How to Join a Team without Selling Your Soul to the Devil (Subcontracting to a Prime)

As a new launched business as a Federal Contractor (I’m assuming you’ve set up your company and and are registered in SAM and have a DUNS number; see my previous blog: http://wp.me/p4xkC1-Q), your primary tasks as a company are three fold: 1) generate revenue, 2) earn a profit, and 3) develop past performance.  These task are derived from winning work.  As I have written in the past, there are two ways to work as a federal contractor — as a Prime contractor or a subcontractor.

A excellent path to finding a prime is to join the Service Disabled Veteran Owned Business Council (https://sdvosb-council.org/)  The council provides an avenue to network with Prime contractors for potential teaming opportunities. It also host networking events with larger primes looking to team with small businesses.  Remember that many federal contracts have set-aside contracting goals.  This is a huge benefit to 8a, SDVOSB, SDB, WOSB, and other set-aside categories.

Make sure you have developed your core capabilities statement; the capabilities statement is your written “elevator speech.”  Potential prime contractors and US Government entities review core capability statements when looking for small businesses.

Below is an example of of core capability statement used by Whetstone Security Group, Inc. (www.whetstonesecurity.com)

wsg corporate capabilities 201312040-0001

Prime contractors are looking for set-aside partners they can depend upon.  Make sure as you market your company you always deliver on promises and conduct your business with integrity.  At the end of the day, everything whether in business or personal life is about relationships.  Make sure that you and your business’ reputation is stellar and become know for doing what you say.

Once you have joined a team you will most likely be provided  a Non-disclosure agreement (NDA) and teaming agreement (TA) to sign.  See my previous blog and TA’s, NDA’s, and SubK’s. (http://wp.me/p4xkC1-4m).  Review the TA closely to ensure your company is signing up for a mutually beneficial agreement.  It might be a good idea to engage a Contract Specialist to help you navigate the NDA, TA, and Subcontract process.  The primary take away is to ask for guaranteed work share.  Work share is usually provide in percentages, such as have 20 percent work share.  This means that your company will have 20 percent of the available work on an awarded contract.

Be transparent, operate with integrity, and demonstrate how your company will add value as a prime contractor’s teammate.  You have to put yourself out there and engage with other people, associations, and prime contractors to be known.  Remember, hundreds of people before you have done the same thing — you can do this!

As always, take action each and everyday to drive your business forward and grow as an individual.

With Love and Respect,

Gary

NDA’s, TA’s, and SubK’s…Really?

Greetings Entrepreneurs –

Good news for Whetstone Security Group (WSG Inc) and our teammate Ruiz Protective Service!  We were one of three awardees of a Department of Homeland Security contract.  I’m very proud to have had WSG Inc serve as a significant contributor to our team’s win.

The win reminded me that I should share with you the documents you will need to become familiar with when you team with other companies and the jargon used in the federal contracting world.

In this post, you learn a bit about Non-disclosure Agreements (NDAs); Teaming agreements (TAs); and Subcontractor Contracts (SubKs) — see this stuff really is not that complicated; well, the acronyms are not that difficult.

As you begin working in the Federal contracting world, some of the documents you will become to become familiar with are NDAs and TAs.  These documents set the ground rules for partnering with other businesses.

Before most companies will discuss proposal and proprietary information concerning contract teaming opportunities, an NDA is established.  The NDA states that any information discussed is proprietary and will not be shared with other entities outside of the two companies in discussion.  It’s said by some Federal contractors that  NDAs are about as enforceable as a handshake and really do not protect information from disclosure, so there are some companies no-longer requiring NDAs; however, it remains a standard business practice.

You can find an example of an NDA here: http://www.nolo.com/legal-encyclopedia/sample-confidentiality-agreement-nda-33343.html

Teaming Agreements:  TA’s are fairly standardized.  The list below is not all encompassing but is in most TAs:

Purpose – Who is teaming and for what purpose.

Exclusivity – Whether the subcontractor is exclusive to the prime or can team with other companies.  It is often beneficial for a small company to subcontract with different companies to increase the opportunity for work; however, it becomes a challenge to the prime as your price may be the same, higher, or less for other companies and you are privy to their propriety information.  It is reasonable for companies to ask you to be exclusive when signing with them.  This is why guaranteed work share becomes important.

Work share – the percentage of work or revenue that your company is guaranteed or can compete for based on your price for services or labor as a subcontractor.  If at all possible try to avoid a TA that requires you to compete for work (often called “Best Athlete) after a contract has been awarded.  The best scenario is to have guaranteed work share in the event that the team wins an award.

 Proposal Preparation –  The Contractor will act as the prime contractor and will prepare and submit the Proposal and requires the subcontractor to agree to provide proposal support.

Allocation of Cost – Normally states each party is responsible for its own costs and expenses for proposal preparation.

Termination – Sets the conditions for when the TA can be terminated.  Such as when:

  • The contract is awarded to another company
  • Cancellation of the program
  • When the team cannot reach agreement on the terms and conditions of the SOW (price, schedule, and terms
  • The parties mutually agree to terminate this Agreement.

Intellectual Property –  States that any ideas, designs, concepts, techniques, inventions, discoveries or improvement made in performance belong to whom.

Limitation of Liability – Simply states that either party is liable to the other for any lost revenues, lost profits, incidental, indirect, consequential, special or punitive damages.

Enforcement – States where the agreement will be governed in regard to legal action (Usually the State where the Prime is registered).

There are several other articles that may or may not be included in the teaming agreement.  It is highly recommended that you consult your attorney or a contract specialist.  As I have stated previously, you need to have your team (legal, financial, insurance, and others) established to help guide you.

Subcontracts (SubK): The final document will discuss is the SubK.  This is the document that is issued by the prime after a win.  It spells out the terms and condition.

The basis of the subcontract is the Government’s contract with the Prime Contractor.  The Prime will normally “flow down” clauses from the Prime Contract to subcontractor.  Some of these clauses require the subcontractor to following laws regarding federal contracts and are related to the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation (DFAR) as well as the Government’s requirements set forth in their Statement of Work (SOW).  Some of the website to review are:

The Department of Labors – Federal Contractor Compliance Adviser:  http://www.dol.gov/elaws/esa/ofccp/determine.asp

Federal Acquisition Regulation: http://www.acquisition.gov/far/

The Defense Federal Acquisition Regulation Supplement: http://www.acq.osd.mil/dpap/dars/dfarspgi/current/

The Small Business Administration has a online learning center with an introduction to Government Contracting.  http://www.sba.gov/tools/sba-learning-center/training/government-contracting-101

I hope this blog added a bit of illumination to NDAs, TAs, and SubKs.  I bet you know what they are now!  Until next time, pursue your dreams and take action each day to reach them.  You can do this.

With Love and Respect,

Gary