liable to the authority for all of it; your consortium agreement should give you corresponding rights against your partners if they underperform.

Example

Three companies, a German IT integrator, a Polish cybersecurity firm, and a Czech training provider, form a consortium to bid for an EU agency's digital services contract. They sign a consortium agreement appointing the German firm as lead, allocating 55% of work and revenue to the integrator, 30% to the cybersecurity firm, and 15% to the training provider. The agreement provides for joint and several liability to the authority and specifies that any variation to the work scope requires unanimous approval.

Frequently Asked Questions

Must a consortium agreement be submitted to the contracting authority?

The internal consortium agreement itself is usually not submitted. The authority typically requires a consortium declaration or letter confirming that the members are jointly and severally liable and identifying the lead member. The detailed internal governance terms remain confidential to the consortium members.

Can a consortium agreement be changed after contract award?

Yes, but changes that affect the parties performing the contract, or the allocation of key work, may require the contracting authority's consent. Substituting a consortium member is subject to the same approval process as subcontractor substitution.

Does every member need to meet the selection criteria?

No, as a general rule. The consortium as a whole must collectively meet the selection criteria. Members may pool their individual capabilities. However, the authority may specify that the lead member or the member performing a specific element must independently satisfy defined criteria.