What is a Teaming Agreement?

A teaming agreement is a type of subcontracting where one business, usually a smaller business, will enter into a teaming agreement with a larger company to subcontract some of the work on a government bid or RFP. Entering into a teaming agreement can give a government contractor access to opportunities that they might not have been able to win had they been competing for the business on their own.

Strategies for Teaming in Government Contracting >>

Why Do Teaming Agreements Matter?

Relationships in the procurement space are a necessary part of growth. Whether those relationships be with teaming partners or with government agencies themselves, bigger networks mean more business. In the federal and SLED government contracting spaces, building these relationships is critically important, and some of the most important relationships are those that allow contractors to form a partnership in order to expand their eligibility to pursue contracting additional opportunities. These include teaming agreements, which can aid a small business looking to expand its capabilities or a large business looking for access to set-aside contracts.

Teaming with larger businesses is a common avenue for smaller companies that want to support a portion of a contract while building up their past performance so they can tackle bigger projects on their own in the future, and it benefits larger businesses by allowing them access to opportunities they might not otherwise had been able to include in their pipeline.

Free Guide: Teaming Agreements 101

Discover how the virtual business environment has changed the way government contractors make connections, best practices for subcontracting, why small businesses should team with larger primes and next steps to get started.

Get the Guide

When two or more companies are working together to fulfil a government contract, it is important to understand the distinction between the prime contractor and the subcontractor.

According to the U.S. General Services Administration (GSA), a prime contractor is a company that works directly with the government. They take on the responsibility of making sure the work is completed as expected in the designated amount of time and manage any subcontractors on the project.

Government subcontractors work with a prime contractor as a part of the larger overall agreement. Unlike prime contractors, subcontractors do not work directly with the government, but instead work for other contractors. Subcontractors are generally smaller businesses and/or ones with a specific core competency that is useful for the project. Subcontractors must contract with prime contractors directly to find opportunities to sell to the government. Subcontractors do not need to have a GSA Schedule contract, but they must comply with the terms and conditions of the prime contractor’s contract.

If you are looking for subcontracting opportunities in the federal market, you know how challenging it can be to find and pursue them. With fewer contractors securing prime dollars, the subcontracting market is increasingly competitive.

Deltek’s GovWin IQ has introduced a new feature that makes it easier to identify and track subcontracting opportunities by simply running a search. SAM.gov Notices in GovWin IQ have always been individually reviewed by a GovWin analyst and now that review process includes analyst-verified subcontracting opportunities marked with a searchable subcontracting opportunity tag. This human verification provides GovWin IQ users with a level of accuracy they can’t get from other tools that rely on automated algorithms to identify government subcontracting opportunities.

Build a Pipeline of Government Subcontracting Opportunities with GovWin IQ

You need a tool to help you build your pipeline of potential teaming agreement partners and projects. With GovWin IQ, you can be confident that you are seeing the most relevant and reliable subcontracting opportunities for your business.

Find Subcontract Opportunities

A small business teaming agreement is one that allows a contractor to maintain its status as a small business, while allowing it to bring in another small business – or a larger business – to contribute some of the work on the project.

Small businesses have a distinct advantage when searching for government contracts as the federal government provides many resources and programs specifically designed to help these firms compete. Most agencies have offices of small and disadvantaged business utilization (OSDBUs) and/or small business programs that are focused on ensuring the agency maximizes the opportunity to contract with small businesses in their acquisitions. Many contracts specify that small businesses must perform a certain amount of the work, which creates a need for larger businesses to partner with smaller ones to gain access to these contracts.

Resource Center: Grow Your Success as a Small Business Government Contractor

GovWin’s Small Business Resource Center serves as your toolkit for finding small business opportunities, staying informed about current market conditions and more.

Small Business Resources

If you are looking for a way to expand your business opportunities and collaborate with other companies, you may have come across the terms joint venture and teaming agreement. But what do they mean and how are they different?

Joint Ventures

A joint venture is a legal entity formed by two or more companies (generally one of which is categorized as a small business and one of which is larger) to undertake a specific project or business activity together. A joint venture is considered a new legal entity that requires approval by the Small Business Administration (SBA). Joint ventures also require a separate federal identification number and a new SAM user account. The companies share the equity, revenues, expenses and control of the joint venture. A joint venture can be formed to fulfil a single project or for a long-term partnership.

Benefits of joint ventures:

• Joint ventures allow you to access new markets, resources, technologies and expertise that you may not have on your own.
• Joint ventures can help you share the risks and costs of a complex or large-scale project with your partners.
• Joint ventures can give you more bargaining power and influence with customers, suppliers and regulators.
• Joint ventures can enhance your reputation and credibility by associating with well-known or established partners.

Drawbacks of joint ventures:

• Joint ventures require a lot of planning, negotiation and coordination to set up and manage. You may need to hire lawyers, accountants and consultants to help you with the legal, financial and operational aspects of the joint venture.
• Joint ventures involve sharing profits and control with your partners, which may limit your autonomy and flexibility. You may also face conflicts or disagreements with your partners over the strategy, management or performance of the joint venture.
• Joint ventures may expose you to liabilities or risks that your partners bring to the table. You may be responsible for the debts, losses or breaches of your partners, even if you are not directly involved in them.
• Joint ventures may create competition or conflict of interest with your existing or future business activities. You may have to limit or forego some opportunities to avoid harming or competing with your joint venture.

Teaming Agreements

A teaming agreement is a contract between a potential prime contractor and another company to act as a subcontractor under a specified federal government contract or acquisition program. The purpose of a teaming agreement is to enhance the capabilities and experience of the prime contractor by leveraging the resources and expertise of the subcontractor. While the SBA does not have a formal definition of a teaming agreement, it does recognize and authorize the use of teaming agreements for small businesses to subcontract a portion of their set-aside contracts to large and small companies, unless specifically prohibited by statute, regulation, or solicitation.

A teaming agreement usually outlines the roles and responsibilities of each party, the scope of work, the pricing and the terms and conditions of the subcontract. Unlike a joint venture, a teaming agreement does not create a separate legal entity, but rather a contractual relationship between the parties. Teaming agreements, on the other hand, is a type of subcontracting where two (or more) companies work together on a proposal to win a piece of government business.

Benefits of teaming agreements:

• Teaming agreements allow you to leverage the strengths and capabilities of your partners to increase your chances of winning a federal government contract. You can offer a more comprehensive and competitive solution to the government by combining your supplies or services with your partners’.
• Teaming agreements are relatively easy and quick to set up and execute. You do not need to create a new legal entity or share equity or control with your partners. You only need to agree on the terms and conditions of the teaming agreement and the subcontract.
• Teaming agreements are flexible and adaptable. You can tailor the teaming agreement to suit the specific requirements and expectations of the government contract. You can also modify or terminate the teaming agreement as needed, without affecting your other business relationships or activities.

Drawbacks of teaming agreements:

• Teaming agreements are not binding or enforceable until the prime contractor wins the government contract and awards the subcontract to the subcontractor. Until then, the parties have no legal obligation to perform or deliver anything to each other or to the government.
• Teaming agreements may not guarantee the subcontractor a fair or favorable share of the work or the profits. The prime contractor may have the discretion to change the scope, price, or terms of the subcontract after winning the government contract, or to exclude the subcontractor altogether.
• Teaming agreements may create legal or ethical issues if the parties are not careful or transparent about their teaming arrangement. The parties may face allegations or penalties for violating federal procurement laws or regulations, such as the False Claims Act, the Anti-Kickback Act or the Small Business Act.

Both joint ventures and teaming agreements have advantages and disadvantages, depending on your specific goals and circumstances. It is important to consider which option is best for your unique situation and strategy.

Whether you are looking for teaming partners as a small business or enterprise company, building professional relationships and partnering with other companies can open up critical avenues for new business. GovWin IQ offers tools to help identify best-fit potential partners as you continue on your government contracting journey – making it easier to find and win more opportunities.

Try GovWin IQ For Free

Learn how the leading market intelligence platform can help you find and win more government contracts.

Find More Contracts