Intro to Contractor Teaming Arrangements (CTAs)
What is a CTA?
According to the Federal Acquisition Regulation (“FAR”):
“Contractor team arrangement,” as used in this subpart, means an arrangement in which—
(1) Two or more companies form a partnership or joint venture to act as a potential prime contractor; or
(2) A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program. FAR § 9.601
FAR 9.6, however, does not apply to General Services Administration (“GSA”) Schedules teaming. A GSA Schedule, otherwise known as Federal Supply Schedules or Multiple Award Schedules, are governmentwide contracts that provide products and services to the government on a long-term basis. Therefore, the definition for a GSA Schedule CTA is different from the FAR definition, as the GSA CTA’s do not create a separate legal entity such as a joint venture or partnership. According to the GSA, a CTA is an arrangement in which two or more GSA Schedule contractors team together to provide a total solution to meet a customer’s needs and to meet agency requirements. This agreement allows contractors to combine their supplies or services from each team member’s contract to fulfill a Request for Quote.
Unlike a contractor/subcontractor relationship, the team members are all equal parties to the contract. In addition to sharing supplies and services, they also share the risk and responsibilities of the contract with multiple team members.
What Does Case Law Say About CTAs Under GSA Schedule Contracts?
The requirements for CTAs under a GSA schedule contracts differ from the requirements if a contractor-subcontractor relationship. The differences include:
(1) Each team member has privity of contract with the government for the goods or services that it providing, (2) each team member is responsible for its duties laid out in the CTA document, and (3) each team member must have a GSA schedule contract. Matter of: Veterans Healthcare Supply Solutions, Inc., B-409888, Sept. 5, 2014, 2014 CPD ¶ 269.
In Matter of: Brooks Range Contract Services, Inc., a protester argued that an agency improperly made an award to an entity they claimed “was not a . . . schedule contract holder as required by the solicitation.” Matter of: Brooks Range Contract Services, Inc., B-405327 Oct. 12, 2011, 2011 CPD ¶ 216. The protester claimed that the awarded grouop was a joint venture and that the GSA would require joint ventures to separately possess a schedule contract in order to win the award. The Court found that because each member of the team had the appropriate FSS contract and that the CTA they had submitted defined each member’s responsibilities to the satisfaction of the GSA, that the award was allowed. The Court even cited to the GSA website and their guidelines when identifying the required elements of a CTA. Thus, it is very important that the CTA does not create a joint venture, and that the document clearly labels the roles and responsibilities of each member according to the GSA Guidelines.
What Goes Into a CTA Document?
GSA Guidelines have listed many elements that should be present in CTAs. These elements include areas of legal interest, team matters and financial interests. Regarding the area of legal interest, the CTA document should not create a joint venture or separate subsidiary. The document should also have the duration of the team agreement spelled out, as well as identifying options and how they will work. The document should have a Terms of Agreement, defining the project in its entirety, the specific responsibilities, and their limitations, of each team member, and who will pay and receive any team management fees. The document should also list all required open market items, whether the team lead or each team leader is responsible for particular parts of the project and identify all confidential information.
The document, with regard to team matters, should have specifics regarding the identification of the agreeing parties. These specifics include signatures of the participating contractors, identification information for each member of the Schedule CTA, name and address of ordering activities, activity points of contact for specific needs, state that the agreement is only between team members and that it cannot conflict with the terms and conditions of each team member’s contract. Specific team activities should be written out and assigned responsibility to specific team members, including the team leader at each phase of the project. If these team members are to not work out, the document must also illustrate what circumstances and procedures for replacement are appropriate. Finally, the document should have a listed name under which the Government uses to evaluate performance in the Past Performance Information Retrieval System.
As for financial interests, each team should be responsible for reporting its own sales under its particular GSA Schedule Contract and for tracking their own track sales to meet contract pricing and IFF reporting requirements. The team responsibilities for invoicing and payment, as well as for warranties, should be listed. Hourly rates and prices should be identified as well as order incentives and fee divisions within the team. Lastly, liabilities should be clearly established for each team member as well as how the team will handle processing additional orders from the Government.
CTA’s also typically include the following provisions: indemnification, choice of law, limitations of liability, responsibilities in bid protests, dispute resolution, proposal preparation responsibility, non-disclosure, and non-compete clauses. The GSA states that it does not have a specific form for CTAs, however, the comprehensive list indicates that it would be beneficial for all companies to include these elements and provisions in their documents.
It is clearly recommended that the two parties adequately discuss all responsibilities and duties for each team member, or team leader, as they are all sharing the risk. Clarity can reduce miscommunications and allow for all projects to go as smoothly as possible.