Small Business and Teaming Agreements, Part II

Disclaimer – I am not licensed to practice law or give legal advice.  The information written in this blog is based on my experience negotiating hundreds of teaming agreements for large and small businesses over my 20+ years in Government Contracting.

In Part I of the blog, I discussed why Government contractors team and how teaming agreements typically work. In Part II I will discuss terms and conditions that I have personally negotiated most often and why they are important to small business owners. This list is not all inclusive and may be different from one organization to the next in terms of importance.

Workshare – Most RFPs will describe work and tasks that are to be performed during the potential contract. Workshare is the portion of work that you will receive if everything goes as planned in the RFP.  Some primes will not guarantee any work prior to winning the contract, if you can negotiate a percentage of workshare in writing that will only assist you with future planning of resources. I mention percentage of workshare versus specific full time employed/equivalent positions (FTEs) because the Government can change or delete tasks during the amendment phase of an RFP and if you have a specific percentage instead of a FTEs, you have a better chance of receiving the same percentage vs losing specific positions.

Exclusivity – The prime contractor will normally require that once you become a team member, that you will not work with any other companies on that particular pursuit.  It is important to ensure that there is no statement that prevents you from teaming with other partners for that same client on different pursuits or providing your normal services to that same client for work outside of this pursuit.

Advertising – Many agreements will require that you get permission from the Prime before you are allowed to advertise the contract win. A win for the Prime is a win for you, and of course you would like to share that information with the world. Requesting that the prime not unreasonably withhold their permission is important in this area.

Indemnity – An indemnity is an obligation by a person (indemnitor) to provide compensation for a particular loss suffered by another person (indemnitee).  As the sub, when you see this clause, you should at the very least ask for the same protection that the prime requires of you in case of an incident.

Proposal Participation – If you can participate with the prime in proposal preparation, it is important that the prime’s expectations are spelled out and you have the resources to contribute whatever you agree to.

Governing Law – Specifies that the laws of a mutually agreed upon jurisdiction will govern the interpretation and enforcement of the terms of the contract. In this case, you would obviously want to have any legal action addressed where your company does business, or in a state that you and the prime can agree upon.

Intellectual Property – A work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, etc.  As a sub, you want to retain the rights to any intellectual property that you designed or developed.

Term – This includes the length of the teaming agreement as well as the conditions that would terminate the agreement.  It is important to pay close attention as these items will vary from one teaming agreement to the next.

Teaming Agreements are a very important piece of the puzzle as they can determine what happens down the road with relationships and future business.  It is imperative that you have someone that is familiar with negotiating the key terms and conditions and who can represent your organizations best interest.

 

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