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.

 

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.