Joint Ventures and Subcontracting on Australian Tenders
When to bid as a joint venture, how JVs combine capacity and SME, and how mandatory subcontracting to designated groups works on larger government tenders.
Sometimes you cannot win a tender alone — you lack the Prequalification grade, the capacity, or the SME profile. Joint ventures and subcontracting are the two legitimate ways to bid bigger than your own balance sheet. Used well, they unlock contracts; used carelessly, they create disputes.
Joint ventures (JVs)
A JV is two or more firms bidding together under a signed JV agreement. JVs can combine capacity and, for construction, can allow partners to meet a higher Prequalification requirement together within the rules. A JV's business size classification is measured on a consolidated basis according to the codes, so the mix of partners matters for your non-price criteria. Put the split of work, risk, and payment in writing before you submit.
Mandatory subcontracting
For contracts above a threshold (commonly A$30 million), an organ of state may make it a condition that a portion of the work — often around 30% — is subcontracted to designated groups: for example SMEs or QSEs that are Indigenous-owned, black-women-owned, youth-owned or owned by people with disabilities. Where this applies, it is stated in the tender and you commit to it in your bid.
Pre-qualification criteria
Some tenders are pre-qualified: only bidders meeting a stated criterion (a minimum SME level, or a commitment to subcontract to a designated group) may bid at all. Read the pre-qualification conditions first — they decide whether you are even eligible.
Getting it right
- Sign a clear JV or subcontracting agreement before submission, not after award
- Check how the arrangement affects your consolidated SME and non-price criteria
- Make sure subcontractors are themselves ABN-registered and compliant
- Keep the commitments you made in the bid — they become contractual
Frequently asked questions
Can I bid on a tender with another company as a joint venture?+
Yes. A joint venture lets two or more firms bid together under a signed JV agreement, combining capacity and (for construction) helping meet higher Prequalification requirements within the rules. The JV's SME is measured on a consolidated basis.
What is mandatory subcontracting on a tender?+
On larger contracts (often above A$30 million) a buyer may require that a portion — commonly around 30% — be subcontracted to designated groups such as Indigenous-owned SMEs or QSEs. It is stated in the tender and committed to in your bid.
What is a pre-qualification criterion?+
A condition that limits who may bid at all — for example a minimum SME level or a commitment to subcontract to a designated group. If you do not meet it, your bid is not considered, so check it first.
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