Teaming Agreements for Government Contracts: Complete Guide

Quick Overview: Teaming Agreements

A teaming agreement is a contract between two or more companies to pursue government contracts together. By combining capabilities, companies can bid on opportunities they couldn't win alone. Strategic teaming is essential for growth in government contracting.

Combine

Capabilities

Reduce

Risk

Expand

Reach

Win

Larger Contracts

Types of Teaming Arrangements

There are several ways to structure contractor partnerships. The right choice depends on the opportunity, your goals, and regulatory requirements.

Prime-Subcontractor

Most common arrangement. One company is the prime contractor with full contract responsibility; others are subcontractors.

• Prime manages government relationship
• Subs perform defined scope of work
• Prime responsible for all deliverables
• Clear hierarchy and accountability

Joint Venture

Separate legal entity formed by two or more companies to bid together. Often used for SBA mentor-protégé arrangements.

• Creates new legal entity
• Shared ownership and control
• Can use protégé's small business status
• More complex setup and governance

Contractor Team Arrangement (CTA)

Companies jointly bid but maintain separate contracts with the government. Used primarily on GSA Schedules.

• Each company holds separate contract
• Team lead coordinates proposal
• Direct government relationship for each
• Common on GSA Schedule orders

Consortium

Group of companies that agree to work together on multiple opportunities. Often industry-specific or capability-focused.

• Ongoing partnership framework
• Pursue multiple opportunities
• Shared business development
• May form JVs for specific bids

Why Team on Government Contracts?

Teaming offers significant advantages for both small and large contractors.

Benefits of Teaming

✓
Fill Capability Gaps
Add expertise or certifications you don't have
✓
Meet Past Performance Requirements
Use team member's relevant experience
✓
Spread Risk
Share financial and performance risk
✓
Increase Bonding Capacity
Combined resources support larger projects
✓
Geographic Coverage
Partner with local firms in target areas

When to Consider Teaming

→Contract requires capabilities you don't have
→Project is too large for your resources
→You lack past performance in required area
→Customer prefers or requires teaming
→Set-aside requires specific small business status
→Work is in location where you lack presence

Key Elements of Teaming Agreements

A well-drafted teaming agreement protects both parties and sets expectations. Include these essential elements:

Essential Agreement Terms

Scope of Relationship

Define which opportunities the agreement covers, who will be prime vs. sub, and each party's role and responsibilities.

Work Share

Specify the percentage or scope of work each party will perform. Include how work share may change based on contract modifications.

Exclusivity

Define whether parties are exclusive to this team for the target opportunity or can pursue it with other teams. Be specific about scope and duration.

Proposal Costs

Clarify how proposal development costs are shared. Each party typically bears their own costs, but document this clearly.

Intellectual Property

Address ownership of proposal content, technical approaches, and any IP shared or developed during the pursuit.

Confidentiality

Protect proprietary information shared during proposal development. Include non-disclosure provisions.

Subcontract Terms

Specify key terms for the resulting subcontract including flow-down provisions, payment terms, and performance requirements.

Termination

Define conditions for ending the teaming relationship, including what happens to shared information and work product.

Important Note

Teaming agreements are typically not enforceable as contracts to subcontract—they're agreements to negotiate in good faith. Courts have generally held that "agreements to agree" lack consideration. Include specific, measurable terms to strengthen enforceability.

Finding Teaming Partners

Finding the right partner is crucial for a successful teaming relationship.

Where to Find Partners

Industry Events

Conferences, matchmaking events, and industry days where contractors network

SBA Resources

Dynamic Small Business Search, PTACs, and SBA district office referrals

Agency OSDBU

Office of Small and Disadvantaged Business Utilization maintains contractor lists

Prime Contractor Portals

Large primes have supplier diversity portals seeking small business partners

Professional Associations

Industry groups and contractor associations facilitate introductions

SAM.gov Entity Search

Search registered contractors by capability, location, and certifications

Evaluating Potential Partners

✓Financial Stability: Review financial health and bonding capacity
✓Past Performance: Check CPARS records and references
✓Technical Capability: Verify they can actually perform the work
✓Cultural Fit: Assess compatibility in work style and values
✓Customer Relationships: Do they have relationships with the target agency?
✓Reputation: Check industry references and online presence

Negotiating Teaming Terms

Successful negotiations require balancing interests while maintaining a collaborative relationship. Here's what to focus on:

Key Negotiation Points

1.
Work Share Percentage
Who does what and for how much?
2.
Management Structure
How will the team be managed?
3.
Key Personnel
Who will be named in the proposal?
4.
Pricing Authority
How are rates determined?

Negotiation Tips

→Start discussions early before specific opportunity
→Focus on value each party brings, not just price
→Document everything in writing as you agree
→Address "what-if" scenarios upfront
→Involve attorneys but don't let them derail the deal
→Build relationship first, negotiate terms second

Small Business Teaming Considerations

Teaming has special implications for small businesses, particularly regarding size status and set-aside eligibility.

Key Rules for Small Businesses

Affiliation Rules

SBA looks at whether team members are "affiliated" for size determination. Standard prime-sub relationships generally don't create affiliation, but unusual control or identity of interest can.

Limitations on Subcontracting

On set-aside contracts, the small business prime must perform a minimum percentage of work—can't subcontract everything to a large business.

Mentor-Protégé Exception

SBA-approved mentor-protégé JVs are exempt from affiliation rules. The JV can use the protégé's size status for set-aside bidding.

Joint Venture Work Share

In mentor-protégé JVs, the protégé must perform a significant portion of the work—typically 40% or more depending on contract type.

Tip for Small Businesses

When teaming with a large business as a subcontractor, you can build past performance and capabilities without risking your small business status. This is often the best way to grow toward eventually becoming a prime.

Common Teaming Pitfalls to Avoid

1. Vague Work Share Agreements

Agreeing to "significant" or "meaningful" work share leads to disputes. Define specific percentages or scope in writing.

2. Not Doing Due Diligence

Partnering with a company you don't know well can be disastrous. Verify capabilities, check references, and review financials.

3. Ignoring Exclusivity Terms

Signing exclusivity clauses without understanding implications can block you from better opportunities.

4. Assuming Subcontract Will Follow

Just because you have a teaming agreement doesn't guarantee you'll get the subcontract if the prime wins. Document commitment levels clearly.

5. Not Planning for Disagreements

Include dispute resolution provisions. What happens if you disagree on proposal approach or pricing?

Frequently Asked Questions

Are teaming agreements legally binding?

Teaming agreements are generally enforceable for what they specifically promise—exclusivity, confidentiality, proposal cost sharing. But courts typically won't enforce a vague promise to "negotiate in good faith" for a subcontract.

Can I be on multiple teams for the same opportunity?

Unless you've signed an exclusivity agreement, you generally can. However, this may damage relationships and raise organizational conflict of interest concerns if both teams make it to discussions.

What if my prime partner wins but won't give me the work?

This is unfortunately common. Your recourse depends on what the teaming agreement actually promised. This is why it's crucial to have clear, specific terms about post-award subcontracting commitment.

Should I have a lawyer review the teaming agreement?

Yes, especially for significant opportunities. Legal review can identify unfavorable terms and help you understand your obligations. The cost is small compared to the potential value of the contract.

How do I protect my proprietary information?

Include strong confidentiality provisions, mark documents as proprietary, and only share what's necessary for the proposal. Consider a separate NDA before detailed discussions begin.

Find Teaming Opportunities

Identify opportunities that match your teaming strategy. BidFinds helps you find contracts where teaming makes sense—large opportunities, multi-discipline requirements, or set-asides matching your partner's status.

Start Finding Opportunities →View Pricing

Related Resources

Mentor-Protégé Program

Formal teaming relationships

Subcontracting Guide

Finding subcontract work

Set-Aside Programs

Small business advantages