Mutual Teaming Agreement
As with all contractual disputes, each case deals with the specific language of the agreement, and the law varies by state, but in general, most team agreements are established that the parties submit a proposal together and agree to enter into subcontracting negotiations in good faith when awarding a contract to the principal contractor. The weight of the case law shows that a promise of good faith negotiation is not enough to create a binding treaty. In addition, the conditions of a team agreement must be very specific to create a post-attribution engagement in most countries. While the courts have generally concluded that the „pre-price“ clauses contained in merger contracts, such as exclusivity and confidentiality, are enforceable, what if the parties fail to agree on the terms of subcontracting? More recently, the Virginia Supreme Court considered CGI Fed. Inc., v. FCi Fed, Inc., Record No. 170617 (Va. S. Ct. 2018), with a team agreement that provided for a 41% share of work for the proposed subcontractors. Unbeknownst to the subcontractor, the principal contractor submitted a revised proposal proposing 18% work for the proposed subcontractor.
After the government awarded the contract to the main contractor, the parties entered into subcontracting negotiations in which the principal contractor refused to offer a share of work of more than 22%. The Virginia Supreme Court found that the formation of a subcontracting depended on the success of future negotiations and that no binding agreement had therefore been reached despite the defined share of work. Ultimately, cooperation agreements must be carefully developed and the choice of legal concerns is of the utmost importance for applicability. Conversely, the U.S. Court of Appeals for the Third Circuit, under Pennsylvania law, considered that a principal contractor was in good standing when it signed a contract with another supplier in violation of an exclusive team agreement and found that the reciprocal promises of the team agreement, including the agreement to cooperate exclusively in the development of a proposal , were sufficient for the drafting of the contract. „… The „compilation agreement“ between the defendant and the plaintiff constituted an enforceable contract with sufficiently specific terms of execution, despite the absence of a definitive enforcement document proving the parties` agreement. ATACS Corp. v. Trans World Comm`n, Inc., 155 F.3d 659, 663 (3rd Cir.
1998). The Virginia Supreme Court considered the applicability of team agreements in W.J. Schafer Associates, Inc. v. Cordant, Inc., Va. Record No. 961945, (Va S. Ct. 1997). Cordant, who was either out of contract or re-procured the goods provided by the subcontractor at a much higher price under the team agreement, sued his team member for breach of contract when he could not reach an agreement on a definitive subcontract when the main contract was awarded. The team agreement stipulated that the parties would „negotiate a sub-contract in good faith on time.“ The Virginia Supreme Court ruled that Cordant was not entitled to a violation when the parties did not accept a final sub-contract and stated: „…
there must be mutual agreement between the contracting parties on conditions which, in the present circumstances, are reasonably safe to have an enforceable contract. There has not been such a mutual commitment. No amount was indicated in the agreement and no method or formula was used to determine the amount to be paid. A court should not set the terms of the transaction on which the parties could finally agree. Since the agreement does not provide a reasonable basis for the provision of a remedy for its violation, it is too vague and unlimited to be enforced. Most companies that enter into government contracts enter into team agreements to prepare and submit their proposals.