Joint Venture Agreement Guide for Government Tenders
A joint venture (JV) agreement is the legal foundation of any JV tender submission. Without a properly drafted agreement, your JV bid may be disqualified, and disputes between partners can destroy both the project and the businesses involved. This guide explains what every JV agreement for government tenders must contain.
Essential Clauses in a JV Agreement for Tenders
Government evaluators reviewing JV bids will look for evidence of a properly constituted JV with clear roles and responsibilities. Your JV agreement must be in place before the bid submission date and must be attached to your bid documents.
- Names, registration numbers, and physical addresses of all JV parties
- Purpose of the JV: specific tender reference and project description
- Participation shares: percentage ownership and profit/loss allocation for each party
- Lead partner designation: who has authority to sign bid documents and receive payments
- Joint bank account arrangements for project cash flows
- Powers of attorney: who can sign contracts, draw cheques, and make decisions
- BBBEE compliance arrangements and combined BBBEE certificate provisions
- Roles and responsibilities of each partner (what work they are doing)
- Dispute resolution mechanism (mediation, arbitration, or court)
- Exit provisions: what happens if a partner withdraws or becomes insolvent
- Duration: the JV exists for the duration of the specific project only
Legal Structure: Registered vs Unregistered JV
JVs for government tenders can be structured as an unregistered contractual JV (most common for construction) or as a registered entity (Pty Ltd or partnership). The choice depends on the nature of the project, tax implications, and risk preference.
Unregistered JVs are simpler and faster to establish. Each party is jointly and severally liable for JV obligations. This means government can pursue any JV party for the full contract value if things go wrong — not just their participation share.
Registered Pty Ltd JVs offer limited liability but require CIPC registration, bank account setup, and ongoing compliance. They are more appropriate for long-term or recurring JV arrangements.
BBBEE Implications of JV Structures
JV BBBEE scoring is calculated as a weighted average of each party's BBBEE level, weighted by their participation share. For example, a 60% partner with Level 2 BBBEE and a 40% partner with Level 4 BBBEE will result in a combined BBBEE score between Level 2 and Level 4.
You must obtain a combined JV BBBEE certificate from a SANAS-accredited verification agency. This certificate is based on the participation shares and individual certificates of each party. Allow at least 10–15 working days to obtain a JV certificate.
The flow-through principle means the BBBEE ownership score is determined by looking through the JV to the underlying ownership of each party. Fronting (misrepresenting BBBEE ownership) is a criminal offence under the BBBEE Amendment Act.
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Frequently Asked Questions
Does a JV agreement need to be notarised?
For most government tenders, a notarised JV agreement is not required. However, it must be signed by authorised representatives of all parties and preferably witnessed. Some high-value tenders or financial institutions (for banking facilities) may require notarisation.
Can one party in a JV bid on the same tender individually?
Generally no — bidding on the same tender both as part of a JV and individually is a conflict that most procuring institutions will treat as an anti-competitive practice. Check the specific tender conditions. SBD9 (anti-collusion declaration) may prohibit this arrangement.
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