TOFO, a contract bid is a case in point. You accept the invite, you examine the SOR, you send someone to conduct due diligence, you price the SOR, you submit your bid hoping your future guess is correct, you meet the SOR, offer better VFM than other bidders, and hope you win.
If you lose that is a big cost thrown in the wind and if there are several losers that it a lot of money blown.
So you join with several competitors and form a consortium. You spread the cost, you reduce the risk and you improve the odds to evens or better (no other bidder).
The MOD is now over a barrel, bend over and take it or go back in house. Last one I was involved with the over bidder offered least risk and got the contract. The under bidder was still well over budget and they were working on 5% and anticipatory good will.