The federal government buys billions of dollars of goods and services each year. State and local governments also purchase goods and services. As a small business owner you may want to sell to the government but realize your company alone does not have all the necessary resources to compete. The NMSBDC/Procurement Technical Assistance Program (PTAP) encourages you to consider teaming as an approach to responding to solicitations put out by a government agency. The benefits of teaming include:
- Pooling resources
- Combining management abilities
- Utilizing technical knowledge of multiple team members
- Improving your business’ competitive position
On an annual basis, the federal government must attempt to award 25% of the value of its contracts and sub-contracts to small business. Some state governments also set similar goals for this category. Federal Contracting Officers can set certain acquisitions aside so that only veteran-owned small businesses or HUBZone small businesses, for example, compete for that proposal.
One possibility for small business is in the subcontracting area. Subcontracting agreements detail the conditions for a prime contractor teaming with one or more subcontractors. The prime company and the subcontract companies retain their individual identities. The agreement is formed for the purpose of competing for a specific proposal. If the team wins the award, the prime is obligated to use the sub in accordance with the provisions mentioned in the proposal. The responsibilities of each partner in the teaming arrangement are clearly spelled out. Many small businesses hire subcontractors to assist with a wide variety of functions. Subcontracting is widely used in the construction industry, where builders often subcontract plumbing, electrical work, drywall, painting, tile, site preparation and landscaping. A subcontracting plan must include percentage goals for using each of the set-aside category businesses, total dollar amount of the project planned to be subcontracted, dollar amounts planned to be subcontracted to each of the set-aside category businesses, and other details.
Another type of teaming agreement is a joint venture with two or more companies acting together as a prime contractor to create a new entity. The members [or partners or shareholders] of a joint venture assume the liability for each other’s actions. There are special requirements from the Unites States Small Business Administration (US SBA) for 8(a) companies forming a joint venture. For example, in determining the size (small vs. large) of a partner, the US SBA takes into consideration revenue, number of employees and other criteria of all of a company’s domestic and foreign affiliates. This affiliation calculation can be a critical concern when determining how to set up the joint venture. For more information, please go HERE
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