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What is a Teaming Agreement?
A teaming agreement is a legal contract entered into by a government contractor and another party. These agreements are very common in government related contracting and are used by contractors who want to find work with partners, pool resources, share risks, and enhance competitiveness in government contracting that can ultimately increase the effectiveness of their job(s). The Federal Acquisition Regulation (FAR) provides guidance on government contracts, which includes subcontracting.
Read this material if you are interested in learning more about teaming agreements.
Pros and Cons of Teaming Agreements
Teaming agreements can be extremely beneficial for some contractors but can also have negative elements depending on the situation. Below are some pros and cons of teaming agreements:
Pros of a Teaming Agreement
- Allows a contractor to build a team by partnering with an individual or firm that can contribute their resources, skills, and knowledge in a particular area.
- Teaming agreement parties are pretty much obligated to perform the work they agree upon with one another without worrying about any other employee being brought into the picture for the same job.
- The parties to the agreement can add as many means for termination sections to the contract as they feel are appropriate.
- Individuals or companies are able to bring their diversity and differing mindsets to the table to get a job done without having to work for the same entity right off the bat.
- The contractors are asked to provide an estimate for what the costs will end up being upfront so that risks are minimized.
- As long as subcontracting laws are followed the teaming agreement parties will not be viewed as affiliates so small business rules will not be of concern for the temporary workers.
Cons of a Teaming Agreement
- The sections need to be very carefully written or they otherwise may not have legal standing in the event one of the teammates wants to dispute a matter in court. There have been prior incidents where this happened and the court found that certain parts of the agreement were not enforceable.
- The agreements typically only apply to one project or group of tasks making it necessary to renegotiate every time a new job is proposed unless you structure the agreement to cover multiple projects or cover a long-term partnership between the parties. If not, this may mean that each time a new agreement is put into place a new teaming agreement will need to be discussed and put into writing.
- A subcontractor who was hired by the main (prime) contractor may not come to agreeable terms which can make the process difficult, which is a risk any time you are working with subcontractors and contractors.
- If a contractor other than the main one becomes part of the team to complete certain work and does not do too great of a job the blame will fall on the prime contractor since this individual is the only person contracted with the government.
To get a better idea of the positive and negative sides of a teaming agreement you can view this article.
Key Terms in a Teaming Agreement - Checklist
The checklist below is a guide for what key topics you should include in a teaming agreement for completeness and effectiveness:
- Purpose: a clearly explained goal with the reason for establishing a partnership to accomplish it.
- Duration: state how long the job will last and what the anticipated start and finish dates are.
- Scope of work: describe in detail what each party will be expected to do and what milestones exist for completion of selected tasks.
- Pay schedule: state what payments will be made to who and when.
- Exclusive relationship: add a part in the agreement that leaves no room for confusion about whether the same contract is allowed to be worked on elsewhere with someone different.
- Proposal fees and charges: mention how the proposal costs will be paid and who will pay for what.
- Privacy: add notes stating if anything will not be considered confidential information and can be shared or vice versa.
- Legal components: identify and make known all the laws, regulations, and compliance aspects that apply to the teaming agreement members and share how or where they will be used if a reason arises.
- Insurance: include a section that specifies who will be responsible for work related insurance as well as all details surrounding it such as the total cost and types of coverage.
- Liability limitations: if there will be limits as to the liability that can be placed on one or more team members then this section should be attached to the agreement with specifics on the extent and type of limitations.
- Tax costs: note the amount of taxes and which ones each party will pay and state what penalties one will face if they do not pay as required.
- Assignments: this section should be visible in the agreement so that no one is left wondering whether duties set out can be assigned out.
Visit this webpage to learn more about what to include in a teaming agreement.
Teaming Agreements vs. Joint Ventures
A joint venture differs from a teaming agreement because it involves two or more companies who create a totally separate legal business to assume position as a prime contractor. Members of the joint venture have similar levels of control, liability, and profits.
On the other hand, a teaming agreement consists of only one prime contractor who maintains control over a subcontractor who does not share the same level of responsibility for performance, profit, direction, or liability.
Read this article for a detailed description of teaming agreements compared to joint venture agreements.
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Teaming Agreement vs. Subcontract
A teaming agreement is a legally binding agreement between a prime contractor who coordinates directly with a government contact opposed to a subcontractor who is actually monitored and taken on by the prime contractor. A subcontractor does not have any connection to the government partner like the prime contractor does. Primary differences of the two contracting types are displayed below:
Teaming Agreements
- A GSA schedule must exist and the business or individual must be registered with the federal system known as SAM.
- Responsibilities are determined based on what is in the agreement.
- The government can be directly contacted for work being performed.
- Payments are made based on the rate listed in the agreement, an order, or the GSA schedule.
- Work can be completed in full due to the team efforts of all parties connected to the teaming agreement.
Subcontracts
- No GSA or SAM registration is required.
- Responsibilities are agreed upon but the subcontractor is not held accountable for insufficient work.
- The subcontractor cannot interact directly with the government and any questions or concerns must go through the prime contractor.
- Payments are made in line with the GSA schedule after any relevant subtractions are made.
- Supplies and services may be limited based on relying on only the prime contractor and not having a larger enterprise.
Examples of When to Use a Teaming Agreement
You should use a teaming agreement under the following circumstances:
- You as a prime government contractor are seeking a subcontractor to perform a specific task under your direction that is aligned with an active federal contract.
- You and other contractors involved want to bring your skillsets together to find a total solution and have numerous resources at your fingertips.
- You want to boost your competition and reputation as a contractor by working with others who are highly regarded.
- You want to possibly become part of a master teaming agreement that will allow you to broaden the duration and scope of your federal contract.
Get Help with a Teaming Agreement
If you believe a teaming agreement is right for you then you should reach out to a knowledgeable government contracts lawyer who specializes in reviewing and writing them. Post a project in ContractsCounsel’s marketplace to get free bids from vetted lawyers to draft or review a teaming agreement.
Meet some of our Teaming Agreement Lawyers
Michael M.
www.linkedin/in/michaelbmiller I am an experienced contracts professional having practiced nearly 3 decades in the areas of corporate, mergers and acquisitions, technology, start-up, intellectual property, real estate, employment law as well as informal dispute resolution. I enjoy providing a cost effective, high quality, timely solution with patience and empathy regarding client needs. I graduated from NYU Law School and attended Rutgers College and the London School of Economics as an undergraduate. I have worked at top Wall Street firms, top regional firms and have long term experience in my own practice. I would welcome the opportunity to be of service to you as a trusted fiduciary. In 2022 I was the top ranked attorney on the Contract Counsel site based upon number of clients, quality of work and top reviews.
Anand A.
Anand is an entrepreneur and attorney with a wide-ranging background. In his legal capacity, Anand has represented parties in (i) commercial finance, (ii) corporate, and (iii) real estate matters throughout the country, including New Jersey, Pennsylvania, Delaware, Arizona, and Georgia. He is well-versed in business formation and management, reviewing and negotiating contracts, advising clients on financing strategy, and various other arenas in which individuals and businesses commonly find themselves. As an entrepreneur, Anand is involved in the hospitality industry and commercial real estate. His approach to the legal practice is to treat clients fairly and provide the highest quality representation possible. Anand received his law degree from Rutgers University School of Law in 2013 and his Bachelor of Business Administration from Pace University, Lubin School of Business in 2007.
Agnes M.
Agnes Mombrun Geter is the Founder and Managing Attorney of Mombrun Law, PLLC. She is an experienced attorney and is a member of the Florida Bar, New Jersey Bar, and the Pennsylvania Bar. The firm's practice focuses on Estate Planning, Business Law, and Debt Settlement including IRS Debt Relief. The firm's goal is to simplify the law and provide clients with the confidence and information necessary to make their decisions. The firm also provides project-based legal services to other attorneys and law firms, along with assisting as personal counsel and local counsel on legal matters.
Vicki P.
Vicki graduated from Regent University School of Law in Virginia Beach, Virginia in 1996. She is a licensed attorney. She has been admitted to Wisconsin since 1998 and Pennsylvania since 1999.
June 29, 2023
John V.
Business, Real Estate, Tax, Estate Planning and Probate attorney with over 20 years experience in private practice in Colorado. Currently owner/operator of John M. Vaughan, Attorney at Law solo practitioner located in Boulder, CO. My practice focuses on transactional matters only.
June 30, 2023
Mark M.
I have 20-plus years of experience as a corporate general counsel, for public and private corporations, domestic and international. I have acted as corporate secretary for a publicly-held corporation and have substantial experience in corporate finance, M&A, corporate governance, incorporations, corporate maintenance, complex transactions, corporate termination and restructuring, as well as numerous aspects of regulatory and financial due diligence. In my various corporate roles, I have routinely drafted complex corporate contracts and deal-related documents such as stock purchase agreements, option and warrant agreements, MSAs, SOWs, term sheets, joint venture agreements, tender agreements purchase and sale agreements, technology licensing agreements, vendor agreements, service agreements, IP and technology security agreements, NDAs, etc. and have managed from both a legal and business perspective many projects in the financial, technology, energy and venture capital fields.
August 9, 2023
Daniel K.
My practice focuses on business and commercial litigation. I have worked with companies of all sizes from sole member LLCs to those in the Fortune 500. I've advised clients on mergers, equity issuances, commercial transactions, joint ventures, employment issues, and non-competition. I've also drafted and negotiated the underlying agreements for these transactions and more.
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