Have you noticed that the scopes of work in recent government solicitations are increasing in size? Many services and products are all part of one request for proposal. This can be considered good or bad. Requirements once performed by separate contract vehicles may be consolidated under only one. As a result, teaming is becoming more popular and necessary, especially among qualified government contractors. For many companies who are regularly too small to win or perform these large contracts alone, teaming has become a fundamental part of their strategic planning. A successful prime/subcontractor partnership can be as rewarding as a successful contractor/government relationship, and it can be a great way to enter into the market successfully.
It seems with the shift of multiple contract vehicles to consolidated ones, the government is promoting teaming arrangements. Not only does it help them reduce costs, it streamlines the communication and project management. The prime contractor is customarily the liaison for the team which reduces the workload for the government contracting team.
Teaming - Defined
FAR Subpart 9.6- Contractor Team Arrangements defines the term "Team Arrangement" (i.e., teaming) to mean:
(1) Two or more companies form a partnership or joint venture to act as a potential prime contractor; or
(2) A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program.
9.602 - Contractor team arrangements may be desirable from both a Government and industry standpoint in order to enable the companies involved to--
Complement each other's unique capabilities; and Offer the Government the best combination of performance, cost, and delivery for the system or product being acquired.
Companies normally form team arrangements before submitting an offer. They may enter into an arrangement later in the acquisition process, however, only after a contract has been awarded.
9.603 - The government will recognize the integrity and validity of contractor team arrangements, provided 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.
The above FAR provisions can be interpreted to mean teaming is encouraged when it is in the best interest of all parties.
The most familiar type of a teaming arrangement is a prime contractor/ subcontractor partnership. The prime/sub approach works well for both parties as long as the roles and responsibilities are clearly defined. In all cases, the prime contractor is in control and the subcontractor must follow this structure.
Usually prime contractors select subcontractors and make them a part of their proposals. A subcontractor can often be a key selling point in a prime contractor's proposal, and this should be used in negotiating the teaming agreement.
What's in a Teaming Agreement
When entering into a teaming agreement, your company should consider the following:
1. Is the subcontractor exclusively with the prime?
- If so, is this in your best interest? Or, can the subcontractor be a part of other competitor's proposals? This is a very important clause depending on the type of contract vehicle and the volume of business associated with the clause. Some teaming agreements may prohibit you to execute teaming agreements with other prime contractors prior to award. This could hurt your competitive chances of winning.
2. Does this prime offer the best teaming solution for the requirement?
3. Is the subcontractor part of a minimum guarantee of revenue?
4. What are the performance clauses?
5. Will the subcontractor be required to participate in negotiations with the government?
6. What is the pricing structure for the contract? Is it cost plus, firm fixed price or time and materials? How and when will the subcontractor be paid?
7. Are you the only subcontractor providing the service/product? If not, how will the work be awarded? Will your company have first right of refusal?
8. What FAR’s are passed on to the subcontractor?
9 What is the scope of work and has your company been provided with terms and conditions related to your service/product offerings?
If you are new to the government market, try to become a team member. Subcontracting is a great introduction to the government market. It is also a great way to build the experience needed to become a competitive government contractor. and can reduce time and investment required to enter the market as a prime contractor.
Sign Up for SubTeamPartners today to form your FY10 contractor team. GovPartners News Brief: 01 Oct 2009: By Cynthia Karnik