Teaming Arrangements

Teaming Arrangements can provide higher chances to win government contracts. Learn how to turn your business into a super 8(a).

The first step in successful teaming arrangements is finding the gaps in your business. Seeing areas where your business can fill those gaps and collaborate will make you more competitive in bidding and government contracts.

A teaming arrangement, like any other good relationship, depends a lot on transparency. Make sure a non-disclosure agreement is in place before negotiations. mctlaw understands the federal market and can minimize your risk when creating a non-disclosure agreement, so your business is protected.

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7 Questions to Ask Before Making a Teaming Arrangement:

  1. Is my partner passing on unknown risk to me?
    • If you’re a sub-contractor, make sure you review the prime contractor’s contract.
    • If you’re a prime contractor, make sure you’re distributing risk appropriately, so you can hold your sub-contractor responsible for non-compliance.
    • An attorney can be extremely useful in this regard. mctlaw can draw up agreements and review contracts to make sure your business isn’t at risk.
  2. Have we defined our roles and responsibilities on future contracts?
    • To have valid teaming arrangements, each party must be able to act independently on a clearly defined scope of work.
  3. Have we thoroughly reviewed the contract we’re bidding on?
    • Avoid stiff penalties for non-compliance by having an understanding of all the contract’s details. 
  4. Is there a clearly defined scope of work?
    • It’s important to know what deliverables the government is expecting.
  5. Are we in agreement on how to share proposal costs?
    • Contract proposals are expensive. A teaming arrangement can help you split the cost.
  6. Teaming arrangements don’t last forever. Do we have protections in the event of termination?
    • Effective contract negotiation now avoids unnecessary costly litigation in the future.
  7. Do we want to have non-competes in place?
    • Protect your core competencies. Create a strong agreement and contract now, so you don’t get stabbed in the back later.

You’ve decided to have a teaming arrangement. There are 3 types of teaming arrangements. How do you know which is right for your business?

  1. Teaming Agreement
    • In a teaming agreement, the prime contractor is responsible for the performance of the contract. If your teaming partner is a sub-contractor, you will be responsible for the costs of their mistakes. That’s why it’s important to have a strong teaming agreement. 
  2. Joint Venture
    • Joint Ventures differ from Teaming Agreements because both parties are automatically splitting the risks equally. Remember it’s easy to lose the benefits of a joint venture if you’re not careful about certain partnering rules. Keep in mind, when you do a joint venture, your business and your partner’s business will be combined and may no longer be considered small.
    • Joint Ventures exist only for limited purposes and have a duration of 2 years. Your joint venture agreement must be in writing, and it must follow the SBA’s regulations.
    • A joint venture is essentially a shell organization, which purpose is to hold the prime contract. Your company and the company you’re teaming with must not transfer your employees to the joint venture itself. Keep them separate to avoid any affiliation issues.
    • Your joint venture must be registered in sam.gov. The SBA is not required to approve your joint venture. Also be aware your 8(a) can be the subject of a protest by a competitor.
    • The SBA regulations governing joint ventures are as long as a CVS receipt and you’ll want to be equipped with a good attorney to advise you through this process.
  3. Mentor-Protégé Program
    • The mentor-protégé program is a joint venture but has some of its own factors to follow.
    • A useful exception to the size requirements in joint ventures is the mentor-protégé program. The protégé must be considered a small business, but the mentor does not. You can only team with two small businesses at a time, but there is no limit to how many protégés you can team with in a lifetime.
    • The protégé firm must do 40% of the joint venture’s work.
    • Protégés benefit immensely from the mentor’s past performance and knowledge. A protégé can get valuable assistance from a mentor.
    • Potential mentors are often established small businesses about to graduate from the SBA 8(a) program.
    • mctlaw understands how to partner potential mentors with protégés, so that mentors can continue to benefit for 8(a) certifications in their upcoming recompetes. If a mentor is graduating from the SBA 8(a) program, they may not be able to renew their established contracts due to losing their 8(a) certifications. Mentors can use a protégé’s 8(a) certification to continue to renew their current contracts.
    • The SBA must approve the mentor-protégé agreement.
    • mctlaw can help you succeed in getting SBA approval and continue to keep that approval during annual SBA evaluations.

Teaming arrangements allow the protégé to use the mentor’s experience to win contracts and the mentor can keep their 8(a) status by teaming with a protégé.  

Forming teaming arrangements allows both businesses to compete for contracts neither could do on its own. Let mctlaw guide you through the teaming process. We have seen many businesses benefit from investment dollars provided by teaming partners, as well as revenues gained from winning government contracts.

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