If you are a small business, most likely you will first encounter a teaming agreement when you’ve been asked to be a proposed subcontractor for a procurement.  You will asked to sign a teaming agreement drafted by the proposed prime.  In the majority of cases, you will not have any real leverage to rewrite the agreement.  However, you may get the opportunity to make some tweaks here and there.  This article outlines those areas worth a second look.

1. Participation in Development of the Proposal. Every teaming agreement has a section detailing each party’s responsibilities for preparing the proposal.  Make sure that this section of the teaming agreement obligates the proposed prime to include your name in the proposal as a team member for a specified area of work.  Under current small business regulations, if a large business fails to use a proposed subcontractor during contract performance, it must report such failure to the Contracting Officer.
2. Exclusivity. Most primes want their proposed subcontractors to be exclusive to the team, which means the proposed subcontractor cannot team with any other company.  While this is not an unreasonable provision, make sure the provision dies with the end of the teaming agreement.  If the proposed prime pulls out of the procurement, you want to ensure your ability to team with another contractor.
3. Confidentiality. Teaming agreements almost always contain a provision requiring the parties to keep the other party’s disclosed proprietary information confidential.  The provision should clearly state that the proposed prime cannot disclose the information to any third party except for the government.  If there are multiple team members collaborating on the proposal, the confidentiality provision should provide that all team members will sign a confidentiality agreement that protects the information disclosed between team members.
4. Subcontract Award. The teaming agreement will provide that the prime will negotiate a subcontract with the proposed subcontractor in the event it receives award of the prime contract.  From the subcontractor’s perspective, the most important provision in a teaming agreement is a promise from the prime that it will award a certain amount of work to the proposed subcontractor.  This is often called a “workshare” provision.  While such a provision is good to include in a teaming agreement, generally such provisions are not enforceable.  What a proposed subcontractor can do instead of or addition to including a workshare provision in the agreement is to make sure the subcontract can’t be terminated at the discretion of the prime.  One way to do this is to include in the teaming agreement a promise from the prime that it will exercise all options in the subcontract corresponding to the options exercised by the government under the prime contract.  The teaming agreement also should provide that the prime will not terminate the subcontract for its convenience unless the prime contract is terminated for convenience of the government.
5. Pricing. A common complaint among small businesses is that, after a prime has received award of a prime contract, the prime asks the small business to lower its prices for the subcontract.  There are a couple of ways to avoid this scenario.  First, include a provision in the teaming agreement that allows the proposed subcontractor to review the final price proposal submitted to the government.  This way the proposed subcontractor can determine whether the pricing included in the proposal reflects the pricing proposed by the subcontractor for its work.  Second, include a provision in the agreement that states that the pricing set forth in any subcontract between the parties reflect the pricing included in the proposal or provided by the proposed subcontractor.

Making these adjustments in the standard teaming agreement template provided by the prime will go a long way to ensuring that a small business ultimately benefits from the assistance it provided the prime in preparing the proposal.