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A Teaming Agreement is a private agreement between two companies to combine resources in order to bid on a federal government contract. These types of agreements typically envision either a joint venture to submit a bid as prime contractor or an agreement to future prime/subcontractor relationship for a federal procurement. These two kinds of arrangements are recognized in FAR Part 9.601, which defines a “teaming arrangement” 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.”
These agreements offer many benefits to both parties including:
- Outlining each company’s role in preparing the proposal
- Locking in partners for an upcoming solicitation so that competitors cannot
- Protecting confidential and proprietary information, though it is normal practice for parties to have a separate no-disclosure agreement
- Allocating the parties’ roles in the event that the proposal is successful
Often times, these agreements must be submitted with the proposal, so that the Government is aware of the subcontractor’s level of commitment to the prime and knows that subcontractor’s capabilities. In most cases, if the Government accepts the bid, the prime is bound to use the subcontractor for the contract. At this point, the parties’ relationship would be governed by a separate subcontract, though the teaming agreement may include certain agreed-to aspects of that subcontract or set parameters for how the parties would negotiate that subcontract. Under the Federal Acquisition Regulation System the federal government must recognize the validity of a contractor teaming arrangement “provided that 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.” FAR Subpart 9.601.
Importantly, a teaming agreement is not a “government” contract governed by the FAR, but a private one between two or more parties. Therefore, when teaming agreement disputes arise, they are governed by the agreement’s disputes clause or by the appropriate state law. To be sure, these disputes occasionally find themselves in bid protests before the Government Accountability Office (GAO), but the GAO has unequivocally stated that it will not resolve them. See, e.g., PRB Associates, Inc., B-277994; B-277994.2, Dec. 18, 1997, 98-1 CPD ¶ 13 at 7 (holding that “an allegation that a teaming agreement has been breached is a dispute between private parties” and that “an agency is not responsible to resolve such disputes”).
Ward & Berry has extensive experience drafting or reviewing teaming agreements as well as litigating disputes over teaming agreements. Reach out with any questions and we’ll figure out how your business can maximize the value of these agreements.