Small Business and Teaming Agreements

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 a perfect world, two parties (prime and sub Government contractors) determine that they have capabilities that complement one another for a particular effort and decide to become a team. A teaming agreement is successfully negotiated, the prime wins the contract, a subcontract agreement is signed between the prime and the sub, and the team goes on to deliver either a great service or product(s) to the Government and they create a long term relationship. There are however instances when a teaming agreement is negotiated and nothing ever happens for various reasons, such as the Request for Proposal (RFP) was cancelled, amended or put on hold, or the prime decides not to pursue the effort.

A teaming agreement is a contract between a (potential) prime and a potential sub in pursuit of a Government contract.  In most cases, the terms and conditions negotiated in the teaming agreement are later incorporated into the subcontract agreement, once the subcontract has been fully executed the teaming agreement then becomes void. Based on this, it is very important that you as a small business sub attempt to negotiate an agreement that is mutually favorable as possible for your business.  I use the word attempt, because in some cases there will be items that the prime will not be open to negotiating regardless of the push back that is received from you.

Teaming agreements can be issued before or after the prime has won a contract.  In most cases, the prime will issue a teaming agreement prior to the release of a RFP but there are times, when the work has already started and because the contract with the Government requires the prime get permission from the Government before bringing a subcontractor onto a project, a teaming agreement will be signed while waiting to receive the OK from the Government.

The terms and conditions that a business considers favorable will vary from one business to another. As a small business owner, you will have to determine what terms and conditions are important to your business. Lastly, as mentioned previously the terms and conditions agreed to in the teaming agreement will more than likely be incorporated into the subcontract agreement, it is helpful if most of the terms and conditions have already been agreed to prior to the subcontract phase. A teaming agreement is legal and binding as is any other contract, it is best to educate yourself or hire someone that can review your teaming agreements prior to signature and acceptance.

In part II of the blog, I will compile a list of some of the terms and conditions that I have seen negotiated most often between the prime and the sub in teaming agreements.

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