TEAMING ARRANGEMENTS: Joint venture agreements and Contracting teaming agreements
In government contracting, there are two forms of Teaming Arrangements: Joint Ventures (JV) and Contracting Teaming Agreements (CTA or “Teaming Agreement”). Both can enhance a small business’ competitive advantage in winning a government contract, or fulfilling a government contract once one is awarded. Though the differences are subtle, these two arrangements serve separate functions and are utilized at varying times in the procurement process.
Contracting Teaming Agreements
A Contracting Teaming Agreement (CTA) is an agreement between a prime contractor and subcontractor to pursue a contract opportunity together, and is usually entered into prior to submission of the bid proposal. For small businesses, the SBA allows small business primes to subcontract a portion of the set-aside contract to a larger corporation. Doing so enables the small business to obtain a contract it might not otherwise be eligible to obtain due to inability to fulfill the scope of work alone. Teaming Agreements are usually provided with the proposal; this can be a great advantage for the small business because it forecasts to the government the particular larger subcontractor and the capabilities/past performance of said business. And, with the assurance of a specified subcontract, the larger corporation will also be in a position to assist with pre-bid work, such as drafting the proposal.
Some of the advantages to having a CTA include:
- The parties do not combine to form one entity, and therefore remain independent
- Stronger proposals with the added assistance of the subcontractor
- The ability for the small business to enter new markets (based on the capabilities of the subcontractor)
- Use of the larger business’s past performance
A Joint Venture occurs when two entities form one (whether through a partnership, a corporation, or a limited liability company) for purposes of serving as a prime contractor. It is similar to a Teaming Agreement, except that the separately created entity is the one to bid on the proposal.
Some of the advantages to having a JV include:
- Reduced risk for the small business
- Use of the both business’s past performance
- Equalized distribution of performance of contract
- Both business’s will have privity
- Ability of the small business to pursue larger contracts
CONTRACTING ATTORNEYS YOU CAN TRUST
Notwithstanding the advantages these teaming arrangements provide, there are always precautions that must be observed. For example, in a JV, the small business must ensure it remains the 51% owner of the new entity to ensure access to any particular 8(a) set aside. At the Federal Practice Group, our law firm’s focus is to achieve the strategic ventures for our government contracting clients while protecting their businesses from unforeseen liabilities. Choosing the right teaming arrangement can be difficult. No matter the issue, our government contracts team of attorneys can provide the experience and legal advice necessary to guide clients through even the most complex cases.