Teaming agreement
A teaming agreement is a contract between companies that plan to pursue a government contract together, usually with one as prime contractor and the others as subcontractors. It sets out each party's role, the work each will get if the team wins, and the rules on exclusivity, confidentiality and how the agreement ends.
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01Primes and subcontractors
The prime contractor signs the contract with the government and is responsible for all of the work, including the subcontractors' share. A subcontractor contracts with the prime, not the government: the prime pays it, and it has no direct contractual relationship with the agency. FAR 9.601 defines a contractor team arrangement as either a partnership or joint venture that acts as the prime, or a prime contractor's agreement with other companies to have them act as its subcontractors. Under FAR 9.603 the government recognizes the integrity and validity of these arrangements when they are identified and the companies' relationships are fully disclosed in the offer, while still holding the prime fully responsible for performance.
02What a teaming agreement covers
Some courts have held that teaming agreements leaving the subcontract to future negotiation are unenforceable agreements to agree, so specific terms protect both sides.
03Small business rules
When a small business is the prime on a set-aside contract, it must do a minimum share of the work itself. For services, FAR 52.219-14 allows it to pay no more than 50 percent of the amount paid to it to subcontractors that are not similarly situated, and SBA's rules in 13 CFR 125.6 set the limits for each type of contract. SBA can also treat a prime as affiliated with a subcontractor that performs the primary and vital requirements of the contract, which can cost the prime its small business status for that award (13 CFR 121.103). Joint ventures and SBA's mentor-protégé program (13 CFR 125.9) are the usual routes when a small business needs a larger partner.
04Why teams form
Teaming fills gaps: missing capabilities, locations, clearances, capacity or past performance. The right partner can turn a no-bid into a credible offer. Settle it during capture, well before the RFP is released.
Teaming agreement: common questions
Is a teaming agreement the same as a subcontract?
No. A teaming agreement is signed before the proposal and sets out how the companies will pursue the contract together. The subcontract is signed after award and sets the actual work, price and terms.
What is the difference between a teaming arrangement and a joint venture?
FAR 9.601 treats both as contractor team arrangements. In a joint venture or partnership the companies together act as the prime contractor; in a prime-subcontractor arrangement one company is the prime and the others work under it.
How much work must a small business prime perform itself?
On a set-aside services contract, FAR 52.219-14 allows it to pay no more than 50 percent of the amount paid to it to subcontractors that are not similarly situated. 13 CFR 125.6 sets the limits for other contract types.
Sources
- FAR 9.601 — Definitions (contractor team arrangements)Acquisition.gov
- FAR 9.603 — Policy (contractor team arrangements)Acquisition.gov
- FAR 52.219-14 — Limitations on SubcontractingAcquisition.gov
- 13 CFR 125.6 — Prime contractor performance requirements (limitations on subcontracting)eCFR
- 13 CFR 121.103 — How SBA determines affiliationeCFR
- 13 CFR 125.9 — SBA mentor-protégé programeCFR
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