Teaming Agreement Exclusivity

Some­times (when there is no exclu­sive team agree­ment), we even present pro­pos­als as bonuses and sub­con­trac­tors. This is a good point and I had thought about it, but in many cases, the pro­posed prin­ci­pal con­trac­tor has already entered into other con­tracts, often with the same pro­posed sub­con­trac­tor that offers the same type of products/services from deliv­ery con­tracts. This “FAR” clause would there­fore be in effect under these other treaties. Wouldn‘t that pre­vent the pri­or­ity of reach­ing a team agree­ment with the sub­com­mit­tee on a new SSP for sim­i­lar work? It makes no sense for coop­er­a­tion to be so lim­ited because, as Vern pointed out, it is recog­nised as accept­able after para­graph 9.6 of the FAR, but the lan­guage of this clause amazes me. Is there only one project to pro­hibit con­trac­tors from pre­vent­ing sub­con­trac­tors from engag­ing as the main con­trac­tor for com­pe­ti­tion in this spe­cific con­tract? Or are team agree­ments an excep­tion to 52.203–6 (b)? There seems to be a gen­eral con­sen­sus that it doesn‘t mat­ter, but my OCD lets me know why it‘s right. The equip­ment agree­ment there­fore links the sub-premium to competition-related pur­poses, in which the sub­con­trac­tor has not been able to com­pete inde­pen­dently and not offer its prod­ucts inde­pen­dently. I don‘t see any con­flict with the 52.203–6. In addi­tion to the expla­na­tion of the sec­ond remark, we do not insert our­selves or make dou­ble pro­pos­als. In sum­mary, the exclu­sive team agree­ment, where two com­pa­nies unite exclu­sively to pur­sue a DoD con­tract and one of these com­pa­nies is the sole provider of an essen­tial ser­vice, is likely to be chal­lenged by con­tract agents. In fact, there have already been DoD pur­chase con­tracts, where exclu­sive team agree­ments have been totally banned.

While the pro­posed FTC/DOJ guide­lines are not lim­ited to coop­er­a­tion between com­peti­tors in the area of pub­lic pro­cure­ment at the fed­eral level, they pro­vide a frame­work for ana­lyz­ing the impact of spe­cific coop­er­a­tion on com­pe­ti­tion to deter­mine whether the gov­ern­ment risks chal­leng­ing them. Con­trac­tors and gov­ern­ment offi­cials should famil­iar­ize them­selves with these doc­u­ments and remain vig­i­lant for the pub­li­ca­tion of the pro­posed DFARS amend­ment and the pro­posed FTC/DOJ guide­lines. 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? Risk analy­sis involves agree­ments that harm com­pe­ti­tion and have no com­pet­i­tive advan­tage that they do not war­rant fur­ther study of their likely effects. Instead, these col­lab­o­ra­tions are in them­selves ille­gally called into ques­tion. These coop­er­a­tions include “agree­ments” that tend to raise prices or reduce pro­duc­tion. For exam­ple, pric­ing, sup­ply manip­u­la­tion, pro­duc­tion fix­ing and mar­ket allo­ca­tion or dis­tri­b­u­tion agree­ments in (a) cus­tomers, (b) sup­pli­ers, © ter­ri­to­ries or (d) com­mer­cial lines. The man­age­ment strat­egy of a well-established com­pany is, in most cases, the oblig­a­tion to require the exclu­siv­ity of its subs. Excep­tions are com­pa­nies that offer spe­cial­ized prod­ucts or ser­vices that no one else has. The other excep­tions are com­pa­nies with skills and expe­ri­ence strong enough to be able to col­lude on a non-exclusive TA. It may be fool­ish to let them slip with­out being signed because they refuse to be exclu­sive. This is an area in which com­pa­nies some­times do not bal­ance. Some­one at the top can decide that their busi­ness is King of the Hill and that all subs will be exclusive.

Maybe it‘s a night­mare for the comic book director.