Teaming Agreement Types

Table of Contents

1. What Is a Teaming Agreement
2. Why Are Teming Agreements Important?
3. Types of Teaming Agreements
4. Risks and Considerations for Exclusive Teaming Agreements
5. Workshare Distribution and Fairness of Exclusivity Provisions
6. Key Takeaways
7. Assistance with Teaming Agreements

Teaming Agreements tend to follow a basic recipe, but there are two primary types:  exclusive and non-exclusive.  How should you decide which is best for your company, and what are the risks that come with each option?  Some of the driving factors in determining whether to team exclusively include the type of contract the team is pursuing and the anticipated contract term, the workshare distribution, and the fairness of any exclusivity provisions in the Teaming Agreement.  

What Is a Teaming Agreement?”

A Teaming Agreement is a commercial contract that outlines the agreement between two parties to collaborate on submitting a tender for work or providing services. This agreement usually takes place between a smaller business and a larger company to execute work on a government bid or request for proposal.

If the tender is successful, one team member may become the prime contractor, while the other members act as subcontractors. This is an excellent option for a government contractor who might have found it challenging to compete for a business alone.

These agreements are also unlike mergers, partnerships and joint ventures because Teaming Agreements allow involved parties to have a limited obligation to one another. It also allows involved parties to share the rewards and financial risks.

Why Are Teaming Agreements Important?

Teaming Agreements are essential in that they influence bigger networks for teaming partners and government agencies. This ensures that their business continues to grow. Building the right relationships allows contractors to form partnerships that expand their capabilities to get further contracting opportunities. Large businesses benefit from this through access to set-aside contracts, while smaller businesses may pursue Team Agreements to expand their capabilities.

Smaller businesses gain the opportunity to build up past performances and the capabilities to tackle larger projects independently in the future. Similarly, larger businesses get to include more opportunities in their pipeline, which they may have been unable to attain otherwise.

Sharing resources during a Teaming Agreement is what helps companies make a successful tender bid. The idea is to create a partnership that ensures you have the workforce, specialist employees, resources and industry expertise necessary to undertake critical aspects of tender specifications. Teaming up with the right third parties helps businesses make this possible. It may even help with improving tender proposals due to combined expertise and capabilities.

Types of Teaming Agreements

Multiple-award IDIQ-type (Indefinite Delivery, Indefinite Quantity) contracts, also known as Basic Ordering Agreements (BOAs) or Blanket Purchase Agreements (BPAs), are issued with monetary ceilings and terms and conditions, but they do not actually offer paying work. Here’s a closer look at the different types of teaming agreements and their durations.

Exclusive Teaming Agreements

When the government intends to make multiple awards under one of these contract vehicles, many primes offer exclusive Teaming Agreements to its teammates because they are hoping to build an “all-star” team that the government will see as a winning team, even though other teams will also get awards. The idea is that when the IDIQ holders all compete for task orders, the all-star team will have an advantage because the government likes the proposed team, especially in best value source selections.

This is certainly a reasonable expectation, as long as the prime has the insight to predict the best skill mix suited to win the biggest number of task orders and that they can perform effectively for the entire IDIQ term. It is important to note that the vast majority of federal contracts lack requirements for the prime to maintain the proposed team throughout the contract’s term.

In fact, as long as the prime is meeting schedule and cost, the government customer may never give a second thought to who stays or leaves the prime’s team. Usually, parties with a strong commitment to joint success will collaborate in the sales and marketing process to reduce costs and improve effectiveness. They also ensure partners have the necessary support to optimize the exclusive partnership.

Non-Exclusive Teaming Agreements

Conversely, non-exclusive teaming at the IDIQ level is usually best for subcontractors. A non-exclusive Teaming Agreement usually requires two contractors to combine skills, expertise and resources to compete for a contract without exclusive commitment.

While non-exclusive teaming partners must protect the proprietary information that will be shared as part of the different proposal efforts, the odds of winning paying task orders improve if you are on more than one team.

If one of your primes does not get an IDIQ award, you are not out of the running if you are also on a team that did get an award. If both of your primes win the IDIQ award, then you will likely have more exposure to task order opportunities, even if those primes issue separate, exclusive Teaming Agreements as they compete for each task order.

Risks and Considerations for Exclusive Teaming Agreements

When considering entering into an exclusive teaming agreement, it is critical to thoroughly understand the terms of the agreement.

Be sure you understand the termination provisions, and that there is an exit ramp that allows you to team with others if the prime releases you from the exclusive Teaming Agreement. They may not like your price and you may be unwilling to reduce it, and this could lead to termination. They may want to adjust your workshare downward as solicitation amendments and discussions progress, even if the amendments do not necessarily impact your contemplated workshare, and this could lead to termination.

They may decide to withdraw from the proposal process, triggering a termination. These are examples of how a Teaming Agreement might end prematurely and leave you on a windy corner if you are not released from the exclusivity covenants upon termination.

Weed out clauses that attempt to restrict you from throwing your hat in the ring for recompetes or that require you to share competition-sensitive information if you leave the team. A surprising number of exclusive Teaming Agreements have clauses in them that cross the compliance line of FAR clauses designed to foster competition in federal contracts. Here are two examples:

Certificate of Independent Price Determination: FAR 52.203-2 (excerpt) “The offeror certifies that (1) The prices in this offer have been arrived at independently, without, for the purpose of restricting competition, any consultation, communication, or agreement with any other offeror or competitor relating to (i) Those prices; (ii) The intention to submit an offer; or (iii) The methods or factors used to calculate the prices offered.”

Restrictions on Subcontractor Sales to the Government: FAR 52.203-6 (excerpt) “The Contractor shall not enter into any agreement with an actual or prospective subcontractor, nor otherwise act in any manner, which has or may have the effect of restricting sales by such subcontractors directly to the Government of any item or process (including computer software) made or furnished by the subcontractor under this contract or under any follow-on production contract.”

Any clause in a Teaming Agreement that requires you to disclose who you team with after termination, or one that says you cannot pursue a follow-on or recompete effort as prime should be viewed as a red flag and negotiated out of the agreement.

Workshare Distribution and Fairness of Exclusivity Provisions

If you are contemplating an exclusive Teaming Agreement, then look for reciprocity in the agreement. If it restricts you from bidding yourself or actively participating on any other team, then assert your expectation that the prime will dedicate your workshare exclusively to you in return. After all, this is a commitment that both parties expect to last from the proposal build through contract closeout, which could be a long time.

By offering a subcontractor an exclusive Teaming Agreement, the prime has already decided one or two things: (1) they need your expertise to win the contract and/or (2) and they want you out of play for its competitors. If both of these things are true, you are in a good position to negotiate a solid, dedicated workshare.

However if you find that the prime will not waiver from surrounding your workshare allocation with squishy qualifiers like “approximate”, or “target”, they plan to pit you against other teammates to compete for workshare at the task order level, or they place a long list of contingencies around awarding you workshare, it is likely that only the 2nd is true: you were invited to the team to take you out of play in the market.

In these scenarios, the prime will happily use your task order bids to push their preferred subcontractor’s prices lower, but you will see little work, if any. In these cases, try to change the agreement to become a non-exclusive teammate at the IDIQ level, or join a different team where you are valued for your capabilities.

Key Takeaways

• Teaming Agreements can be classified into two primary types: exclusive and non-exclusive.
• Exclusive Teaming Agreements are suitable for building an “all-star” team for multiple award IDIQ contracts, providing an advantage in best value source selections.
• Non-exclusive Teaming Agreements are beneficial for subcontractors as they allow participation in multiple teams, increasing the odds of winning paying task orders.
• Careful consideration should be given to contract type and duration when deciding on the type of Teaming Agreement.
• Exclusive Teaming Agreements may carry risks such as the lack of requirements for maintaining the proposed team throughout the contract’s term.
• It is crucial to understand termination provisions and have an exit ramp in exclusive Teaming Agreements to team with others if necessary.
• Clauses that restrict competition or require the sharing of competition-sensitive information should be negotiated out of Teaming Agreements.
• Reciprocity and dedicated workshare should be sought in exclusive Teaming Agreements to ensure a fair allocation of tasks.
• Red flags in Teaming Agreements include clauses that prevent pursuing recompetes or disclosing teaming information after termination.
• By employing experienced contract compliance services for GovCons, you can get help in reviewing, negotiating, and achieving a balanced Teaming Agreement that benefits all parties involved.

Get Help With Teaming Agreements From BOOST

Teaming Agreements can be particularly beneficial if you’re looking to enhance your resources to make a successful tender bid. In the long term, Teaming Agreements expand capabilities and future opportunities. Still, its success all depends on whether you’ve chosen the right Teaming Agreement.

The BOOST LLC contracts team has extensive experience reviewing and negotiating Teaming Agreements. Our highly skilled experts can help decode the clauses for clarity and assist in negotiations to reach a fair, balanced document that is good for both you and your prime. With a combined government contracting (GovCon) experience of 120 years, we can create a compliant contracting agreement template and memorandum of understanding and help with System for Award Management updates.

If you’re looking for an easier and more manageable Teaming Agreement experience within the GovCon environment, contact our professionals at BOOST today for specialized assistance.

About The Author, Kathy Wright

Kathy Wright is a contracts and procurement professional with more than 30 years of experience working with government and commercial contracts.  She has worked for both small and large businesses and has developed a contracts management style that blends agility with process improvement.