Good agreement, good team
- By Carl Peckinpaugh
- Sep 04, 2000
More often than not, the first thing a company does after becoming interested
in a business opportunity is to consider what companies might be added to
the team to enhance prospects for winning a contract. Generally, the companies
negotiate a formal teaming agreement under which they define their respective
roles in the proposal effort and their roles in implementing the contract,
should they get the award.
Experience shows that the most successful teaming arrangements begin
with a solid agreement, one in which the parties reach an understanding
on as many issues as possible at the outset. An issue that is difficult
to resolve upfront becomes even more difficult as time goes by and the stakes
get higher. Particularly if an issue might be a deal-breaker, it is better
to know early, when alternatives still may be possible.
Teaming agreements should be customized to address the opportunities
at hand. All terms should be understood and accepted by all parties. However,
some terms are more important than others.
Generally, the most important provisions are those involving the duration
and breadth of the arrangement, the exclusivity of the parties to the team,
the parties' roles in performance if a contract is secured, and the conditions
under which a party can terminate the relationship.
The last consideration is by far the most important. Several court decisions
issued this year illustrate that.
In ABT Associates Inc. v. JHPIEGO Corp., a court dismissed a complaint
by one company alleging that a second company, which had been awarded a
federal contract, breached an agreement to include the first as a "partner"
on the project.
The first company had refused to sign the draft teaming agreement provided
by the second before the prime contract was awarded and had refused to sign
the draft subcontract provided after the award because the first company
did not believe that the documents gave it the role to which it was entitled.
However, the court found that because the parties never entered into a final
binding agreement, there could be no breach of contract.
By contrast, in Cable & Computer Technology Inc. v. Lockheed Sanders
I a court allowed one teammate to sue another based on an alleged breach
of an oral teaming agreement. Even though the parties had expected to enter
into a written agreement, the court found that their failure to finalize
the document did not preclude a suit based on oral promises allegedly made
during earlier discussions.
In Storage Technology Corp. v. CCL Service Corp., a court found that the
company serving as the prime on a government computer systems contract had
breached an agreement under which its teammate was to perform the maintenance
functions as a subcontractor. The court said the prime contractor failed
to comply with its commitment to use the subcontractor for the contract's
These cases show how important a good agreement is in order to ensure
a successful teaming effort.
—Peckinpaugh is corporate counsel for DynCorp, Reston, Va.