A recent Virginia Supreme Court case underscores the hurdles government subcontractors may face when they seek to enforce common teaming agreement terms (see: CGI Fed’l Inc. v. FCi Federal, Inc., No. 170617 (Va. June 7, 2018).

This case of the “disappearing workshare” also illustrates that strategic choices made during teaming agreement negotiations and in litigation may dictate whether the subcontractor has any recourse against the prime contractor.

In 2012, CGI signed a teaming agreement with FCi to jointly prepare a proposal for a State Department contract for which FCi would act as the prime contractor and CGI as the subcontractor.  FCi retained exclusive rights to finalize the proposal and negotiate any resulting prime contract with the government.   The teaming agreement said CGI “will receive” a 45% workshare of the awarded total contract value, but the “commitment may not be exactly 45% each year,” and it required the parties to enter into “good faith negotiations” for a subcontract after prime contract award.  If the parties could not mutually agree on a subcontract within 90 days after award, the teaming agreement would expire.

CGI and FCi worked together on the proposal for three months.   The government identified weaknesses in the proposal and invited a revised proposal.   CGI agreed to help FCi with the revised proposal if FCi committed to give CGI a 41% workshare and ten management positions on the resulting project.  The parties signed an amended teaming agreement with those new terms, but the other terms of the original teaming agreement did not change.  With CGI’s help, FCi prepared a revised proposal to the government.  

The government awarded the prime contract to FCi, but a competing bidder filed a series of protests.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2018/07/teaming-agreement-challenges-subcontractors/