Most federal contractors hit a wall at some point where a solicitation demands capabilities they don't have. You could pass on the opportunity, or you could team up with someone who fills the gap. Teaming agreements create a prime-subcontractor relationship for a specific bid without the complexity of a joint venture. The catch? Courts often refuse to enforce them if you don't include the right terms. We're showing you how to draft one that actually holds up.

TL;DR

• A teaming agreement binds two firms to pursue a specific federal contract together as prime and subcontractor during the proposal phase

• Courts often reject these as unenforceable "agreements to agree" unless you define scope, pricing, and period of performance upfront

• Small business primes must perform 50% of service contract work themselves to avoid SBA affiliation and ostensible subcontractor violations

• GSA Contractor Team Arrangements let multiple Schedule holders work together while each maintains direct government contracts

• GovDash platform automates teaming partner identification and proposal collaboration across capture, proposal development, and contract management workflows

Teaming Agreement Definition

A government contract teaming agreement binds two companies to pursue a specific federal procurement opportunity together. One entity serves as the prime contractor, while the other acts as a potential subcontractor. This arrangement details cooperation during the proposal phase and sets the intent to negotiate a subcontract upon award. Unlike joint ventures, parties retain separate legal identities and management structures. This approach lets organizations pool past performance and capabilities without forming a new entity. The agreement primarily secures exclusivity for a bid, preventing partners from supporting competitors.

FAR Teaming Agreement Requirements

FAR Subpart 9.6 governs contractor team arrangements, defining them as either a partnership acting as a potential prime or a prime contractor agreeing with specific subcontractors. The policy recognizes the integrity of these relationships when they yield superior performance and cost benefits. FAR 9.603 mandates that you identify the relationship in your offer. While agencies typically accept these structures barring antitrust violations, the prime contractor remains fully responsible for contract performance.

Types of Teaming Agreements

Federal contractors generally utilize vertical arrangements where a designated prime partners with a subcontractor. The prime retains privity of contract with the agency and assumes sole responsibility for performance, while the partner agrees to negotiate a subcontract upon award to provide specific capabilities.

Horizontal arrangements typically involve forming a joint venture where partners share management, profits, and risk. A unique variation exists within GSA teaming agreements known as Contractor Team Arrangements. In this model, every team member holds a direct contract with the government, distinct from standard prime-subcontractor hierarchies.

Teaming Agreement vs Joint Venture

Teaming agreements maintain separation between your companies. You establish a prime-subcontractor relationship where the prime submits the bid and accepts liability. The partner simply agrees to negotiate a subcontract upon award. This structure provides flexibility with lower administrative requirements.

Joint ventures create a third, new legal entity. Both companies own this entity while sharing management, profits, and risk. Although JVs allow firms to combine resources for size status, teaming vs joint venturing comparisons show that JVs require far more legal configuration.

Teaming Agreement vs Subcontract

The primary distinction involves timing. You execute a teaming agreement during capture to outline proposal responsibilities and exclusivity for a specific pursuit. This preliminary understanding supports the bid but typically expires once the government awards the prime contract.

A subcontract is the definitive post-award instrument governing performance. While the teaming agreement sets intent, the subcontract formalizes scope, flow-down clauses, and payment terms. Because courts often view teaming agreements as unenforceable "agreements to agree," you must sign a separate subcontract to secure work share.

SBA Affiliation Rules and Teaming Agreements

Small businesses face affiliation risks where the SBA aggregates partner sizes. Exceptions apply to bundled contracts or Multiple Award Contracts exceeding the substantial bundling threshold. You can form a Small Business Teaming Arrangement without affiliation here, provided every member meets the size standard.

Otherwise, the ostensible subcontractor rule poses significant risk. This treats firms as affiliated if the prime relies excessively on a partner for vital requirements. Triggers include the subcontractor managing the project or supplying all relevant past performance. The prime must maintain management authority to satisfy SBA affiliation regulations.

Essential Elements of a Teaming Agreement

Key Components of a Teaming Agreement

A compliant teaming agreement template identifies the prime and subcontractor alongside the specific solicitation number. Tying the document to a definitive pursuit creates enforceability. The scope of work must detail exact work share percentages, avoiding vague promises courts frequently reject.

Exclusivity clauses restrict partners from joining rival bids to lock in past performance. Intellectual property provisions shield proprietary data shared during proposal development. Finally, termination conditions dictate when the agreement expires, typically upon award loss or subcontract execution. A teaming agreement checklist verifies these sunset clauses prevent coverage gaps.

Benefits and Risks of Teaming Agreements

Why Use a Teaming Agreement?

Teaming agreements in government contracting allow you to bid on larger solicitations by accessing specialized capabilities and security clearances. This arrangement helps large businesses access small business set-asides through subcontracting. Combining resources strengthens proposals by filling past performance gaps and sharing writing duties. Yet, enforceability remains a major risk. Courts frequently reject "agreements to agree," leaving subcontractors empty-handed after award. You must also manage SBA affiliation risks. If the prime contractor relies too heavily on a subcontractor, the agency may disqualify the team.

Small Business Teaming Considerations

Small business set-aside contracts mandate strict limitations on subcontracting. For service contracts, the prime contractor must cover at least 50% of personnel costs. This requirement prevents small entities from serving as pass-throughs for large partners. SDVOSB and HUBZone participants must monitor these percentages to protect eligibility.

Beyond financial metrics, the prime must keep managerial authority. Ceding control to a subcontractor risks size status affiliation. A properly structured agreement lets the prime acquire technical experience and build past performance for future independent contract wins.

GSA Schedule Contractor Team Arrangements

GSA Schedule Contractor Team Arrangements (CTAs)

GSA CTAs allow multiple Schedule holders to combine capabilities while retaining direct privity of contract with the government. Unlike standard FAR teaming where agencies only recognize the prime, a CTA treats every partner as a prime contractor for their specific scope.

Each member remains liable for their own performance, Industrial Funding Fee (IFF) payments, and sales reporting. Because partners are not technically subcontractors, this structure avoids standard subcontracting limitations. You must define roles and invoicing in a written agreement, but the agency views the team as a collaboration of equals.

Drafting an Enforceable Teaming Agreement

Most teaming agreements in government contracting face legal risks during the post-award phase. Courts frequently rule that promises to hire a teammate are merely unenforceable agreements to agree rather than binding contracts. This is particularly common under strict Virginia law standards. To secure your work share, you must define material terms including scope, pricing methodology, and period of performance. Ideally, negotiate the full subcontract upfront and attach it as an exhibit. Always use mandatory language stating the prime shall award the subcontract to remove ambiguity.

Teaming Agreement Templates and Resources

Finding a free teaming agreement template or teaming agreement template word document is simple, yet unmodified versions carry risk. Generic forms often miss solicitation mandates or state enforceability laws. A standard teaming agreement pdf frequently lacks language binding the prime to the subcontractor post-award.

Tailoring any teaming agreement sample doc to your work share is required. This applies when using an SBA teaming agreement template or SDVOSB teaming agreement template to meet limitation on subcontracting regulations. Legal counsel must review teaming agreements templates for FAR compliance.

Final thoughts on federal teaming arrangements

Understanding teaming agreements in government contracting helps you decide when to partner and when to go solo on federal opportunities. The structure you choose affects everything from size status to post-award enforceability, so take time to match your agreement type to the specific solicitation requirements. Document your work share clearly and negotiate subcontract terms upfront to protect your interests. Good teaming relationships can become long-term competitive advantages if you build them on solid legal foundations.

FAQ

What is the main difference between a teaming agreement and a subcontract?

A teaming agreement is a preliminary document signed during the proposal phase that outlines intent to work together, while a subcontract is the binding post-award contract that governs actual performance. The teaming agreement typically expires once the prime contract is awarded, and you must negotiate a separate subcontract to formalize scope, pricing, and deliverables.

How can I make my teaming agreement legally enforceable?

Define all material terms upfront, including specific scope, pricing methodology, and period of performance. Use mandatory language like "shall award" instead of "will negotiate" to remove ambiguity. The strongest approach is to negotiate the full subcontract before proposal submission and attach it as an exhibit to your teaming agreement.

When does the SBA's ostensible subcontractor rule apply to teaming agreements?

The SBA treats your team as affiliated if the prime contractor relies too heavily on the subcontractor for vital requirements or past performance. This rule applies when the subcontractor manages the project, provides all relevant experience, or performs the primary contract requirements. The prime must maintain clear management authority and perform the required percentage of work to avoid affiliation.

What are the subcontracting limitations for small business set-asides?

For service contracts under small business set-asides, the prime contractor must perform at least 50% of personnel costs with its own employees. This limitation prevents small businesses from acting as pass-throughs for large contractors. SDVOSB and HUBZone contracts carry similar requirements that you must track carefully to maintain eligibility.

Can GSA Schedule holders team differently than standard FAR contracts?

Yes. GSA Contractor Team Arrangements (CTAs) allow multiple Schedule holders to work together while each maintains direct privity of contract with the government. Unlike standard teaming where only the prime has a contract, every CTA member is treated as a prime contractor for their scope, remains liable for their own performance, and pays their own Industrial Funding Fee.