Tuesday, April 28, 2015
Just because the team is successful and a prime contract is awarded, does not necessarily mean the teaming partner will be awarded a subcontract. For instance, many teaming agreements require the parties to exert good faith efforts to negotiate a subcontract once a prime contract is awarded. After receiving the prime contract award, the prime contractor may decide it doesn’t want to be exclusive to the teaming partner or that the partner’s pricing is too high. From a practical standpoint, if the prime contractor wants to avoid awarding a subcontract to the teaming partner, it can cause the negotiations to fail by insisting the subcontractor agree to unacceptable terms while claiming it is acting in good faith.
If the prime contractor refuses to award a subcontract to a teaming partner, the partner may find that the courts refuse to enforce the teaming agreement. The enforcement of teaming agreements by courts is mixed. They have been called unenforceable “agreements to agree” by some courts, and enforced by others. The more ambiguous the agreement, the less likely it is to be enforced. Conversely, a teaming agreement is likely to be enforced if it clearly shows the parties intent to be bound by the agreement and the terms of the agreement are sufficiently definite. To increase the likelihood of enforcement, an agreement must identify the duration and scope of the agreement, as well as the compensation to be paid.
Companies that carefully draft their teaming agreements will greatly increase their chances of having a contract that is enforceable. Key terms to consider are any requirements and exceptions to the award a subcontract, the term of the subcontract, as well as definitive pricing and scope of work. Also, attaching a draft subcontract as an exhibit to the teaming agreement may help avoid conflicts over subcontract terms after the prime contract is awarded.
Thursday, January 22, 2015
· Develop items at private expense when they have commercial application and may result in a competitive advantage.
· Properly mark all data and software with the appropriate protective legend before delivering to the Government.
· Provide written notice to the Government of all items that will be delivered with less than Unlimited Rights, and obtain agreement from the Government that such items may be delivered with less than Unlimited Rights.
Monday, October 27, 2014
Subpart 9.6 of the Federal Acquisition Regulations (“FAR”) recognizes that teaming agreements enable offerors to complement each other’s capabilities, and to offer better performance, deliveries, and cost structures. Agencies must recognize the integrity and validity of teaming agreements if the agreements are fully revealed in competitive proposals or before the teaming agreement becomes effective.
A properly structured teaming arrangement must vest control and daily management in the proposed prime contractor, and the proposed prime contractor must be solely responsible for performance. The government may find parties of a teaming arrangement to be “affiliated” for purposes of size standards, where the would-be prime contractor is overly reliant on its teaming partners or the tasks and areas of responsibility of the parties are not clearly delineated.
The Small Business Administration (“SBA”) decides whether parties to a teaming arrangement are deemed “affiliated.” If the parties are deemed “affiliated” their revenues and personnel will be combined by the SBA in making its decision of whether the affiliated companies are small for purposes of the procurement at hand.
Under the Ostensible Subcontractor Rule, 13 C.F.R. 121.103 (h)(4), a would-be prime contractor and its subcontractor are treated as joint venturers, and therefore affiliates, for size determination purposes if the subcontractor has too great of a role under the teaming arrangement. More specifically, “an ostensible subcontractor is a subcontractor that performs primary and vital requirements of a contract, or of an order under a multiple award schedule contract, or a subcontractor upon which the prime contractor is unusually reliant. All aspects of the relationship are considered, including, the terms of the proposal (such as contract management, technical responsibilities, and the percentage of subcontracted work), agreements between the prime and subcontractor (such as bonding assistance or the teaming agreement), and whether the subcontractor is the incumbent contractor and is ineligible to submit a proposal because it exceeds the applicable size standard for that solicitation.”
With proper planning and structuring of teaming arrangements, companies can reap the benefits of teaming and avoid the pitfall of being deemed “affiliated.”
Tuesday, April 1, 2014
It should be noted that a protester may be able to challenge the impropriety by filing suit in the Court of Federal Claims, even if the issue has been rejected by the GAO.
Monday, March 31, 2014
Determining the country of origin for BAA and TAA purposes can present complex issues of interpretation and application that must be considered on a case-by-case basis, based on determinations of the Bureau of Customs and Border Protection (“Customs”). Companies that fail to accurately identify whether their products are compliant or non-compliant with the BAA or TAA requirements are at great risk of having their contract award terminated and being liable to the U.S. Government under the False Claims Act. In the past few years, violations have cost companies tens of millions of dollars in fines and terminated contracts.