Teaming Agreement

A teaming agreement is not a subcontract — it's a commitment to pursue an opportunity together and, if you win, to execute a subcontract based on the agreed terms. It's one of the most important strategic tools in government contracting, allowing companies to combine complementary strengths for a specific bid.

Why companies team:

• Capability gaps — The prime lacks a specific technical skill the sub brings
• Past performance — One company has relevant agency experience the other lacks
• Set-aside eligibility — A large business teams with a small business to compete on set-asides (with the small business as prime)
• Geographic requirements — Some contracts require local presence or knowledge
• Workload capacity — Neither company alone could staff the full requirement

Key clauses in a teaming agreement:

• Work share — Which company performs what percentage and which specific tasks (nail down specifics — vague work share leads to disputes)
• Exclusivity — Whether the sub is locked to this prime for this opportunity only (standard) or exclusively across all bids (unusual and often unreasonable)
• Cost responsibility — Who bears proposal preparation costs if you lose
• IP rights — How proprietary information shared during proposal preparation is protected
• Termination — What happens if the agency cancels the procurement or one party withdraws

Note: Courts have found that some teaming agreements are unenforceable as mere "agreements to agree." To strengthen enforceability, be specific about work share percentages, roles, and subcontract terms rather than leaving them to future negotiation.