I am about to sign my first teaming agreement as a subcontractor for a federal contract. The prime contractor reached out after seeing my capability statement in response to a sources sought notice for IT services, NAICS code 541519. This is a potential 8(a) set-aside. I've been told to review the agreement carefully, but I am not sure what to look for. Are there common pitfalls in teaming agreements that small businesses often encounter? What clauses or terms should I pay close attention to and potentially negotiate for as a new sub?
What are the common pitfalls in a teaming agreement that a small business should watch for?
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A common pitfall in a teaming agreement is an unclear scope of work, which can lead to disputes over responsibilities and compensation. You should pay close attention to the definition of each party's roles and responsibilities, especially concerning proposal development and contract performance. Ensure the agreement clearly delineates your scope of work as a subcontractor versus the prime's scope, and how changes to that scope will be managed during both the proposal phase and if awarded the contract. For an 8(a) set-aside, the limitations on subcontracting are critical: on a services set-aside, the prime will not pay more than 50 percent of the amount paid by the Government to subcontractors that are not similarly situated entities (FAR 52.219-14(e)(1)). Verify that the teaming agreement addresses how this will be met and how your status as a similarly situated entity, if applicable, is documented. Also, review clauses regarding intellectual property, confidentiality, and how conflicts of interest will be resolved. Pay attention to clauses that dictate exclusivity or restrict your ability to pursue other opportunities with the government or other primes, and negotiate for clear terms that protect your business interests.