Veterans Business Resources

a portal for all Veterans and SDV Small Business Owners

More on Teaming

Due to the number of request to talk more about TEAMING, the following is submitted for your consideration.  To gain a proper understanding of TEAMING, we must first look at its root, TEAM.  TEAM is defined as a group on the same side, as in a game.  A group organized to work together; in this case, a group of Veterans.  In the earlier entry about T.E.A.M., I spoke of essentials necessary to make it work.  Those essentials; integrity, character and honor are routinely accepted as SOP for service members, especially toward each other.  That said; there still needs to be a document that binds and formalizes our verbal and handshake agreements.  That document is called the Teaming Agreement.   

The Teaming Agreement is a commonly used marketing tool whereby a prime contractor and subcontractor agree to combine resources to bid on a major government procurement.  Typically, this agreement includes the actual bid of the subcontractor as an exhibit. The prime then may submit that bid as an exhibit to its own bid for the government work.  In most cases, the prime is bound to use the subcontractor for the work once the bid is accepted, and the parties will follow the teaming agreement closely when finalizing the subcontract between the parties. 


Why enter into a teaming arrangement?  A competent, smaller business may obtain access to government business that would otherwise be denied to it by teaming with the larger prime in bidding for government work.  The prime contractor, on the other hand, can achieve greater control over its costs and more certainty through a pre-bid teaming agreement with a potential subcontractor.

A teaming agreement is not considered a “government” contract, but a private one between two or more parties and is governed by contract law and/or the Uniform Commercial Code, as applicable.  No government acquisition regulations (“FARs” or “DFARs”) must be referenced in the agreement—those are usually negotiated and included within the subcontract. 

Under the FARS/DFARS, 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.  Full disclosure of the teaming arrangement, in other words, must be part of the prime’s bid.  Conversely, the prime must seek at least three competitive bids for any work to be done by a subcontractor unless the government has already approved the subcontractor’s bid as part of the prime’s original bid. The teaming agreement thus eliminates this requirement for the prime after it is awarded the prime contract.  It may often prove helpful for the subcontractor to include this requirement as an obligation in the teaming agreement, as well as in the bid.  It can also prove advantageous to the subcontractor to have a copy of the teaming agreement itself divulged within the bid to the government.  

A teaming agreement serves as a temporary bridge to a final contract. That is, the successful teaming agreement will always be superseded by a fully negotiated subcontract after the government accepts the prime contractor’s bid.  The final contract is with a third party–the government; all provisions necessary to govern the legal relationship between the parties must be included–brevity is not recommended; and a teaming agreement is always binding on both parties. 

Drafting Considerations: 

The following are some important business provisions to be addressed in any teaming agreement:

  • Exclusivity; May either party retain a right to change its mind and do business with another prime or subcontractor once the government has chosen the winning bidder?
  • Should the agreement oblige the prime to award a subcontract to the subcontractor, or may the subcontractor merely rely on the implied covenant that the parties must negotiate in good faith—case law supports the proposition that an agreement to negotiate in good faith does not require that a final agreement actually be achieved but only that the parties work to reach an agreement “actively and in good faith?”
  • To what extent should the parties’ confidentiality and data rights be protected?
  • When and how shall termination occur?
  • Ought the subcontractor to be allowed to participate in negotiations with the government customer concerning the contribution of the subcontractor to the teaming?
  • Lastly, should the prime agree in advance to compensate the subcontractor if the government disapproves the subcontract for any reason? 

Inevitably, of course, there will be many other business and legal considerations that need to be considered and accounted for in the teaming agreement. Each individual situation is different and may require expert business and legal assistance to ensure that your company’s business objectives will be met and its legal rights fully protected.

There are a number of Veteran Small Business owners out here that have already broken the code and figured out how Government Contracting works and how to make it work.  Those wise and tenacious Veteran Small Business owners are being asked to “each one, teach one.”  Working together, our community can make it happen and together realize the true meaning and power of T.E.A.M.


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“T.E.A.M.” Together Everyone Achieves More!

The Veteran Small Business movement is much, much more than a ground swell, it is a full blown, very real movement and it is gaining momentum each and everyday.  More and more websites are being dedicated to Veteran Small Business and Entrepreneurship as more and more people realize that Small Business really is the backbone of the American economy and will lead our recovery.  The Small Business community drives the job market and as goes Small Business so goes the Economy.  Right now, Small Business is sputtering, popping, starting, stopping, jerking, lunging forward all as the country contracts and expands in an effort to dig ourselves out of a near recession.  Money is tight, but you already knew that!  How do we get our small businesses off the ground when the people with money (you know, the ones WE bailed out) won’t let us borrow any?  Part of the solution to that question is creative financing; everything from borrowing money from family and friends to finding venture capitalists to selling ownership percentages in your businesses to selling personal assets to raise capital to finding angel investors to.…the list goes on and on and on.  You are only limited here by your own imagination and the amount of ownership you are willing to give up in order to move your business forward.  THIS TOPIC WILL BE COVERED LATER AND IN GREATER DETAIL BY A FINANCIAL EXPERT.   

As Veterans and Business Owners, many of us are faced with these same challenges and opportunities.  One potential solution I will advance for our community is TEAMING.  TEAMING with other Veteran Owned Small Businesses can be good for all businesses involved, can minimize risk by spreading them among the TEAM,  can help address the issue of contract bundling,  can help others work and reach profitability sooner, can help keep your business and employees working and can keep your doors open.  TEAMING is nothing to be afraid of and is actually something to be embraced.  Integrity, character and honor make TEAMING work.  Remember; Together Everyone Achieves More!   

This site has awesome potential and can positively impact many lives, but the ground truth is this, “it will only be as good as we make it.”   We can write a myriad of articles about Government Contracting and Business Development, but they will all miss their mark, if they are not speaking to your concerns.  With that in mind, we humbly and respectfully solicit your feedback and suggestions.   




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