Teaming and Subcontracting in Government Contracting

The prime contractor holds the contract with the government and is fully responsible for performance. Subcontractors work for the prime, not the government directly. As a sub you take less risk and need no contract vehicle, but you have no privity with the customer and your past performance from the role can be harder to cite. As a prime you own the relationship and the upside — and the accountability.

A teaming agreement is a pre-award contract between companies that plan to bid together — typically one as prime and others as subs. It defines who does what, the expected workshare, exclusivity, and the commitment to negotiate a subcontract if the team wins. Sign teaming agreements before the proposal, while you still have leverage and clarity, not in the chaos after award.

A joint venture (JV) is a separate legal entity formed by two or more firms to pursue work together, sharing the contract and its profits. JVs are powerful for small businesses because, under SBA rules, an approved JV can pursue a set-aside as long as each member meets the relevant criteria — and a JV between a protege and its mentor can compete as small even when the mentor is large.

The SBA Mentor-Protege Program lets a small business (protege) partner with a more experienced firm (mentor) for technical, management, and contracting assistance. Its biggest benefit: an approved mentor-protege joint venture can bid on small-business set-asides even though the mentor is large, without violating affiliation rules. This is one of the most powerful growth tools available to small contractors.

On set-aside contracts, the prime must perform a minimum share of the work itself — the 'limitations on subcontracting.' As a general rule, for services the small-business prime must perform at least 50% of the work (measured by the amount paid to non-similarly-situated subcontractors), with different thresholds for supplies and construction. Work performed by similarly situated entities (other small businesses with the same status) generally does not count against the prime. Build your team so the prime clearly meets these limits.

• Complementary, not overlapping, capabilities — fill a real gap.
• Relevant, citable past performance for the requirement.
• Cultural and pricing alignment, so the team can actually execute.
• A clear workshare and decision process agreed before the bid.
• Trust — teaming is a relationship, and the best teams recompete together for years.