Teaming Agreement: the Role of the Prime Contractor

The prime contractor is the firm that will be legally responsible for the overall contract and will therefore take the lead in securing the contract and managing its performance. Primes typically use teaming agreements with subcontractors when they lack the expertise or capacity to perform specific portions of the project. Generally, a prime will choose subcontractors and form teaming agreements before it submits a bid or proposal — but not always. For example, when the contract is large, only the key subcontractors are typically signed pre-bid.

Once a prime contractor has formed a teaming agreement with a subcontractor, the teaming agreement becomes part of the proposal or bid — and may even be a significant selling point.

Although it might seem that the prime contractor would always be the one to go about recruiting subcontractors, that’s not always the case — especially on the state and local level. It’s not uncommon for a small local business to identify a contract and then recruit a larger firm to serve as the prime in a teaming agreement. Sometimes the small local business offers a unique expertise; other times, it may offer knowledge of the project, the community and the contracting officers.

A teaming agreement is not easy. You must find the right partner or partners and negotiate and draft a comprehensive teaming agreement. Then you must all work together to fulfill the contract, which can be a challenge if you have different management and communication styles.

Benefits of a Teaming Agreement

A teaming agreement allows your business to participate in, and profit from, government contracts that would normally be too large for your company to secure on its own.

Additionally, a teaming agreement enables your business to gain first-hand experience on projects your business wouldn’t ordinarily see, which might expand your skill base.

And finally, as your business develops strong relationships with other businesses whose expertise complements your own, you may find that these partners will locate projects for you to work on with them — new contracting opportunities will come looking for you.