The Government’s increased interest in multiple-award IDIQ contracts has increased the teaming opportunities for contractors. As a result the task of negotiating teaming agreements is more complex than ever. Teaming Agreements (TAs) normally consist of two pieces: the basic terms and conditions and an exhibit or attachment that defines the specific roles and responsibilities for the proposed opportunity.
When laying the groundwork for the TA there are certain provisions that can become “deal-breakers” and should be addressed early in the negotiation process. There is no point in proceeding until these items are resolved.
Critically important is exclusivity. A potential subcontractor is going to be reluctant to sign up to be exclusive without some consideration, normally a guaranteed workshare. After all, why would a company promise not to pursue business from another prime contractor without some promised return? The prime on the other hand is going to want exclusivity because the teammate’s specific capabilities can set it apart from other competitors and increase the win probability for the team.
The more unique the capability that a teammate brings to the table, the stronger its position when it comes to negotiating workshare, which is the second provision that can be a deal breaker. The prime, of course, has to divide up the workshare among all its teammates while maintaining enough for itself to be profitable. If the prime contract is a small business set-aside, the prime will only have 49% of the workshare to divvy up among its teammates because it has to retain 51% for itself.
Another potential deal breaker is how the proposal work is going to be divided up. Again, how much effort a teammate is going to be willing to put into the proposal is related to how much work it stands to get from the contract if awarded. Teaming agreements nearly always provide that each teammate absorbs the costs of its own work on the proposal.
When initiating teaming discussions, the top three items to address up front are inter-related and can become deal-breakers: exclusivity, workshare and division of effort for the proposal. If those items can be resolved, most other terms and conditions can be negotiated with minimal effort by reasonable parties.