Teaming Agreements What to Expect What to Avoid by ja2304

VIEWS: 30 PAGES: 12

									Teaming Agreements: What to
   Expect & What to Avoid


       Marc. F. Efron
      Amy L. O’Sullivan
   CROWELL & MORING LLP
              Teaming: Understanding a
                   Broad Concept
• What do we mean by “teaming”?
   – Teaming Agreements
   – Prime/Sub relationships
   – Joint Ventures
• Key Factors in Identifying Teaming Partners
  and Type of Relationship: Size, Skill, Success,
  Chemistry
• RFP Considerations:
   – Set-Asides
   – Past Performance/Experience Limitations and
     Weighting
   – Unique Technical Capabilities
• There is no “one size fits all” for these
  agreements, but templates are useful guides
                    Teaming Agreements:
                     Advance Planning
• DEFINE THE SCOPE CLEARLY: one RFP or
  specific program vs. broader alliance
• Ranges of Exclusivity:
  –   Applicable only to Sub’s portion of the work
  –   All matters related to the proposal
  –   All matters related to the alliance
  –   Anti-trust risks
• Goal: Manage relationship and expectations of
  the parties
• Traits to avoid: complacency, tyrants
            Key Issues in Structuring
              Teaming Agreements
• Clearly defining work share
• Sharing of confidential/proprietary data
• Enforceability/consequential damages
• Exclusivity/anti-competitive teaming
• Recoverability of IR&D/B&P costs
• Control and communication in proposal
  development
• Control and involvement in work
  development and management/customer
  contact
               Teaming Agreements – Forming
                an Enforceable Relationship
• Firm and binding obligation v. agreement to negotiate in
  good faith v. agreement to agree
• Teaming Agreements often contain only minimum terms
  necessary to bid: submission of proposal data, requirement
  to cooperate, protection of proprietary info, promise to
  negotiate subcontract if award
• Results in insufficient detail in key areas: pricing terms,
  work allocation, ability of party to withdraw prior to award
• Provisions to help ensure enforceability:
   – Intention to be bound
   – Price: specific formula or range
   – Duration
   – Scope: well-defined performance obligations of parties
      consistent with RFP and proposal; consider including
      attached statement of work and/or form of subcontract
               Teaming Arrangements – Prime
                  vs. Sub in Negotiations
• Exclusivity
   – Primes want to maintain options
   – Subs prefer exclusive commitments
• Follow-on Contracts
   – Primes do not want to commit to subsequent subcontracts
   – Subs often need or want such commitments
• Work Content
   – Primes speak of targets and goals
   – Subs seek specific commitments
• Cost Proposals
   – Primes want subs to make BAFOs, usually at a discount
   – Subs are concerned with providing BAFOs unless they are
     involved in negotiations
           Prime/Sub vs. Joint Venture

• Prime/Sub Advantages:
  – Easier and quicker to arrange than JV
  – More familiar/standard approach
  – Reduced need to arrange chains of command
  – Don’t create separate, new organization
  – Necessary for set-asides, unless mentor-
    protégé – avoid affiliation issues
  – Fewer requirements/responsibilities imposed
    on Sub (good for new/small businesses to
    “learn the ropes”)
           Prime/Sub vs. Joint Venture

• Joint Venture Advantages:
  – Maximum ability to pool resources and
    strengths
  – Agencies frequently request for mentor-
    protégé relationships
  – May result in more competitive bidder
    • Stronger past performance history (look at
      history of 2 companies instead of 1)
    • More competitive pricing
    • Single point of contact with customer and more
      centralized management
               Subcontract Negotiations

• Advice to prime contractors:
  – Take time to tailor draft agreement – use letter
    agreements if necessary to “buy time”
  – Be reasonable – avoiding an unfairly one-sided
    agreement sets a good tone for the relationship and
    saves time in negotiations
  – Spell out key issues and address historical or contract-
    specific risk areas:
     • Notice and authority requirements
     • Invoicing and payment
     • Proprietary information
     • Term and termination
     • Limitation of liability
     • OCIs
     • Relationship with customer
               Subcontract Negotiations

• Advice to Subcontractors:
  – Invest in help to get it right before signing agreement
  – Don’t assume terms must be accepted simply b/c Prime
    is an experienced government contractor
  – Limit/tailor terms to what is relevant/required
  – Ensure clauses are even-handed
  – Review flowdowns and limit as appropriate (key
    limitations based on dollar thresholds and commercial
    items)
  – Clearly define statement of work and responsibilities
  – Review payment provisions to ensure payments can’t
    be withheld unreasonably
               Special Rules for Set-Asides
• SBA excels at finding attempts to bend the rules particularly
  with size status and affiliation
• Instead of just percentages, consider “totality of the
  circumstances” and substance over form
• Multiple tests for affiliation:
   – Ownership – own or power to control > 50% of stock
   – Control (affirmative or negative)
   – Agreements to merge/sell stock given present effect
   – Common management
   – Identity of interest
   – Ostensible subcontractor rule
   – Newly organized concern rule
   – Joint ventures – exception for approved mentor/protégé
• Consider these issues in negotiating teaming agreements
          Questions?

   Marc F. Efron
   (202) 624-2640
 mefron@crowell.com

  Amy L. O’Sullivan
    (202) 624-2563
aosullivan@crowell.com

  www.crowell.com

								
To top