Subcontracts and Teaming Agreements
Washington, DC 20015
A teaming agreement is an agreement between companies to pool resources to obtain and perform a government contract. They are generally between a company competing for a prime contract and a prospective subcontractor or joint venturers. Teaming agreements generally focus on proposal preparation responsibilities, division of work upon award, exclusivity of the teaming arrangement and subcontract terms should a subcontract be awarded. A subcontract is a legally binding agreement setting forth the work to be performed, pricing, delivery requirements, flow down clauses and procedures for resolving subcontract disputes.
There are two types of teaming agreements: (1) agreements that require the award of a subcontract if a prime contract is awarded and (2) agreements to attempt to negotiate a subcontract if a prime contract is awarded.
If a potential subcontractor has the negotiating leverage it should insist on a teaming agreement that requires it to be awarded a subcontract if the team leader is awarded the prime contract.
Important provisions to be considered include:
•prohibitions on employee raiding;
•a requirement that the prime contractor exercise a subcontractor’s option if the Government exercises the a prime contractor’s option;
•limitation the prime contractors’ right to terminate for convenience to work terminated from the prime contract by the government;
•required substitution of other work if subcontractor work is eliminated from the program;
•protection of proprietary rights; and
•prime sponsorship of subcontractor claims against the Government.
See, “Government Contract Teaming – A Subcontractor Perspective”, a June 10, 2009 Presentation by Paul J. Seidman to the National Small Business Association Procurement Conference.
The aforementioned statement of general principles applicable to subcontracts and teaming agreements is not intended as legal advice. In order to obtain legal advice applicable to specific facts a consultation is required.