Drafting Protest Provisions in Teaming Agreements

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Drafting and negotiating provisions in teaming agreements can be complex in many situations. These agreements attempt to address the duties, responsibilities and roles of the parties in the event that a protest arises and are often part of many federal contracts.

About Teaming Agreements

Teaming agreements are often initiated by similar contractors and subcontractors. These individuals may agree to pool their resources in order to win a federal contract. The agreement usually states which party will be the primary contractor and which will be the subcontractor. This agreement often addresses the scope of the work of each party if they are awarded the contract. Additionally, the agreement usually states how decisions will be made during the actual contract if it is won and which party will handle the bidding process.

However, teaming agreements may also address the sequence of events that will occur if the bid or proposal is not successful. The agreement may contain language about how it is determined whether to file a bid protest with the administrative agency that denied the bid or other entity.

Role of Protest Provisions

Teaming agreements may include language that states when a party may make a bid protest. For example, it may state whether the contractor or subcontractor will be the protesting party and whether the support of the other party is necessary for a protest to be made. This is an important distinction because the subcontractor may not be able to lodge a protest of its own due to the potential lack of standing.

Breach of Contract Concerns

Subcontractors that want to protest may be prevented from taking this action if they do not have standing to do so. This may result in their sole source of recourse being to sue the contractor for breach of contract. If this occurs, the language of the teaming agreement often is determinative of the outcome. Such a claim may be based on the lost profits that the subcontractor suffered due to not receiving the contract.

Considerations in Drafting Protest Provisions

Parties who are entering into a teaming agreement are largely free to draft the agreement as they see fit. A subcontractor may want to include language in the teaming agreement that requires the contractor to file a bid protest or to protest if the subcontractor requests it to do so, although such a provision would flow against the norm of such agreements that provide greater control and discretion to the primary contractor. In contrast, the primary contractor may carefully consider whether it should provide such a right to compel a protest. The parties may also want to consider what procedures they want to put in place in case they have a disagreement and reach an impasse.

The parties must carefully consider a number of factors when drafting teaming agreements and protest provisions within them. In particular, the teaming agreement should clearly indicate which party will have the right to decide whether or not to protest. Some agreements may indicate that the parties have to both agree to protest before it is made. Others may give the subcontractor the right to mandate a protest even if the primary contractor does not want to make one. The agreement should also outline which party will be responsible for paying for the protest. The parties may agree to split these costs or require the party who wants to move forward with the protest to shoulder them.

The protest provisions may also outline the status of the team during the pendency of a protest. The termination provision in the teaming agreement may be contradictory to the protest provision. The termination provision may state that the agreement terminates upon the award of the contract to another contractor. However, the parties may not want this clause to be triggered because the contract would be over and if the parties do prevail with the protest, the teaming agreement may not apply. The parties may contain clauses that specify actions if the GAO protest is not successful and the case moves to the Court of Federal Claims.

Another important provision in these types of claims is which party will be responsible for appointing legal counsel. This right can affect both parties if they will both be responsible for paying legal fees. The agreement may indicate that the parties may be required to agree on legal counsel.

Legal Assistance

Parties who would like assistance in drafting a teaming agreement may decide to contact a lawyer to assist. He or she can explain particular provisions and draft an agreement of this nature.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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