Good agreement, good team

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

entire duration.

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.


Cases discussed in this column include: ABT Associates Inc. vs.JHPIEGOCorp., No. H-99-3238 (D. Md. July 5, 2000);

Cable & Computer Technology Inc. vs. Lockheed Sanders, Inc., 214F.3d 1030 (9th Cir. 2000)

Storage Technology Corp. v. CCL Service Corp., 94 F. Supp. 697 (D. Md.2000)

BY Carl Peckinpaugh
September 04, 2000

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