As mentioned earlier, the FAR recognizes two different forms of association agreements – joint ventures and association agreements. These agreements can be mutually beneficial to small businesses and government, but they can also pose challenges for small businesses and their hopeful partners. SBA 8(a) participants do not need to obtain prior approval from the SBA for association agreements between premiums and subcontractors, according to an SBA statement in a protest case against the GAO`s offer. Following SBA`s statement in The Matthews Group, Accent`s deal looks even cruder. However, I agree with the position of the SBA as set out in The Matthews Group. Nothing in Regulation 8(a) requires prior review or approval of Association Agreements and, to my knowledge, such a review is not part of the usual practice of the SBA. Hopefully, this means that Accent Services Company has been an outlier and that 8(a) other participants won`t have to fear termination due to unapproved association agreements. The SBA stated that under the terms of its programme 8(a), the SBA must approve a joint venture agreement before it can award a contract referred to in paragraph 8(a) to a joint venture. However, the SBA continued: « There is no similar prior approval requirement under the SBA regulations for [other] association agreements involving participants in paragraph 8(a) BD, and the SBA has no process or practice for reviewing such agreements. » For this reason, the SBA concluded, « it would have been impossible for suppliers affected by the Navy`s requests to meet this requirement as written. » In addition to SUB-Net, the following resources provide guidance for the creation of association agreements and subcontracting: While courts have generally concluded that « pre-award » provisions in association agreements, such as exclusivity and confidentiality, are enforceable, what happens if the parties are unable to agree on the terms of a subcontract after being awarded? The SBA`s statement arose as part of a protest against the offer of the GAO, The Matthews Group Inc. d/b/a TMG Construction Corporation, B-408003.2, B-408004.2 (June 17, 2013), which in turn stemmed from two navy 8(a) decommissioning requests. The originally published calls state: « Suppliers considering an association agreement must demonstrate in their proposal that the agreement was received by the SBA before the expiry date of the proposal and approved before the award of a resulting contract. » In other words, the calls required that all association agreements – not just joint venture agreements – be approved by the SBA prior to award. However, the team is a different concept. Subpart 9.6 of the FAR defines a contractor team arrangement as an agreement 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 act as subcontractors under a particular government contract or acquisition program. The latter is essentially an agreement to develop an entrepreneur-subcontractor agreement for the specific acquisition once it has been awarded. First-rate and subcontracting agreements in the government`s procurement system are probably more familiar to most people than association agreements. In the normal relationship between the former and the subcontractor, prime contractors work directly with the government. You manage all subcontractors and are responsible for ensuring that the work is completed as defined in the contract. As with all contractual disputes, each case revolves around the specific wording of the agreement, and the law varies from state to state, but in general, most association agreements require the parties to jointly submit a proposal and agree to enter into good faith negotiations on subcontracting when awarding a contract to the supervisor. The weight of the case law shows that a promise to negotiate in good faith is not sufficient to conclude a binding contract. In addition, the terms of an association agreement must be very specific in order to create a post-award obligation in most states. Protégé`s Performance of Work – Current Performance of Work Requirements for 8(a) Mentor-Protégé Joint Ventures The SBA allows small businesses to award a portion of their dismantling contracts to large and small businesses, unless expressly prohibited by law, regulation or solicitation. Therefore, small businesses regularly use this feature using association agreements.
Association agreements allow small businesses to maintain their standard for small businesses while obtaining subcontracting support from other small businesses or even large companies. If you`re new to the federal contract, working with another company as a « subcontractor » is a great way to get your foot in the door of the federal government. The Internet is a great resource for finding ways to collaborate with other providers. After a bid against the initial award was submitted, the Navy took corrective action. As part of its corrective actions, the Navy removed the requirement that non-joint venture association agreements be submitted to or approved by the SBA. Matthews Group, Inc. d/b/a TMG Construction Corporation protested the corrective measures, claiming that the requests for correction were not erroneous. More recently, the Virginia Supreme Court looked at CGI`s Fed. Inc., c. FCi Fed, Inc., registration number 170617 (Va.
S. Ct. 2018) with an association agreement stipulating that the proposed subcontractor would receive a 41% share of the work. Without the knowledge of the subcontractor, the prime contractor submitted a revised proposal proposing an 18% work share for the proposed subcontractor. After the government awarded the contract to the prime contractor, the parties entered into subcontracting negotiations in which the prime contractor refused to offer a share of more than 22% of the work. The Virginia Supreme Court ruled that the formation of a subcontract was contingent on the success of future negotiations and therefore did not establish a binding agreement despite the defined share of the work. Association agreements can be a valuable tool for small businesses, allowing companies to pool their resources, management skills and technical knowledge. All of these elements contribute to making a small business more competitive in the bidding process. However, if not properly implemented, the application of association agreements can have a negative impact on their ability to meet the size requirements of decommissioning contracts.
The use of these association agreements does not pose any potential risk to entrepreneurs. Incorrect association agreements may result in violations of the SBA membership rules that the SBA uses to analyze the relationship between a party competing for a small business decommissioning contract and its partners to determine whether they meet the applicable procurement size requirements. Even the simple appearance of affiliation can cause a small business to spend a lot of time and money just to prove that it falls under the agency`s requirements to consider them for the contract. Since the association often takes place very early in the acquisition process, when the requirements may still be largely undefined, prime contractors strive to maintain enough flexibility to adjust their strategy as the demands of the call take root. Similarly, prime contractors are solely responsible for performance risk when awarding the contract. However, subcontractors may also be required to make significant investments in continuing the contract with the main contract and often accept exclusivity provisions that prevent the subcontractor from participating in the application with other teams, so they must ensure that their interests are protected. Balancing these needs requires an intermediate approach that includes provisions that are specific enough to be enforceable, but leaves the prime contractor with the opportunity to submit a successful proposal and any subsequent negotiations with the client. GSA`s Contractor Association Agreements provide another opportunity to team up. There, the Contractor Association Agreement (CTA) allows contractors to use their GSA schedule to develop a solution for the government and does not create a separate legal entity, but allows schedule contractors to meet buyer requirements by combining the deliveries and services of each team member`s separate schedule contract in response to a buyer`s request for quote. Ultimately, association agreements must be carefully drafted and concerns about the choice of law in terms of applicability are of paramount importance. Conversely, the United States Third Circuit Court of Appeals, applying Pennsylvania law, held that a prime contractor was in breach of contract if it had subcontracted to another supplier in violation of an exclusive association agreement and concluded that the mutual promises of the association agreement, including the agreement to cooperate exclusively in the preparation of a proposal, were sufficient for the drafting of the contract.
« . The association agreement between the defendant and the plaintiffs constituted an enforceable contract with sufficiently precise conditions of performance, notwithstanding the absence of an final document identifying the agreement of the parties. ATACS Corp. . . .
