Joint ventures and subcontracting (Senegal)

A contract looks too big for you, or it asks for a skill you do not have. There are two ways forward: bid together with another firm in a joint venture, or hand part of the work to a subcontractor. They do not commit you in the same way. Chosen badly, they can make you answerable for someone else's faults, or get the bid rejected.

Which one to choose

	Joint venture	Subcontracting
Who signs with the buyer	All members, or the lead member for them	You alone
Who answers to the buyer	Depends on the form of the joint venture	You, for the whole contract
Counts towards your capacity	Often, depending on the tender file	Only if the tender file allows it
Sharing the price	Under your agreement	Under your subcontract
Fits when	You lack turnover, references or a large part of the skills	You lack one specific, limited task

A simple rule helps you choose. If the other firm is needed to meet the qualification criteria, a joint venture is the safer route. If you meet the criteria alone and only lack a specific skill, such as the electrical work in a building, subcontracting is enough.

Joint and several, or separate

A joint venture (groupement d'entreprises) is an association of several firms for a given bid. It usually takes one of two forms:

Joint and several (solidaire). Each member answers for the whole contract. If your partner disappears or does poor work, the buyer can ask you to finish everything and pay for everything.
Separate liability (conjoint). Each member answers for its own share, as defined in the bid. The lead member is often also required to answer for the others.

For a small firm the difference is huge. Being jointly liable with a partner you barely know, on a contract several times your turnover, can put your company at risk. Many files, especially on funder-financed contracts, require the joint and several form. Check which applies before you agree, and have the agreement reviewed by an adviser if the amount is large.

The lead member

The lead member (mandataire, or chef de file) represents the joint venture before the buyer. It files the bid, receives letters, signs documents for the others if they have given it authority, and usually receives the payments.

Each member gives it this authority in a document signed by a person empowered to commit the firm. The file often provides the form, and the signature sometimes has to be legally certified. A joint venture bid without this authority, or with one signed by the wrong person, can be rejected.

Choose as lead the firm with the largest share of the contract, the strongest finances and the fastest replies. If that is you, count the coordination time in your price.

How capacity adds up

This is the point that justifies most joint ventures. In general, members' capacities add up towards the criteria, but not all of them and not without conditions. The file may, for example:

add up the turnover of all members;
require a minimum share of each criterion to be met by the lead member;
require each member to reach a threshold on its own;
require a similar experience to be held by one member, with no adding up.

Read these rules in the qualification criteria before you contact a partner. You will then know exactly what they need to bring.

What each member must supply

Each member usually supplies its own administrative documents, up to date on the deadline: tax and social security certificates, company registration, non-bankruptcy certificate and the rest of the list. A single expired document from the smallest partner can bring down the whole bid. Name one person to check everyone's dates.

The bid security must cover the joint venture, and its wording must name the group or its members as the file requires. A security in the name of one member alone is a classic cause of rejection.

One firm, one bid

A firm can generally appear in only one bid for the same contract or lot: alone or in a joint venture, not both. If it appears twice, all the bids concerned can be rejected, sometimes on suspicion of collusion. Ask your partners plainly whether they are already on another bid, and write it into your agreement. A subcontractor may sometimes appear in several bids: the file says so.

The rule in Senegal

Candidates may form a joint-and-several joint venture (each member bound for the whole) or a separate one (each for its own part). An individual candidate cannot also be a joint-venture member, and a member can join only one venture: otherwise all the ventures involved are disqualified. The composition is fixed except for a company restructuring or a member's inability, with the authority's agreement (art. 47).[1]
Subcontracting: up to 40% of the amount of a works or services contract, with priority to Senegalese or community SMEs. Approval of the subcontractor and its payment terms are requested in the bid, or after the contract is concluded by a special statement delivered against receipt. An approved subcontractor can be paid directly by the authority and can pledge its claim (art. 48, 49, 110, 111).[1]

Subcontracting

A subcontractor works for you, and you alone stay responsible to the buyer. If they do poor work, it is your contract that is in question.

Limits. The rules may cap the share you can subcontract, or forbid subcontracting certain essential tasks. The contract holder cannot be a mere letterbox.
Declaration. Major subcontractors generally have to be declared in the bid or accepted by the buyer before they start. Using an undeclared subcontractor can be a breach of contract.
Direct payment. Some systems allow or require the buyer to pay the subcontractor directly for their share. Where this does not exist, your subcontractor waits until you are paid. Tell them clearly, and provide for it in your subcontract.
Local content. Some files give an advantage, or set an obligation, for using local firms or local labour. Read these clauses: they can change your choice of subcontractor.

If the file lets you count a subcontractor's experience in your capacity, attach their proof as if it were your own.

The agreement to sign before you bid

Never bid on a verbal promise. A short agreement signed before submission prevents many disputes. It should at least cover the following.

The contract and the lot
The notice reference, the lot and how long the agreement lasts. Also say what happens to it if the bid does not win.
The form and the lead member
Joint and several or separate, who the lead member is and how far its signing authority goes.
Sharing the work and the price
Who does what, for what amount or share. How profits are split, but also losses and penalties.
The money
Who obtains and pays for the guarantees, who advances funds, which account receives the payments and how quickly they are passed on.
Documents and dates
Who supplies which document and by what internal date, ahead of the deadline. Who assembles and checks the whole.
Exclusivity
The commitment not to appear on a competing bid for this contract.
Disputes and a member leaving
What happens if a member withdraws, defaults or goes bankrupt, and how you settle a disagreement.

For subcontractors the same exercise applies, plus the payment periods and the penalties you pass on to them. For a large amount, have the agreement reviewed by a lawyer.

Joint ventures and subcontracting