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As the firm that will be legally responsible for executing a government contract, a prime contractor takes the lead in securing the contract and managing its performance. In cases where a prime lacks the expertise or capacity to implement certain components of a project, it will typically establish teaming agreements with subcontractors to handle this work. Generally, a prime will choose all of its subcontractors and form teaming agreements before it submits a bid or proposal — but not always. For example, in contracts involving major budgets, only the most extensively involved subcontractors are usually signed pre-bid.

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

Though you might expect that the prime always recruits the subcontractors for the bid, it's not uncommon - especially at the state and local levels - for a small business to identify a contract in which it wants to participate and then to recruit a larger firm to serve as the prime in a teaming agreement. Sometimes in cases like this the small business offers a unique project expertise; other times, it may bring substantial knowledge of the project's local area or familiarity with the contracting officers.

Benefits of a Teaming Agreement

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

Plus, your company can gain first-hand experience on projects that'll expand its skill set.

And finally, as your business develops strong relationships with companies whose expertise complements your own, you may find that these partners will recruit you to work on projects with them in future years.