A teaming agreement involves two or more companies combining resources to bid on a government contract. Typically, this involves a large corporation and one or more small businesses, with the large corporation acting as the prime contractor to the government and the smaller company or companies serving as subcontractors to the prime contractor. The biggest risk encountered in such agreements is that after spending time and effort in preparing the agreement, the smaller company will not receive the share of work expected if the project bid on is awarded. Therefore, it is important that the teaming agreement states whether or not the prime contractor intends to award a subcontract to the potential subcontractor if the prime contractor is awarded the contract in question. The agreement should also deal with, among other issues, the protection of proprietary data involved.
A teaming agreement is defined by the Defense Contract Audit Agency as:
"An arrangement between two or more companies, either as a partnership or joint venture, to perform on a specific contract. The team itself may be designated to act as the prime contractor; or one of the team members may be designated to act as the prime contractor, and the other member(s) designated to act as subcontractors."
