Teaming Agreements vs. Prime/Subcontractor Agreements: Key Differences and Best Practices

Federal contracting is a highly competitive landscape where businesses must choose the right approach to secure government contracts effectively. One of the most critical decisions involves selecting the appropriate agreement structure, which would typically fall under the scope of either Teaming Agreements (TAs) or Prime/Subcontractor Agreements. While both arrangements facilitate collaboration between businesses, they operate under distinct legal, operational, and contractual frameworks.

• Understanding the Basics
• Key Differences Between Teaming and Prime/Subcontractor Agreements
• When to Use Each Agreement
• Legal and Compliance Considerations
• Best Practices for Structuring a Teaming Agreement
• Conclusion
• Teaming Agreements vs. Prime/Subcontractor Agreements: Frequently Asked Questions (FAQ)

Understanding these differences is crucial because the wrong choice can limit a company’s flexibility, impact compliance with federal regulations, and affect the likelihood of winning a contract. For example, a Teaming Agreement may be beneficial when multiple businesses want to pool resources and expertise while maintaining individual autonomy. In contrast, a Prime/Subcontractor Agreement is ideal when one company assumes full responsibility for contract performance while outsourcing specific tasks to subcontractors.

As federal agencies emphasize efficiency, compliance, and small business participation, choosing the right agreement has become even more important. Recent changes in General Services Administration (GSA) regulations, FAR requirements, and small business set-asides have made it necessary for businesses to carefully evaluate their approach to teaming.

In this article, we’ll break down the key distinctions, advantages, and best-use scenarios for both Teaming Agreements and Prime/Subcontractor Agreements, helping businesses make informed decisions that maximize their federal contracting opportunities.

Understanding the Basics

A Prime/Subcontractor Agreement establishes a structured relationship where the prime contractor holds a direct contract with the federal government and manages one or more subcontractors to fulfill specific tasks. The prime contractor assumes full responsibility for contract execution, regulatory compliance, and government communication, while subcontractors play a supporting role by providing specialized goods or services.

Structure of the Prime/Subcontractor Relationship

• The prime contractor is solely responsible for all interactions with the federal agency, contract performance, and financial transactions.
• Subcontractors work under the prime contractor and have no direct contractual relationship with the government.
• The government does not interact directly with subcontractors, making prime the only official point of contact.

Roles and Responsibilities

Prime Contractor:

• Manages contract execution and compliance with Federal Acquisition Regulation (FAR) and agency-specific rules.
• Oversees subcontractor performance and ensures they meet contract requirements.
• Handles all financial transactions, including invoicing the government and paying subcontractors.

Subcontractor:

• Delivers goods or services according to the terms set by the prime.
• Complies with contractual and regulatory requirements.
• Relies on the prime for payment and contract-related communication.

Since subcontractors do not interact directly with the government, they must clearly define payment terms, performance expectations, and dispute resolution procedures in their agreements with the prime to mitigate risks.

Requirements to Become a Prime Contractor

To qualify as a prime contractor in federal contracting, a business must:

1. Register in the System for Award Management (SAM) – All businesses working with the federal government must have an active SAM registration.
2. Obtain a Unique Entity Identifier (UEI) – Required for tracking contract performance.
3. Meet Small Business or Socioeconomic Set-Aside Requirements (if applicable) – Many contracts have small business participation requirements, such as 8(a), HUBZone, or Women-Owned Small Business (WOSB) certifications.
4. Demonstrate Past Performance – Many federal contracts require businesses to show prior successful project execution.
5. Comply with FAR and Agency-Specific Regulations – Prime contractors must fully understand compliance requirements, including subcontracting limitations under FAR 52.219-14 for small business set-asides.

A Prime/Subcontractor Agreement is best suited for companies that want a clear leadership role, a defined contract structure, and full control over government interactions. However, businesses that prefer a more flexible, partnership-based approach may benefit from a Teaming Agreement.

What is a Teaming Agreement?

A Teaming Agreement (TA) is a pre-award arrangement between two or more companies that intend to collaborate on a government contract opportunity. Unlike a Prime/Subcontractor Agreement, a TA is typically not a binding legal contract for contract performance, but rather a document outlining the intent of the parties to work together if they win the contract.

How Teaming Agreements Work

• Pre-award collaboration: A TA is established before a contract is awarded, allowing businesses to combine resources and submit a stronger bid.
• No new legal entity required: Unlike Joint Ventures, a TA does not create a separate business entity.
• Government interaction depends on structure: In a GSA Contractor Team Arrangement (CTA), each team member may interact directly with the government. Otherwise, only the designated prime contractor communicates with the government.
• Regulated under FAR Subpart 9.6: Governs contractor team arrangements, ensuring compliance in federal contracting.

How Teaming Agreements Differ from Other Forms of Collaboration

• Unlike Prime/Subcontractor Agreements, a TA is typically formed before a contract is awarded, giving businesses an opportunity to strengthen their bids without committing to a fixed hierarchy.
• Unlike Joint Ventures, a TA does not create a separate legal entity, making it easier to establish and dissolve.
• Each party retains autonomy in most cases, unless otherwise specified in the agreement.

A Teaming Agreement is often the best choice when:

• Two or more businesses want to combine expertise but do not want to form a new legal entity.
• A small business wants to leverage a larger firm’s past performance to improve its bid.
• Companies need more flexibility in structuring their partnership than a Prime/Subcontractor Agreement allows.

However, it is important to draft Teaming Agreements carefully, as courts have sometimes ruled them unenforceable if they are too vague. To avoid legal uncertainty, businesses should clearly define roles, responsibilities, and exclusivity terms within the agreement.

Both Prime/Subcontractor Agreements and Teaming Agreements play crucial roles in federal contracting. The right choice depends on contract structure, risk distribution, and compliance requirements.

Key Differences Between Teaming and Prime/Subcontractor Agreements

Choosing between a Teaming Agreement (TA) and a Prime/Subcontractor Agreement is a critical decision that affects contract management, risk distribution, and government compliance. While both structures enable businesses to collaborate on federal contracts, they differ in their legal framework, operational responsibilities, and financial arrangements.

The following table outlines the primary distinctions between these two types of agreements:

Feature	Prime/Subcontractor Agreement	Teaming Agreement
Legal Structure	Hierarchical model – The prime contractor holds full responsibility and manages subcontractors.	Flexible partnership – Parties work together as equal participants without a strict hierarchy.
Government Interaction	The prime contractor is the sole point of contact with the government.	Both parties may directly interact with the government, depending on the agreement structure.
Risk Distribution	The prime contractor bears most of the risk, including contract performance, compliance, and financial obligations.	Risk is shared among team members, as each company is responsible for its portion of work.
Payment Structure	The prime contractor receives payment from the government and distributes funds to subcontractors.	Payment terms vary and are agreed upon by the team members within the agreement.
Compliance Requirements	The prime contractor must comply with all contract requirements, including FAR (Federal Acquisition Regulation) clauses.	All members must comply with FAR 9.6 and ensure their contributions meet government regulations.
Best For	Businesses seeking clear leadership, structured oversight, and well-defined responsibilities.	Companies that want flexibility, shared expertise, and direct government relationships.

Detailed Breakdown of Key Differences

1. Legal Structure

In a Prime/Subcontractor Agreement, the prime contractor has a formal contract with the government, while subcontractors have agreements only with the prime. This hierarchical model ensures that the prime contractor retains full control over contract performance and decision-making.

In contrast, a Teaming Agreement establishes a partnership between companies, often before a contract is awarded. While it defines the roles of each partner, it does not create a legally binding commitment to perform the contract unless specifically outlined in the agreement.

2. Government Interaction

With a Prime/Subcontractor Agreement, only the prime contractor communicates directly with the federal agency, handles compliance reporting, and submits invoices. Subcontractors rely on the prime for guidance, funding, and communication.

A Teaming Agreement, however, allows greater flexibility in government interactions. Under GSA Contractor Team Arrangements (CTAs), all members may communicate with government officials and hold independent responsibilities. This ensures that each contractor maintains autonomy while still working collaboratively on a project.

3. Risk Distribution

The prime contractor assumes full liability in a Prime/Subcontractor Agreement. If the subcontractor fails to deliver, the prime remains responsible for fulfilling contract obligations. This makes risk management a key concern for primes, as they must ensure subcontractors meet performance expectations.

A Teaming Agreement distributes risk among members. Since each team member is responsible for their portion of the contract, liability is shared. This arrangement reduces financial and performance risks for any single company while enhancing collaboration.

4. Payment Structure

In a Prime/Subcontractor Agreement:

• The prime receives all payments from the government and is responsible for compensating subcontractors.
• Subcontractors depend on the prime for timely payments, which can introduce financial risks if the prime delays distribution.

In a Teaming Agreement:

• Payment terms are negotiated between the parties and can vary.
• Some agreements allow each member to invoice the government separately, while others centralize billing through a designated team leader.
• This flexibility allows businesses to create custom payment arrangements that best fit their financial needs.

5. Compliance Requirements

Under a Prime/Subcontractor Agreement, the prime contractor carries the full burden of compliance, ensuring that all aspects of the contract adhere to FAR regulations and agency requirements. Subcontractors must follow the prime’s directives but have fewer direct compliance obligations.

In a Teaming Agreement, all members must comply with FAR Subpart 9.6, which governs contractor team arrangements. Since team members often interact directly with the government, each company is responsible for maintaining regulatory compliance.

6. Best Use Cases

• A Prime/Subcontractor Agreement is ideal for businesses seeking a structured contract arrangement, particularly when a company wants to maintain full control over project execution and government interactions.
• A Teaming Agreement works best when multiple businesses want to combine their expertise and resources while retaining more independence in contract execution.

Both Prime/Subcontractor Agreements and Teaming Agreements offer valuable opportunities for businesses in federal contracting. However, selecting the right structure depends on business objectives, risk tolerance, and compliance capabilities.

• Choose a Prime/Subcontractor Agreement if you need a clear hierarchy, centralized control, and full government communication through a single entity.
• Opt for a Teaming Agreement if you want a collaborative approach with shared responsibility and direct access to government buyers.

When to Use Each Agreement

Choosing the right agreement depends on the business structure, project scope, and level of control required. Some contracts demand a hierarchical relationship, while others benefit from a collaborative partnership. Below, we outline when it is best to use a Prime/Subcontractor Agreement versus a Teaming Agreement based on specific business needs.

When to Choose a Prime/Subcontractor Agreement

A Prime/Subcontractor Agreement is the best choice in scenarios where one company wants to maintain full control over contract performance while delegating certain tasks to subcontractors. This model works well for businesses that have the capacity to manage large projects but require specialized services from third-party vendors.

Use a Prime/Subcontractor Agreement when:

• One company wants to be the primary contractor and oversee subcontractors.
  The prime contractor takes on the leadership role, ensuring that all contract requirements are met while outsourcing specific work to subcontractors. This is ideal when the prime has the necessary resources and compliance knowledge to manage the contract effectively.
  
• The goal is to minimize administrative burdens for subcontractors.
  Subcontractors do not need to manage direct government interactions, invoicing, or regulatory compliance; the prime contractor would handle such aspects. This setup allows subcontractors to focus on their specialized work without the added complexity of full government compliance responsibilities.
  
• The prime contractor is willing to take full responsibility for contract execution.
  If a business is confident in its ability to meet contractual obligations, it may prefer a Prime/Subcontractor model to maintain full decision-making power. Since the prime contractor is solely accountable to the government, it retains complete control over project direction, compliance, and risk management.

When to Use a Teaming Agreement

A Teaming Agreement is the better choice when two or more businesses want to combine their strengths while maintaining independence. It is particularly useful in federal contracting, where small businesses can partner with experienced contractors to improve their chances of winning bids.

Use a Teaming Agreement when:

• Businesses want to pool resources and expertise.
  Teaming Agreements allow multiple companies to combine their skills, past performance, and technical capabilities to bid on contracts they might not qualify for individually. This setup expands contracting opportunities for both small and large businesses.
  
• Both companies want to maintain direct relationships with the government.
  In a Prime/Subcontractor Agreement, only the prime communicates with the federal agency, whereas a Teaming Agreement (especially under a GSA Contractor Team Arrangement (CTA) allows all team members to interact directly with the government. This is ideal when businesses want equal participation and visibility in contract execution.
  
• There is a need to merge qualifications, certifications, or contract eligibility.
  Some government contracts require specific certifications or qualifications that one company alone may not have. By teaming up, businesses can leverage each other’s credentials to meet eligibility requirements and submit a more competitive bid.

Making the Right Choice

Scenario	Best Agreement Type
A company wants to be the main contractor and manage subcontractors.	Prime/Subcontractor Agreement
A business wants full control over project execution and compliance.	Prime/Subcontractor Agreement
A company wants to reduce subcontractor administrative burdens.	Prime/Subcontractor Agreement
Two or more businesses want to combine expertise for a stronger bid.	Teaming Agreement
All partners want direct government interaction.	Teaming Agreement
A small business wants to use a larger company’s past performance.	Teaming Agreement
The project requires multiple certifications that one company alone doesn’t have.	Teaming Agreement

Understanding when to use a Prime/Subcontractor Agreement versus a Teaming Agreement is essential for federal contractors looking to optimize their business strategy.

• A Prime/Subcontractor Agreement is ideal when one company is ready to take on full contract responsibility and manage subcontractors.
• A Teaming Agreement is best when companies want to collaborate as equals while maintaining direct government interaction.

By selecting the right type of agreement, businesses can increase their chances of winning federal contracts, improve operational efficiency, and mitigate risks.

In the next section, we will explore the legal and compliance aspects of both agreements to ensure your business remains fully compliant with federal regulations.

Legal and Compliance Considerations

When entering into Teaming Agreements or Prime/Subcontractor Agreements, businesses must comply with Federal Acquisition Regulations (FAR) and General Services Administration (GSA) requirements. Failing to follow these regulations can lead to contract disputes, disqualification from future contracts, or legal penalties. Below, we discuss key compliance considerations, including FAR 9.6, GSA Contractor Team Arrangements (CTAs), and common legal risks.

FAR 9.6 and Its Impact on Teaming Agreements

FAR Subpart 9.6 governs Contractor Team Arrangements (CTAs), which include Teaming Agreements and Joint Ventures. It establishes the legal framework for two or more companies collaborating to pursue federal contracts. While FAR 9.6 allows businesses to form teaming relationships, it does not override other federal regulations or contract requirements.

Key provisions of FAR 9.6:

• The government recognizes and permits teaming arrangements, but the contracting officer is not required to either approve or accept them.
• The prime contractor remains fully responsible for contract performance, even if it subcontracts work.
• Teaming Agreements must not eliminate competition or create anti-competitive behavior that violates federal procurement policies.
• The government may evaluate the performance record of all team members, not just the prime contractor.

For businesses, this means that while Teaming Agreements can be beneficial, they must be carefully structured to comply with competition laws and ensure clear accountability.

GSA Requirements for Contractor Team Arrangements (CTAs)

Under GSA Schedules, businesses can form Contractor Team Arrangements (CTAs) to bid on contracts that require a mix of capabilities from multiple contractors. Unlike traditional Teaming Agreements, a GSA CTA allows each team member to invoice the government directly, maintain separate responsibilities, and remain independently accountable for contract performance.

Key requirements for GSA CTAs:

1. All team members must hold an active GSA Schedule contract.
2. Each member is responsible for its portion of work and compliance.
3. The CTA agreement must clearly define roles, responsibilities, and billing arrangements.
4. CTAs do not create a new legal entity—each contractor operates under its existing GSA contract.

A common mistake businesses make is assuming that GSA CTAs function the same as Prime/Subcontractor Agreements. In reality, GSA CTAs give each contractor direct obligations to the government, while a Prime/Subcontractor Agreement places all responsibility on the prime contractor.

Common Legal Risks and Mistakes

Failing to comply with federal contracting regulations can result in contract disputes, financial penalties, or debarment from future government contracts. Below are some of the most common compliance issues businesses encounter when structuring teaming relationships.

Violation of Subcontracting Limitations (FAR 52.219-14)

For small business set-aside contracts, FAR 52.219-14 limits how much of the work can be subcontracted. The prime contractor must perform at least 50% of the contract’s total cost (excluding materials). This prevents pass-through entities that win contracts from delegating most of the work to large subcontractors.

Risk: If a small business prime subcontracts too much work, the government may cancel the contract or impose penalties.

Mitigation Strategy:

• Track labor costs and work distribution to ensure compliance with the 50% rule.
• Clearly define work percentages in the Prime/Subcontractor Agreement.

Lack of Clear Role Definition in Teaming Agreements

Teaming Agreements must clearly outline the responsibilities of each party. Vague or poorly defined agreements can lead to disputes over work scope, payment, and contract execution.

Risk:

• If roles are not clearly defined, one party may refuse to perform certain tasks or claim a greater share of the contract revenue.
• Courts have ruled that some Teaming Agreements are legally unenforceable when they do not contain specific obligations.

Mitigation Strategy:

• Include clear and specific terms regarding work scope, performance expectations, and payment.
• Define an exit strategy in case one party cannot fulfill its obligations.

Anti-Competitive Behavior and Contract Bundling

Teaming Agreements must not eliminate competition or create excessive market control by limiting the ability of other contractors to bid.

Risk:

• Excluding competitors from subcontracting opportunities may lead to legal challenges or bid protests.
• Contracts that combine too many services under one prime (contract bundling) may violate small business participation rules.

Mitigation Strategy:

• Ensure Teaming Agreements do not prevent fair competition for subcontracting opportunities.
• Consult legal counsel before entering into exclusive teaming arrangements that could raise anti-competitive concerns.

Misuse of Joint Ventures vs. Teaming Agreements

Some businesses mistakenly assume that Teaming Agreements and Joint Ventures (JVs) are interchangeable. However, JVs create a new legal entity, while Teaming Agreements do not. This difference affects contract liability, government reporting, and tax obligations.

Risk:

• Misclassifying a Teaming Agreement as a Joint Venture can result in compliance violations.
• Joint Ventures must be registered in SAM.gov and may have additional small business reporting requirements.

Mitigation Strategy:

• Determine whether a Joint Venture or Teaming Agreement is appropriate before forming a partnership.
• Consult with a government contracting attorney to ensure the agreement is structured correctly.

Both Teaming Agreements and Prime/Subcontractor Agreements offer strategic advantages, but compliance with FAR and GSA regulations is critical.

• FAR 9.6 allows and regulates teaming arrangements but requires that they maintain fair competition and accountability.
• GSA CTAs differ from traditional Teaming Agreements by giving all team members direct contractual relationships with the government.
• Common compliance mistakes include violating subcontracting limitations, failing to define roles clearly, and structuring agreements in a way that restricts competition.

By understanding and mitigating these risks, businesses can maximize their chances of winning and successfully executing federal contracts while maintaining full compliance.

Best Practices for Structuring a Teaming Agreement

A well-structured Teaming Agreement (TA) increases the likelihood of successful contract execution by clearly defining the roles, obligations, and financial arrangements between the participating businesses. Without precise terms, disputes over responsibilities, payment, and contract performance can arise, jeopardizing the agreement’s enforceability and eventual successful performance on a federal contract. Below are best key practices for drafting a strong and legally sound Teaming Agreement.

Defining Roles, Responsibilities, and Obligations

One of the most critical aspects of a Teaming Agreement is a clear delineation of roles and responsibilities. Each team member must understand its function within the project and how work will be distributed. The agreement should specify:

• Which company will be the prime contractor (if applicable) and which will be the teaming partner(s).
• The scope of work assigned to each team member, ensuring alignment with technical capabilities and contractual obligations.
• Performance expectations, including quality standards, deadlines, and reporting requirements.

Ambiguities in role definitions often lead to contractual disputes, particularly if one party believes they are entitled to a larger portion of the contract work. By explicitly outlining expectations in writing, companies can minimize misunderstandings and set clear benchmarks for accountability.

Profit Sharing and Risk Management

Financial arrangements, particularly profit distribution and risk allocation, should be well-documented to avoid conflicts. Unlike Prime/Subcontractor Agreements, where the prime fully controls financial disbursement, Teaming Agreements often involve shared responsibility for contract execution and revenue distribution.

The agreement should address:

• How profits will be allocated among team members, particularly if multiple parties contribute varying levels of resources and expertise.
• Risk-sharing provisions, detailing how unexpected costs, penalties, or losses will be distributed.
• Invoicing procedures and payment timelines, ensuring that all parties receive compensation fairly and promptly.

Teaming Agreements that lack specific financial terms often result in delayed payments, disputes over cost overruns, and disagreements on work valuation. A well-defined payment structure protects both parties and ensures financial transparency.

Dispute Resolution Mechanisms

Even with a well-structured agreement, disputes can arise over work performance, payment delays, or contract interpretation. A strong dispute resolution clause can prevent costly legal battles and keep the project on track.

The agreement should establish:

• Negotiation procedures, requiring parties to resolve disputes through internal discussions before escalating the matter.
• Mediation or arbitration clauses, specifying a neutral third party to facilitate resolution if disputes cannot be settled internally.
• Jurisdiction and governing law, ensuring that any legal actions follow federal contracting standards and applicable state laws.

By establishing a structured process for handling disagreements, companies can maintain a productive working relationship and avoid disruptions that could jeopardize contract performance.

Key Provisions to Include in a Teaming Agreement

To ensure enforceability and alignment with FAR regulations, a Teaming Agreement should contain specific provisions that define how the partnership will function. Essential clauses include:

• Statement of Purpose: Clearly defines the contract opportunity being pursued and the intent of the teaming arrangement.
• Workshare Agreement: Outlines how tasks will be divided and ensures compliance with FAR 52.219-14 (subcontracting limitations for small business contracts).
• Exclusivity (if applicable): Determines whether team members can pursue the contract independently or with other partners.
• Confidentiality & Data Protection: Prevents unauthorized sharing of proprietary information between parties.
• Termination Clause: Defines the conditions under which the agreement may be dissolved, protecting parties from abrupt contract withdrawals.

Each of these provisions reduces legal uncertainty and ensures that all participants are aligned on contract execution and responsibilities.

A well-structured Teaming Agreement is essential for successful federal contracting partnerships. By clearly defining roles, financial terms, dispute resolution mechanisms, and enforceable provisions, businesses can establish a strong foundation for collaboration while maintaining compliance with federal regulations.

Conclusion

Both Teaming Agreements and Prime/Subcontractor Agreements offer unique advantages in federal contracting, but choosing the right approach depends on a company’s strategic goals, risk tolerance, and compliance capabilities. Prime/Subcontractor Agreements provide a structured, hierarchical model, where the prime contractor retains full control and assumes all contractual risks. Teaming Agreements, on the other hand, foster collaboration and shared responsibilities, making them ideal for businesses looking to combine expertise, resources, and government contracting experience.

For businesses navigating the complexities of federal contracts, ensuring regulatory compliance, contract clarity, and risk mitigation is essential. Companies should carefully evaluate the scope of work, government interaction requirements, and financial considerations before deciding on a contract structure. Regardless of the agreement type, businesses must align their strategies with FAR regulations and GSA requirements to avoid common pitfalls such as subcontracting limitations, compliance violations, or contractual disputes.

At Price Reporter, we specialize in GSA consulting and federal contract management, helping businesses secure, maintain, and optimize their GSA Schedules. Since 2006, we have successfully assisted over 1,000 contractors in navigating the complexities of government contracts, ensuring full compliance and maximizing business opportunities in the federal marketplace. Whether you need assistance structuring a Teaming Agreement, managing a GSA contract, or understanding federal regulations, our team of experts provides customized solutions to help you succeed in government contracting.

Teaming Agreements vs. Prime/Subcontractor Agreements: Frequently Asked Questions (FAQ)

What is the main difference between a Teaming Agreement and a Prime/Subcontractor Agreement?

The main difference lies in the structure and level of control. In a Prime/Subcontractor Agreement, the prime contractor holds the direct contract with the government and is fully responsible for performance, compliance, and subcontractor management. Subcontractors provide services or products under the prime’s direction but do not interact directly with the government. A Teaming Agreement, on the other hand, allows two or more companies to collaborate before bidding on a contract, often enabling them to leverage each other’s expertise and qualifications while maintaining a more flexible partnership structure.

When should a business use a Teaming Agreement instead of a Prime/Subcontractor Agreement?

A business should consider a Teaming Agreement when it wants to pool resources, expertise, and past performance with another company to strengthen its bid for a government contract. This is particularly useful for small businesses partnering with larger firms to increase their competitiveness. It is also beneficial when multiple businesses want to maintain direct relationships with the government rather than relying on a single prime contractor to manage all contract interactions. A Prime/Subcontractor Agreement is a better option when one company prefers to retain full contract control and assume all associated risks and responsibilities.

Are Teaming Agreements legally binding?

Teaming Agreements can be legally binding, but their enforceability depends on how they are structured and whether they contain clear and specific obligations. Courts have sometimes ruled against Teaming Agreements that only express an intention to negotiate in the future, rather than setting firm commitments for each party’s responsibilities. To ensure enforceability, businesses should include well-defined workshare agreements, dispute resolution clauses, and termination conditions. Additionally, compliance with FAR 9.6 and other federal regulations can strengthen the legal standing of the agreement.

How does FAR 52.219-14 impact Prime/Subcontractor Agreements?

FAR 52.219-14 (Limitations on Subcontracting) imposes restrictions on how much work a small business prime contractor can subcontract when awarded a small business set-aside contract. Under this rule, a small business prime must perform at least 50% of the contract’s total cost (excluding materials) to ensure that large businesses do not take advantage of small business set-asides through excessive subcontracting. Failure to comply with this requirement can result in contract termination, financial penalties, or disqualification from future federal contracting opportunities.

Can a subcontractor or teaming partner win a contract without the prime?

No, in a Prime/Subcontractor Agreement, the subcontractor does not hold a direct contract with the government and cannot receive the contract independently. The prime contractor is the only party contractually obligated to the federal agency and is responsible for ensuring the subcontractor’s compliance with contract requirements. In a Teaming Agreement, both parties may collaborate on the proposal, but if the government awards the contract, it is typically given to one company; either the prime contractor or a designated team leader who then distributes the work based on the Teaming Agreement. For direct government contracts, each company must register individually and qualify for bidding opportunities.