The focus of this article centers on contractor teaming arrangements. While a variety of contractual relationships exists in government contracting that are not prime contracts, teaming is one of the most common.
What Is Teaming
Federal Acquisition Regulation 9.6 defines teaming as an arrangement in which (1) two or more companies form a partnership or joint venture to act as a potential prime contractor; or (2) a potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified government contract or acquisition program. Effectively, teaming is when two or more parties decide to work together in obtaining and performing a government contract, whether it is a procurement, grant, or cooperative agreement. This type of cooperative venture can be horizontal where companies decide to be on equal footing in award and performance through formation of a joint venture or vertical through a prime contractor / subcontractor relationship. The government encourages teaming and will recognize the integrity and validity of contractor team arrangements provided they are identified and relationships are fully disclosed in an offer or, for those entered into after submission of an offer, before the arrangement becomes effective.
Why Engage in Teaming
Often, the prime contract requirements for production, integration, and implementation of a complex system is beyond the capabilities of a single entity. Therefore, teaming sometimes is the only way the requirements of a contract can be met and the requests of the government on a project satisfied. Additionally, contractors can share resources and past performance history to obtain the work. They can collaborate in the bid proposal effort to increase their chances for award and assist agencies in meeting their socioeconomic goals.
Considerations When Teaming
Teaming is usually for a specific project with a limited duration and most importantly is a commercial arrangement. While the government must be notified of the arrangement and the parties are subject to certain federal acquisition laws, the relationship between the parties, at this level, is governed by common law. Meaning, the variety of contracts and documents memorializing the relationship are commercial and must be drafted and if need be litigated as such.
Typically, preliminary documents include a letter of intent or memorandum of understanding and a mutual non-disclosure agreement as the parties are working out how the venture will look and play out. Once definitive terms have been agreed upon and the type of arrangement has been solidified (joint venture or prime/sub), a formal teaming agreement is executed. This contract normally outlines the nature of the arrangement, the obligations of the parties, and the remedies for nonperformance. Contractors entering into teaming arrangements should take care to conduct due diligence of their partners prior to executing definitive agreements to ensure the requisite cooperation at the proposal and performance levels can be met.
Teaming arrangements are useful and powerful in obtaining federal awards, particularly for smaller contractors who may not otherwise be able to access larger opportunities. Partnering with complementary organizations, when done right with careful due diligence and the appropriate governing documents, is a win for both the government and industry. Contractors engaging in this type of endeavor should take care to understand their partner’s capabilities, thoughtfully consider the appropriate nature of the arrangement (vertical or horizontal), execute the necessary agreements, and then leverage the capabilities of each partner to the fullest extent to maximize opportunity for award and excellence in performance.