New Contract Opportunities Through Teaming Agreements

The Teaming Agreement

What is a Teaming Agreement? Pitfalls of Teaming Agreements As A Subcontractor, How Do I Protect My Intellectual Property?

Rob CoganPrincipal AttorneyContinuum Law

As presented to the quarterly seminar of the National Defense Industrial Association in San Diego

NDIA SBC ForumRob Cogan, Continuum Law [email protected] 2

What is a teaming agreement?

It is basically an agreement to cooperate on preparation of a proposal and to work toward closing a contract if you win.

However, it does NOT by itself guarantee that you will get the subcontract if your team wins.

Parties agree to negotiate a subcontract in good faith.


Advantages

It allows a smaller company to “plug in” to the capital and technical expertise of larger companies.

It allows you to focus on your core competency while expanding your markets.

You may gain expertise in the other team member’s “space.”

NDIA SBC Forum Rob Cogan, Continuum Law [email protected]

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Pitfalls

Prime may have teaming agreements with many subs.

Surprises could arise in final contract negotiations.

You may be cut out of the loop.

The Prime may get the right to use your information.

You could have an unintended non-competition obligation.


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Objectives of the Agreement

Avoid costly disputes later on.

Answer the “what ifs?” when possible.

Try to establish some certainty regarding your costs and margins.

Maximize the chance of actually getting a subcontract.


Objectives of the Teaming Effort

Identify the specific contracting opportunity and potential follow-ons.

Identify who is bringing what to the party.

Identify the scope of effort

Specify who will do what during the proposal effort

Set the best possible context for negotiating the subcontract when your team wins


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Division of Proposal Tasks

The proposal is commonly prepared by prime contractor.

Parties usually bear their own expenses.

The subcontractor should make sure proposal accurately reflects its role.

Be aware of restrictions imposed on your ability to communicate with companies at the same or other tiers.


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Identifying the Opportunity – and Whether There Really is One

Are you cooperating on a specific solicitation, or are you teaming as to solicitations that may arise under a program?

Are you the exclusive teaming partner? Exclusivity may or may not be proper.

Will you remain the teaming partner? Can the teaming agreement be terminated? When does the teaming agreement expire? What happens when the Government delays or

cancels the solicitation?


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Types of Termination

Termination for Convenience (T4C) Government may cancel and not pay lost profits; the

current statute took root at the end of World War II. Prime contractors have adapted this clause for their

own purposes

Termination for Default (T4D) Requires a clause that will not result in giving the

prime contractor too much leverage; not every breach is a default

Termination Under State Contract Law


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Expiration of Teaming Agreement

Types of expiration When the team wins the award. After a set period of time. After failure to win – But when does that

happen, after award, after protest? Upon cancellation of the program – But what if

it is just delayed or temporarily withdrawn? Upon failure to negotiate a subcontract “in

good faith.”


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Agreement on certain subcontract terms

If Prime is awarded the Contract by the Agency, then prime and sub shall immediately commence good faith negotiation.

The Government includes “flow-down” provisions in the prime contract automatically applicable to subcontractors

The more terms agreed upon in advance, the better


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Important Terms Often Overlooked

Subcontractor shall be pair the price in its proposal

The type of contract.

A specific work statement, which can be invaluable later. The DoD Manual on Work Statements is a good tool that simplifies the task.

Payment details.


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Proprietary Agreements

Benefits – protecting your information and keeping your options open.

Pitfalls (if not done right) –

-- losing your exclusivity;

-- unintended non-compete obligations;

-- endless arguments;

-- delayed or canceled product release.


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Types of Legends

Commercial legends may take many different forms; these will bind other contractors, e.g., “Proprietary,” “Trade Secret”

Data submitted to the Government must be marked EXACTLY as specified in the Federal Acquisition Regulation. The law permits the government to ignore any other markings.


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Clauses to look out for

Some agreements say that all data is protected; this is impossible to administer.

You should require data to be in tangible form, marked with a suitable restrictive legend.

Oral disclosures must be reduced to tangible form in a given time and properly marked.

If you must return all data at contract completion, how will you know what your obligations are?


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Handling of Information

Who can see it? E.g., employees with need to know, consultants

under agreement. Due care

Specify a standard of care, such as how the other party treats its own similarly important data

“Strictest confidence” isn’t defined; it is not a good standard for protection.

Archiving information A way to avoid returning information and being

open to unbounded trade secret claims. Enforced under state law


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Examples

Rights lost - Xerxe Group v. US

Contractor didn’t mark the data properly.

Rights protected – Touchpoint Solutions v. Eastman Kodak

Kodak got data from Touchpoint but later cut out Touchpoint and teamed with IBM.

Court held that the software Kodak used was not independently developed


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Thank You. Rob Cogan

Continuum Law(858) 926-5800

[email protected]

New Contract Opportunities Through Teaming Agreements

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