Teaming Partner vs. Subcontractor

[cheskieb]

Is there an operative difference between a teaming partner vs. a subcontractor?

[here_2_help]

Is there an operative difference between a teaming partner vs. a subcontractor?

Cheskieb,

I believe there could be. If the teaming partners agreed to create a joint venture or similar stand-alone entity, and infuse it with employees and its own cost structure, and then subcontract to that entity for additional services, then you could have such a distinction. Certain costs would be incurred by the teaming partner in its role as, say, accounting or program management function, while other costs would be incurred in its role as performing entity.

I experienced this type of arrangement a decade ago. Pretty dang complicated in terms of direct and indirect costs.

On the other hand, that is a pretty specific situation. If you are making a general inquiry, then I would answer that a teaming partner is an entity that was a party to a teaming agreement, while a subcontractor has actually entered into a subcontract. Many times (but not always), a teaming agreement is an agreement to agree -- i.e., not a fully executed contract.

Hope this helps.

[Guest Vern Edwards]

Is there an operative difference between a teaming partner vs. a subcontractor?

A teaming partner might or might not be a subcontractor. It depends on how the team is set up.

FAR 9.601 defines "contractor team arrangement" as follows:

“Contractor team arrangement,” as used in this subpart, means an arrangement in which—

(1) Two or more companies form a partnership or joint venture to act as a potential prime contractor; or

(2) A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program.

Definition (1) is not a prime-subcontractor relationship, and no member of the team is a subcontractor of any other member, although the team itself might have subcontractors. See Chierichella, Teaming Agreements and Advanced Subcontracing Issues (Federal Publications, Inc., 2007):

There are two basic alternative structures that are commonly employed in teaming arrangements, i.e., a prime contractor/subcontractor relationship of some specified or anticipated duration and a joint venture. In addition, two parties may join together as “dual prime contractors” in pursuing the same objectives as those traditionally accomplished by teaming agreements under FAR 9.601.

A joint venture may be a partnership or a corporation. Concerning joint ventures, Chierichella says:

Joint ventures differ from the more common prime contractor/subcontractor teaming agreements in one essential respect, i.e., they constitute separate legal entities, either partnerships or corporations, that are jointly owned and managed by the co-venturers... The hallmarks of this separate legal entity are joint ownership, joint management (or an agreed upon abdication of managerial responsibility by one party), and a sharing of profits and losses... It is the substance of the arrangement between the parties, and not the use of terms such as “prime contractor” and “subcontractor,” that determines whether a joint venture exists.

Concerning dual prime contractors, Chierichella says:

In McDonnell Douglas Corp. v. United States, 25 Cl. Ct. 342 (1992), the two plaintiffs had entered into a relationship which they denominated as a “Teaming Agreement” for study and full-scale engineering development of the Navy A-12 Advanced Tactical Aircraft. The agreement stated that the parties would respond jointly to A-12 Requests for Proposals, and provided for “an integrated organizational system to manage and allocate A-12 work equally.” 25 Cl. Ct. at 344. However, the agreement also included the following provision:

"This Agreement does not constitute and shall not be construed or given effect as a joint venture, partnership, pooling arrangement, or other formal business organization, or as creating any fiduciary relationship. Except as expressly provided herein, nothing herein shall be construed as providing for the sharing of profits or loss, nor shall either Party be liable to the other for any of the costs, expenses, risks, or liabilities arising out of the other's activities in connection with the performance of programs outside this agreement."

Id. (emphasis in original).

(According to Chierichella, the court held that the dual prime contractor arrangement was not a "team" as defined by FAR 9.601.)

So in answer to your question, there may be an operative difference between a "teaming partner" and a subcontractor. depending on how the team is set up.

[napolik]

Is there an operative difference between a teaming partner vs. a subcontractor?

If you are addressing this in the context of GSA Schedules, see the info here:

http://www.gsa.gov/Portal/gsa/ep/contentVi...124&faq=yes.

[formerfed]

In addition to what Vern and napolik said about Contractor Team Arrangements, the term "teaming partner" is used a lot lately by marketing personal and proposal writers. It's a buzzwork without any legal reference and essentially is the same as subcontractor.

I guess it implies more of a joint effort to fulfill client needs rather than a prime directing a subcontractor. Marketing types probably thinks it comes across better.