Major Issues in
Teaming Agreements
A I L EEN A . P I SC I O TTA , ESQ .
EXECUTIVE COUNSEL, PLC
THE ASBC
AIMS WORKING GROUP
JULY 7, 2010
Summary
2
 Nature and Limits of Teaming Agreements
 Two Models of Teaming Arrangements
 Joint Venture Model
 Prime/Sub Model
 SBA Affiliation Issues
 Contract Issues in Teaming Agreements
 Special Cautions
Aileen A. Pisciotta
July 7, 2010
What is Teaming
3
FAR Subpart 9.6
 An agreement
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between two or more companies to form a joint venture or
partnership to act as a potential prime contractor (JV Model); or
between a prime contractor and one or more companies proposed to
act as subcontractors under a particular Government contract or
acquisition program (Prime/Sub Model);
 Entered into prior to the submission of a proposal in
response to an RFP; and
 That must be recognized if disclosed in a proposal, or
after contract award if approved before becoming
effective.
Aileen A. Pisciotta
July 7, 2010
Purpose of a Teaming Agreement
(Different from a Subcontract)
4
 Focus is on preparation of a proposal, not performance
under a contract.
 Parties promise each other in good faith:
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To cooperate in proposal preparation
IF a contract is awarded, to enter into prime (or prime/sub)
agreements that include(s) certain features:
Allocation of task orders
 Allocation of profits (JVs)
 Project management structure

 Teaming Agreement should always automatically
expire:
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If contract is awarded – TA will be replaced by a prime or
prime/sub contracts
If no contract is awarded or if RFP is cancelled – no further
contracts are required
Aileen A. Pisciotta
July 7, 2010
Limits of Teaming
5
 No protection from antitrust.
 Prime contractor(s) in privity with customer always
fully responsible for performance.
 No limit to agency’s right to review and consent to
subcontractors.
 No insulation from joint venture liability.
Aileen A. Pisciotta
July 7, 2010
Teaming Agreement Models
6
Joint Venture
Teaming
Agreement
Aileen A. Pisciotta
Prime/Sub
Party A
Co-Prime
Customer
Party B
Co-Prime
Teaming
Agreement
Party A
Prime
Customer
Party B
Sub
July 7, 2010
Joint Venture Model
7
Teaming
Agreement
Party A
Co-Prime
Party B
Co-Prime
Customer
 Privity with Customer: All parties to the JV
 Common Characteristics
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Unlimited scope
Proportionate sharing of profits and losses
 Forms
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Corporate entity (corporation or LLC)
Partnership
Contract
 Consequences
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Joint liability for all parties for each others’ defaults
Members should indemnify each other
If a legal entity; JV will have to be unwound
Aileen A. Pisciotta
July 7, 2010
Prime/Sub Model
8
Teaming
Agreement
Party A
Prime
Customer
Party B
Sub
 Privity with Customer: Prime only
 Characteristics
 Limited scope and existence
 Sub bills for work performed; no sharing of profits
 Subs may have to be separately approved by customer
 Prime is identified as sole point of contact for the customer
 Form - Contract
 Consequences
 Prime bears ultimate responsibility and sole liability other than
through indemnity by sub for sub’s default.
 Sub bears no liability for prime’s default.
Aileen A. Pisciotta
July 7, 2010
SBA Affiliation Rules
9
 13 C.F.R., part 121 – “Affiliates”
 Entities are “affiliates” of each other when one has the ability or power
to control the other, or when a third party has the ability or power to
control both.
 Size determinations of affiliated companies are based on combined
rather than individual measures.
 Members of a JV team are always “affiliated”
 SBA looks to actual rather than stated relationships –
totality of circumstances:
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Ownership
Management
Prior relationships or ties
Control under contract terms (affirmative or negative)
 “Deemed” JV
 Affiliation rules apply unless there is an exception
 Possible loss of size qualifications
Aileen A. Pisciotta
July 7, 2010
Exceptions to Affiliation Rules
for Small Businesses
10
 Mentor/Protégé (for 8a companies)
 13 CFR 124.513 – Applicable SBA JV regulations
 A JV must be pre-approved
 May pursue bundled or non-bundled large contracts (not just 8a set asides)
 JV is “small” if
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the 8a is “small”
The 8a is in the lead
No percentage of work requirements
Mentor may own 40% of the 8a
 Bundled Procurements
 Each small business meets NAICS code size limits
 Then size standards are applied individually, not to the JV
 Large Procurements
 Each small business meets NAICS code size; AND
 Project meets large size requirements:

Revenue based “size” --- $$ value = ½ NAICS size

Employee based “size” -- $$ value > $10 million
Aileen A. Pisciotta
July 7, 2010
Teaming Agreement Provisions
Important to Both Parties
11
 Structure
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Bi-lateral, not multi-party TAs
Affiliation rules and control issues (totality of circumstances)
Exclusivity with respect to RFP (more important for prime)
Responsibilities for expenses
 Protection of confidential and proprietary information
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Separate NDA (need not expire with the TA)
Specify IP ownership for individual and joint products
 Representations and Warranties: authority, capability, ownership
 Covenants: Ethical conduct and OCI obligations
 Law and disputes (under the TA, not the customer contract)
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Compliance with law
Governing law
Dispute resolution and forum
 Mutual protection
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Non-solicitation provisions
Termination (automatic, for cause and for convenience)
Mutual indemnities and limitations on liability
Aileen A. Pisciotta
July 7, 2010
Teaming Agreement Provisions
Important to Prime Contractor Parties
12
 Maintenance of control
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Single point of contact and control over the procurement as well as
performance
Ability to terminate subcontractor if products or services not
provided on terms proposed
Discretion to respond to customer demands in the contract
Add other subcontractors if and when necessary
 Obtain clear subcontractor commitments to:
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Assist with proposal development and marketing
Provide timely, accurate and complete information reasonably
requested regarding capabilities
Execute subcontract if contract is awarded
Aileen A. Pisciotta
July 7, 2010
Teaming Agreement Provisions
Important to Subcontractor Parties
13
 Protection of role
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Clear and exclusive task order identification and allocation
Limitations on inclusion of additional team members
 Obtain clear prime contractor commitments to:
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Include subcontractor share and qualifications in proposal
Facilitate approval of sub by customer
Negotiate subcontract on award
Promptly and accurately share information
Relevant policies requiring compliance
 Changes in status of contract and customer requirements
 Conflicts of interest

Aileen A. Pisciotta
July 7, 2010
Beware!
14
 Exogenous terms (e.g., controlling obligations in mandatory
contract attachments)
 Additional terms to be included in subcontracts
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FAR clauses
Flow downs from prime contract
 Ostensible Subcontractor Rule
 Limitations on Subcontracting Rule (small business set asides)
 Independent contractor issues generally (1099 vs. W-2)
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IRS : multi-factor test (behavioral, financial, relationship)
Many states: “ABC” test
No control of means of performance (only result)
 Contracted service is outside scope of normal business operations
 Contractor is in business to provide the service

Aileen A. Pisciotta
July 7, 2010
Contact
AILEEN A. PISCIOTTA
EXECUTIVE COUNSEL, PLC
APISCIOTTA@EXEC-COUNSEL.COM
WWW.LINKEDIN.COM/IN/APISCIOTTA
WWW.EXEC-COUNSEL.COM
202-644-0101 OR 703-914-2635