Minimizing business risk through teaming agreements
by Doug Friedli, Senior Business Development Consultant
Using teaming agreements to pursue federal government contracts has become a more popular, convenient way to compete for business that also helps to minimize risk. So what should a successful agreement entail? First, let’s take a closer look at what one is.
A teaming agreement is a contract between two private companies documenting that the two will combine resources to bid on a government business opportunity. According to federal regulations, teaming agreements fall under two main subcategories: Teaming Agreements and Other Teaming Arrangements. The key difference is that teaming agreements, unlike other teaming arrangements, often only apply to one solicitation or to a specific government program—so they are formed to target a specific opportunity.
Different sets of circumstances make teaming mutually beneficial or even necessary. One example is a typical full-and-open competition where the government requires a percentage of work be completed by a business registered under a socioeconomic classification. Federally recognized classifications include Small Business, Disadvantaged Business (8a), and Small Disabled socioeconomic categories. These and other considerations make such agreements both practical and economical to pursue.
Obviously, there are strengths and weaknesses that need to be considered when contemplating this type of action. Key provisions in a teaming agreement should cover the objective, exclusivity, confidentiality, subcontractor participation, communication with the government customer and contract terms. Hopefully this short narrative will stimulate thoughts for other avenues to build your business strategic plan.
Doug Friedli is a senior business development consultant with LSI, a locally based business and economic development firm. As manager of LSI’s economic development contract with the Governor’s Office of Economic Development Procurement Technical Assistance Center, Doug supervises the growth of many small- and medium-sized businesses. He also establishes business outreach events to promote contracting opportunities. Doug holds a bachelor of science degree in business and marketing from Weber State University and a master of arts in organizational management from University of Phoenix.
This blog originally appeared in the Ogden/Weber Chamber of Commerce Nubiz blog. To view this and other Nubiz blogs, click here.