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TEAMING AND
SUBCONTRACT
AGREEMENTS IN
FEDERAL GOVERNMENT
CONTRACTS
Negotiation and Drafting Issues
About the Firm
2
McMahon, Welch and Learned, PLLC represents
many small and mid-sized federal services
contractors in Northern Virginia, DC and Maryland,
including small-disadvantaged firms, veteran-owned
firms, women-owned firms and Hub Zone qualified
firms. We also have a strong corporate and
acquisitions-support practice which focuses on
general business legal matters of significant interest
to the broader business community.
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Presenter
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William T. Welch, Partner
Mr. Welch has twenty-four years of experience providing legal counsel
for the entire lifecycle of a government contractor from contract
negotiation, award, and litigating protests and contract claims. Mr.
Welch also has experience in teaming agreements, subcontractor
agreements (from the prospective of the prime and subcontractor), and
related issues. In addition, Mr. Welch advises contractors who qualify
for small business set-aside awards, 8(a) competitive and noncompetitive contracts, and HUBZone and Service-Disabled, Veteran
Owned contracts.
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Teaming Agreements
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

Far § 9.601 Recognizes Two Types Of Teaming Relationships:

Joint Venture – Two or more companies form a partnership (JV)
where the JV is actually the prime contactor and is primarily
responsible for contract performance.

Contractor Team – Where a prime contactor forms a team including
one or more subcontractors in pursuit of a specific solicitation.
Choice of the type of teaming relationship is dependent on your tactical
assessment of the client, the solicitation and the strengths of the JV or
teaming partners.
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Teaming Agreements
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
General Considerations:
A team is ordinarily formed prior to the submission of
a competitive bid or offer.
 A team is ordinarily formed to provide some sort of
competitive advantage, and selection of participants is
therefore most important.
 The team members should compliment one another to
improve the chances of winning the anticipated work.

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Teaming Agreements
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
Common Selection Considerations:
What are the relative strengths of the participants?
 Who has the most experience/influence with the
customers?
 Who can deliver the most impressive key personnel?
 Who has the most relevant and positive past
performance?
 Is this a set-aside competition?

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Teaming Agreements
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
Personal Considerations:
 Do
I want to prime this?
 Do I want someone else to take the risk?
 What is my value to the team?
 How do I ensure that I will actually get something
out of this?
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Teaming Agreements
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
Negotiating the Teaming Agreement:




Teaming Agreements are not all the same.
Positioning – am I stronger now than I will be at the
subcontracting stage?
Performance period, description of work and positions and
specific work assignments or % of work is important.
If you do a good job here, negotiation of your subcontract
will be easier.
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Subcontract Agreements
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
Context
 Subcontract
follows the Teaming Agreement
and award of the contract.
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Subcontract Agreements
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
Operative Terms
 Customer
Approval
 Allocation of Responsibility
 Reference

to Statement of Work
Statement of Work
 Equivocal
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Language
Subcontract Agreements
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
Term




If we have done a good job with the TA, this has already been defined
Variations
Equivocation
Option to Extend


Unilateral
Termination


Cause (Default)
Convenience

Unilateral
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Subcontract Agreements
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
Payment
 Timing
of Payment (pay when paid?)
 Travel and Other Direct Charges
 Prime Contractor Withhold
 Disallowance
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Subcontract Agreements
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
Personnel
 Qualifications
 Substitution
 Audits
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Subcontract Agreements
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
Proprietary Information Clause
 Most
likely already have a PI Agreement in place
at this stage (NDA)
 Enforcement

Data Rights and Product ownership
 Government
Rights
 Prime Contractor ownership
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Subcontract Agreements
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
Non-Solicitation
 Employees
 Business
Non-Compete Clause
 Changes Clause
 Mandatory Flow-Downs (not so important)

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Subcontract Agreements
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
Assignment
 Common
 Impact

Limitations on Subcontracting


on Sale
Critical for Small Business Set-asides
Affiliations
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Subcontract Agreements
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
Indemnification
 Balanced

Disputes
 Prime
Contract Disputes clause
 Arbitration v. Suit
 Jurisdiction

Subcontract Type (Cost plus, FFP, T&M)
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Questions?
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MCMAHON, WELCH AND LEARNED, PLLC
2100 Reston Parkway
Suite 325
Reston, VA 20191
Main: 703-483-2810
[email protected]
www.mwllegal.com