Beware of an Improperly Drafted Government Contractor Teaming Arrangement
Using a Small business contractor teaming agreement is becoming a hot topic with small business set aside awards. The SBA’s new rules about affiliation do not help matters much. However, there are some benefits to properly structuring contractor teaming arrangements and making sure that limitations on subcontracting rules are met.
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- Knowing how and when to use a teaming agreement vs a joint venture agreement is essential when submitting bids.
When it comes to government teaming contracts, this aspect of the bidding process is commonly overlooked and ultimately leaves the prime small business in a tough position when a size protest is launched. SBA affiliation rules are brutal but getting a better understanding can avoid losing a lucrative contract. Other common issues that can arise include hiring government incumbent subcontractor personnel.
One of the first issues to confuse small businesses when forming a government contractor teaming agreement (CTA) is whether the form meets the statutory requirements. Another hurdle occurs when the prime is challenged in a small business size protest for violation of SBA affiliation rules.
Government contractors can overcome both legal with contractor forms by planning ahead and developing a clear understanding of the various contractor teaming arrangement regulations. Note that the SBA has issued a new set of rules that can minimize the impact of affiliation.
Legal Contractor Teaming Contract Requirements
Government contractor teaming contract requirements have specific guidelines that must be followed. Standard partnership agreements templates must be avoided at all times.
As a prime contractor seeking to develop a new teaming relationship, you must be aware that roles and responsibilities for each party can weigh heavily on the outcome of a small business size protest.
With each agreement between contractor and subcontractor, copying templates can end up in disaster because the contents of the agreement do not include the mandatory requirements of the SBA and small business regulations.
- For example, the prime must always show that it is performing the primary and vital contract requirements. The focus is always on the prime contractor as a small business.
- If the prime contractor is a large business then filing an SBA size protest where the subcontractor is a small business will probably get dismissed.
Government Team Arrangments Must be Project Specific
Furthermore, for each project your teaming contract must set forth the levels of responsibility for each teaming partner. Roles must be defined and specific to the sought after procurement. This is especially true when bidding on large contracts.
Under the Ostensible Subcontractor Rule, the prime should not pass the primary and vital contract requirements to a subcontractor.
The arrangement by itself is not viewed by courts as having the necessary elements of a contract. Therefore, companies must be sure to have a separate subcontract drafted once the award is made.
Who Is in Control of Your Government Business Contracts?
The central legal issue in a government business contract called a teaming arrangement is whether the prime contractor is in total control. Issues of control are looked at on a case by case basis. A clear example occurs when the teaming partner is providing the lion share of supervisory and management personnel.
- Prime contractors, as small businesses should plan the various roles and responsibilities before submitting their proposal.
Plan Carefully when bidding on large contracts: Understanding the legal issues in contractor team arrangements can be very tricky. Understanding the legal definitions, your role, and under what circumstance can a size protest hurt you, are all important considerations when entering into an arrangement.
As you decide to enter into a government contractor teaming agreement or other contractor team arrangements in the future with another government contractor, get the legal advice you need to make educated decisions when bidding on large contracts. Be mindful that there are no such things are statutory Contact our lawyers at 1-866-601-5518..