New Trends in Teaming
Agreements
Breakout Session # 703
James R. Vickers, Sr. Manager, Contracts
Veronica Garcia, Sr. Supplier Manager
Raytheon Missile Systems
21 July 2010
10:00am – 11:15am
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Agenda
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Purpose of the study
Definition of Teaming Agreements
Uses of Teaming Agreements
Types of Teaming Agreements
Basic, expanded and unique Teaming
Agreement content
Methodology of study
Results
Trends over time
Conclusions and Recommendations
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Purpose of the Study
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Identify trends
See what has changed over time
Capture unique terms
Look for improvement areas
Provide recommendations
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Definition – FAR 9.601
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“Contractor team arrangement”
means an arrangement in which:
(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
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Uses of Teaming Agreements
• Better compete; strengthen weaknesses
• Share results
• Complement each Party’s unique
capabilities
• Offer the best combination of performance,
cost, and delivery
• Ensure source of critical parts or know-how
• NOT to take someone off the street
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Types of Teaming Agreements
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Exclusive
Non-exclusive
Multi-party
Collaborative Research
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Basic Teaming Agreement
Content
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Parties
Recitals
Definitions
Proposal Activities
Award of Contract
Customer Interface
Exclusivity
Publicity and News Releases
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Basic Teaming Agreement
Content (Continued)
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Proprietary Information
Intellectual Property (IP)
Termination
Notices
Relationship
Assignment
Modifications
Severability
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Basic Teaming Agreement
Content (Continued)
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Limitation of Liability
Classified Information
Governing Law
Arbitration
ITAR
Entire Agreement
Signatures
Exhibit A
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Typical Expansions of Teaming
Agreement Content
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Foreign Corrupt Practices Act (FCPA)
Non-solicitation of employees
Specific exclusivity language
Joint investment
Specific Limitation of Liability
Steering Committee
Best pricing
Offset
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Very Unique Terms
• Prime/Sub role reversal
• Executive Committee in addition to
Steering Committee
• Allocation of jointly developed IP (other
than 50/50 split)
• Specifics on how to calculate best price
• Right of first refusal
• Sub-tier Subcontracting approval
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Methodology of Study
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Scores of Samples Analyzed
Various Raytheon Business Units
Period of 1999 – 2010
Large and Small Businesses
Defense and Commercial entities
Domestic and International
Single and Multiple Pursuits
RFP and Collaborative Research/IRAD
Joint Ventures/Ownership Agreements
excluded
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Data Compared
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Size of Company
Year of Effectivity
Parties, (number)
Defense or Commercial
Domestic or International
FCPA
Single or Multiple Pursuits
Exclusivity
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Data Compared (Continued)
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For RFP or Collaborative Research
Term
Choice of Law
Arbitration Agency
Offsets
Taxes
Limitation of Liability
Steering Committee
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Data Compared (Continued)
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Non-solicitation of Employees
PIA protection
ITAR
Workshare Defined
Data Rights
Best Pricing Terms
Prime/Sub Role Reversal
OCI
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Data Compared (Continued)
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Investments
Sub-tier Subcontracting Approvals
Approval of Use of Agents
Language (International)
Level of Signatures
Recitals (number)
Termination (number)
Unique Terms Identified
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Findings - General
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Large: 85%
Small:15%
Defense: 78%
Commercial: 22%
– New: 33%
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Domestic: 59%
International: 41%
2 Party: 93%
3+ Parties: 7%
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Findings – General (Continued)
• Single Pursuit: 54%
• Multiple Pursuits: 46%
• Types of Pursuits:
– US Govt. Prime: 66%
– Intl. Govt. Prime: 10%
– Collaborative/New Markets: 24%
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Findings - Terms
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Exclusivity: 80%
Subcontracting Approval: 17%
Non-solicitation of Employees: 12%
Investments Specified: 22%
Offset: 24%
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Findings by Business Size
• 49% of Large businesses took part in
Single pursuits (vs. multiple) compared
to 67% of Small businesses
• 100% of Small businesses took part in
exclusive agreements compared to
only 77% of Large businesses
• None of the Small businesses sampled
included a Non-Solicitation of
Employees term
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Findings by Domestic/Intl.
• 59% of International agreements were
for multiple pursuits compared to 42%
of Domestic agreements
• 17% of Domestic agreements included
the Non-Solicitation of Employees term
compared to 6% of International
agreements
• 76% of International agreements
included an FCPA term compared to
13% of Domestic agreements
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Term (in Years) over Time
• Avg. Term over Time
1999-2002
2003-2006
2007-2010
7.4 38% not specified
4.5 15% not specified
3.8 5% not specified
• Trend is toward shorter term
• Large and Small businesses have been
getting better about including a term limit
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Avg. No. of Recitals
• Recitals by Business Size
Large
Small
6.2
5.2
International
6.5
• Assumed Large
businesses would
• Recitals by Domestic/Int’l. have more recitals
due to Antitrust
Domestic
5.6
concerns
• Over time
1999-2002
2003-2006
2007-2010
6.4
5.2
6.5
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•Small businesses
have just as many
recitals
Use of FCPA terms over Time
1999-2002
2003-2006
2007-2010
60%
67%
100%
% use of FCPA in
International
Agreements
• 13 % of Domestic Agreements include FCPA
term even if not an International agreement
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Use of Termination Terms Over
Time
• Avg. No. of Termination Terms Over Time
1999-2002
2003-2006
2007-2010
8.3
7.8
12.3
• More focus on how to end agreements
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Dispute Resolution
• % Use of Different Arbitration Agencies
Domestic International
AAA
63%
47%
LCIA
0%
41%
ICC
0%
6%
Other
8%
6%
None
29%
0%
• Agreements between Domestic parties
are more comfortable with U.S. courts
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Trends over Time (1999-2010)
• Teaming Agreements are becoming
more common
• More Small businesses are parties to
Teaming Agreements
• Average Term of Agreements has
decreased
• Termination clauses are becoming
more important to parties
• Increased use of unique terms
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Conclusions from Evaluations
• Most Common Form of Dispute
Resolution is via use of AAA, even on
International agreements
• Many terms (ex: IP, Arbitration)
addressed in Teaming Agreements
become moot when superseded by PO
– How much time is spent on these?
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Recommendations
• Since most agreements are between
two Parties for a Single Pursuit,
standardizing these types of
agreements (within company and
industry) would save time
• Optimize re-use of standard terms
• Better address follow-on pricing
• Better define Workshare split
– 75%,25% Workshare = 2/3, 1/3 $ split
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QUESTIONS
• Contact Information
– Jim Vickers:
jrvickers@raytheon.com
– Veronica Garcia:
Veronica_Garcia@raytheon.com
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