Small Business Teaming: 3 Tips For Forming Productive Partnerships

Forbes.com

Although the small business market is currently difficult, there are opportunities for small businesses in the federal market. This is particularly true in the professional services sector, where large businesses are seeing their contracts being recompeted as socioeconomic set-asides.

As a result, teaming relationships for small businesses are of particular interest, and can provide an excellent opportunity for new business either as a prime or subcontractor, with new partners and relationships. However, teaming does come with issues that are of particular concern as well, such as running afoul of small business size status, eligibility, affiliation, and being taken advantage of by firms needing to “rent” a designated socioeconomic designation.

Here are three issues to consider when teaming for small businesses: 

1. Details. Worrying about details later is a recipe for disaster. The teaming agreement should detail how the parties will structure the team, and the work that each party will be performing through a clear statement of work. Further, the teaming agreement should have very specific terms that demonstrate the party’s intent to be bound in the structure of the relationship (e.g. the proposed prime contractor “SHALL”), and their performance in connection with the contract, such as those that meet limitations on subcontract provisions. You should also have a copy of the subcontract you plan on entering into, should the proposed prime be awarded the contract.

The last thing on Earth you want is to have an unenforceable agreement that is not definitive enough to qualify as enforceable. Do not leave details vague, and do not leave issues subject to too many conditions.

2. Communication. Small businesses must ensure that when executing the contract, there are no negative impacts on their small business size or status. Make sure that any issues such ownership, control, and affiliation are dealt with, and that all requirements for small business regulations and governance are met. This is especially true for firms that are certified in the Small Business Administration’s 8(a) program, and for veteran owned business certifications by the Department of Veteran’s Affairs.

3. Exclusivity. The purpose of the relationship is to create a winning team that complements each other, and having each party add capability that wins the contract and differentiates the team from the competition. Exclusivity provisions are especially necessary for small businesses as primes, because it prevents the larger businesses sub from “shopping around”, and teaming with others businesses to win no matter what. Not having exclusivity provisions defeats the purpose of teaming. Make sure that your proposed teaming partner is teaming with you, and you alone, such that you are the only offeror benefitting from what the teaming partner brings to the table.

Understand that your short-term gain could have devastating impacts long-term. Small businesses too often sacrifice these concepts, and that is a mistake. A small business should understand that they need to be prepared to walk away from the teaming agreement, if it is in your firm’s long-term interest.  

Always consult a legal professional, and ensure your teaming agreements are clear, concrete, and will help shape the successful teaming partnership to the benefit of both parties.