Why are consortiums and subcontracting so common in NATO bids?
The largest projects run by NATO organisations such as NSPA and NCIA are often so broad in scope and requirements that no single company can cover the entire need alone. A tender may simultaneously call for hardware, software development, integration, training and long-term support across multiple countries. As a result, consortiums, where several companies combine their expertise into one joint bid, and subcontracting chains, where a prime contractor assembles a network of specialised suppliers, are the norm rather than the exception.
For a small or mid-size Finnish company, a consortium or subcontracting role is also often the most sensible way to start NATO business. It reduces risk, since contractual liability and administrative burden are shared, and allows the company to focus on its core expertise without having to build the capability to manage an entire project from day one.
When should a company pursue the prime contractor role?
Taking on the prime, or lead contractor, role makes sense when a company has a strong, documented track record with comparable projects, sufficient financial capacity to cover the contract's cash flow and guarantees, and the ability to manage a network of subcontractors both contractually and technically. The prime is generally responsible to the customer for the quality, schedule and contractual performance of the entire delivery, regardless of where in the chain a problem originated.
If a company's offering covers only a narrow, though important, part of a project, aiming for the prime role may be overreaching. It is worth honestly assessing whether the company can carry the full contractual risk of the project, or whether positioning itself as a specialised partner is the more realistic and profitable choice for its first NATO projects.
When is a subcontractor or consortium partner role the better choice?
A subcontractor or consortium partner role suits a company with a clear, specialised area of expertise but not yet an extensive track record of leading large international projects. This role provides access to NATO projects without the company bearing the full financial and legal responsibility directly to the customer.
Acting as a partner is also a good way to build up references and learn the practicalities of NATO procurement. Many companies that later act as prime contractors first built their expertise and credibility by working as a subcontractor or consortium member on larger projects.
How do you find a suitable prime contractor or consortium partner?
Finding a suitable prime or consortium partner requires active and sustained networking. Effective channels include industry trade fairs and seminars, national defence industry associations, supplier days organised by NATO and member states' defence administrations, and existing supplier registers and networks where companies can showcase their capabilities.
- attending defence and security industry trade fairs and networking events
- maintaining visibility in national and NATO supplier registers and company profiles
- reaching out directly to companies that have previously won comparable projects
- working through national defence industry associations and export networks
- presenting your specialised expertise and references clearly and concisely to prospective partners
What is a teaming agreement and why is it needed?
A teaming agreement is a contract between two or more companies that sets out how they will cooperate on a specific bid before the contract itself has even been won. It typically defines each party's role in preparing the bid, how preparation costs are shared, whether the arrangement is exclusive to that particular competition, and what happens if the bid is won or lost.
Without a clear teaming agreement, cooperation often rests on vague verbal understandings, which can lead to disputes over who is responsible for which part of the bid or what happens if one party withdraws mid-preparation. A teaming agreement should be put in place as soon as cooperation on a specific bid becomes established, not only once disagreements arise.
What should a non-disclosure agreement cover?
A non-disclosure agreement, or NDA, is essentially a prerequisite before companies can exchange detailed technical or commercial information to prepare a joint bid. Information exchanged in NATO projects can include technical solutions, pricing structures or even classified details, so the scope and duration of the agreement should be defined carefully.
Particular attention should be paid to what information the agreement covers, how long confidentiality obligations continue after cooperation ends, and how any breaches will be handled. In international cooperation, it is also worth confirming which country's law applies and where any disputes would be resolved.
How is responsibility and risk divided within a consortium?
Responsibility within a consortium is generally organised in one of two ways: jointly and severally, where all parties are together liable to the customer for the entire contract, or with a lead partner who bears the primary responsibility while other partners are answerable only for their own share internally. NATO customers often prefer the joint-and-several model, since it gives them a clear right to demand full contract performance from the consortium regardless of which party actually caused a problem.
This makes it essential for the consortium's internal agreement to precisely define how responsibility is allocated among the parties internally, even though external liability to the customer may be shared. In practice, this means clear descriptions of each party's technical obligations, quality requirements, timelines, and how any penalties or damages claims are apportioned if one party is responsible for a delay or defect.
How should pricing and margins be structured within a consortium?
Pricing within a consortium requires transparency between the parties so that the final bid price remains competitive without forcing any partner to accept unprofitable terms. A common approach is for each party to price its own portion transparently, after which the overall bid is assembled, with shared management or coordination costs added where relevant.
It is also important to agree in advance how any additional work, changes or cost increases during the project will be handled and shared among the parties. Without a clear model, there is a risk that internal pricing disagreements weaken the cooperation exactly when the project is under way and flexibility is needed most.
How does a small Finnish supplier build credibility as a partner?
Credibility as a partner is built above all on clear, narrow specialised expertise that larger players either do not offer themselves or do not wish to build in-house. Rather than trying to present itself as a broad generalist, a company should focus on communicating precisely which part of a project its expertise addresses and what references support it.
Practical reliability is also shown through the basics being in order: a valid NCAGE code, the necessary certifications and quality systems, the ability to deliver documentation in the format NATO requires, and a demonstrated capacity to meet agreed schedules and quality standards. For a small company, a reputation for being reliable, punctual and technically competent travels quickly through industry networks and opens doors to future invitations to cooperate.
What pitfalls should be avoided in consortium cooperation?
A common mistake is beginning intensive information exchange before non-disclosure and teaming agreements are properly in place, which can jeopardise both trade secrets and later negotiating position. Another typical problem is unclear division of responsibility that only becomes apparent during project execution, when part of the delivery is delayed and it is unclear who is accountable for the consequences.
A third pitfall is overly optimistic pricing, where one party underprices its own share to secure a place in the bid, which later causes profitability problems and tension within the consortium. Managing these risks requires that agreements and responsibilities be settled carefully before the bid is submitted, not only once the contract is under way.
How does Salpa help find consortium and subcontracting opportunities?
Salpa continuously monitors NATO procurement channels, including notices published by NSPA, NCIA, ACT, ACO and NATO HQ, and identifies among them projects that are actively seeking consortium partners or subcontractors. The service uses AI to summarise notices in the reader's own language, so a company does not need to work through large volumes of English-language material to find relevant opportunities.
Category-based alerts ensure a company learns about projects relevant to its expertise as soon as they are published, giving it time to find a suitable prime contractor or partner early. Salpa can be tried free for 14 days with no commitment.