A “teaming” or “subcontracting” agreement is typically used to facilitate the bidding process of a prime contractor on a major procurement with a subcontractor. Similar to a “Letter of Intent”, a teaming or subcontracting agreement serves as an interim agreement and sets forth the terms and obligations of the parties during the proposal and award stages of the acquisition. It is then superseded by a subsequent negotiated subcontract after the award is made to the prime. Unlike “Letters of Intent”, the teaming or subcontracting agreement is binding on both parties and becomes the primary governing document.
Reasons to Consider a Team Arrangement
At some point, a small company might want to consider teaming with a prime contractor if it desires to market its products to the federal government. A teaming agreement or subcontracting agreement may also be appropriate if a prime contractor and sub-contractor want to do a competitive ‘’sell” of their capabilities to the government. By teaming with an appropriate partner, a competent small business could successfully compete for government business that it might not otherwise be able to obtain on its own. From the prime’s perspective, a team arrangement alleviates the need for the prime to enter into a competition with other potential subcontractors after award of the prime contract. If the sub-contractor’s product is vital to the overall system, it would make the teaming proposal that more competitive. It should be noted, however, regardless of any teaming or subcontracting arrangement, the prime contractor is held responsible for contract performance.
Federal Acquisition Regulations (FAR)
Teaming or subcontracting arrangements are authorized and governed by FAR, SUBPART 9.601, that states in part “the Government will recognize the integrity and validity of contractor team arrangements; provided, the arrangements are identified and company relationships are fully disclosed in an offer or, for arrangements entered into after submission of an offer, before the arrangement becomes effective. The government will not normally require or encourage the dissolution of contractor team arrangements.” The subcontractor must ensure that this requirement is clearly covered as an obligation in the teaming agreement, as well as covered in any applicable proposal. And, it would also be advantageous to the subcontractor to have a copy of the teaming agreement or subcontracting agreement submitted to the government as part of the prime’s proposal.
Contract and/or UCC Law Governs the Teaming Agreement
A subcontracting agreement or teaming agreement is not considered a ‘government’ contract, but a private contract between two or more parties and is governed by contract law and/or by the Uniform Commercial Code (UCC).
Last Modified: December 5th, 2009