janice davis | putting together small business teams

Essential Documents forEffective TeamingDavis & SteeleNCRC Annual ConferencePutting Together Small Business Teams to Compete for Larger ContractsApril 18, 2012

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Presenter

•Janice Davis, Esq.•Chair of Davis & Steele’s Government

Contracts Practice Group•20+ years of government contracts law

experience•Work extensively with businesses selling

to governments—federal, state, and local

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Prepare Before You Share!

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© 2012 Davis & Steele: Uncompromising Service, Unparalleled Valuewww.davissteele.com

Prior to engaging in preliminary discussions regarding the joint pursuit of potential opportunities

Require marketing/business development staff to have executed mutual non-disclosure agreements in place

Do not share proprietary data without an NDA!

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An NDA is a binding agreement that defines proprietary data and establishes limits on the use of such data by the parties generally.

An NDA prohibits the disclosure of proprietary data to third parties, with narrowly defined exceptions.

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Why is a Non-Disclosure Why is a Non-Disclosure Agreement Necessary?Agreement Necessary?

• Share data without fear of losing trade secret protections or having proprietary information disclosed publicly

• Uncovers unscrupulous businesses (e.g., those who insist on disclosure of proprietary data before signing an NDA)

• Fosters the relationship

• Facilitates planning

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• Agreement between the parties to maintain confidentiality of information and not disclose each other’s proprietary information

• Relatively broad definition of proprietary information – specifically reference any information of unique value

• Strict limits on the use of information/permissible use should be very narrow

• Agreement on how the information is to be disposed of upon termination of the agreement

• Requirement that employees of recipient have also signed NDA covering the proprietary information

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Essential Terms of a Essential Terms of a Non-Disclosure AgreementNon-Disclosure Agreement

• Term/duration – long enough to enable the parties to explore teaming possibilities, PLUS additional time period to protect your interests

• Provision detailing what is exempt/not included in the definition of proprietary data:▫ Public domain▫ Already known▫ Independently developed▫ Legitimately obtained from another source

• Use common sense: Don’t disclose more than you need to!

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Essential Terms of a Essential Terms of a Non-Disclosure AgreementNon-Disclosure Agreement

•FAR 9.601 Defines a “Team Arrangement” as an arrangement in which:▫Two or more companies form a partnership or

joint venture to act as a potential prime contractor; or

▫A potential prime contractor agrees with one or more companies to have them act as its subcontractors under a specified government contract or acquisition program

▫Includes subcontracting, partnerships, JVs

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Teaming ArrangementsTeaming Arrangements

1. To designate a team leader who will act as the prime contractor for a particular contract;

2. To identify the products or services that each party will provide, being as specific as possible;

3. To assign duties and responsibilities for preparing the proposal (and to assign responsibility for costs of preparing the proposal); and

4. To impose a duty on the parties to negotiate in good faith toward the execution of a subcontract if the proposal is successful.

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Teaming Agreements: Teaming Agreements: PurposePurpose

• Enforceable When Carefully Drafted• Teaming agreements may or may not be legally

binding commitments• If forward looking and general, not likely to be a

binding commitment• If detailed with essential provisions, may be a

binding commitment

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Teaming Agreements: Teaming Agreements: Enforceable?Enforceable?

• W.J. Schaefer Associates, v. Cordant, Inc., 254 Va. 514, 493 S.E.2d 512 (Va. 1997)

▫ Nonspecific agreement that left too many key provisions for later negotiations was merely an “agreement to agree” and was, therefore, unenforceable

▫ Too many terms “to be determined,” including Price Subject matter Delivery schedule

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• EG&G Technical Services v. Cube Corp., 63 Va. Cir. 634 (Va. Cir. 2002)

▫ Teaming agreement was sufficiently specific and addressed the essential terms

▫ Intent to bind the parties for contract formation in Virginia: Scope of work to be performed Compensation to be paid Terms and conditions to be incorporated in resulting

contract

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•ATACS v. Trans World Communications. (155 F.3d 659 (3rd Cir. 1998)

▫Third Circuit Court of Appeals Held: teaming agreement enforceable

▫Intent to be bound▫Consideration▫Definite terms

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• Factors favoring the creation of a binding and enforceable agreement:

• Intent to be bound:▫ Statements that one party will be awarded a

subcontract if the other party wins the prime contract▫ Specific statement that the parties will work together as

a team on the project• Consideration

▫ Specific price provisions covering the work to be performed by the subcontractor

• Definite terms▫ Specific scope of work under the prime contract▫ Specific terms and conditions to be incorporated into

the expected prime contract

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• Factors against the creation of a binding and enforceable agreement:

• No intent to be bound:▫ Statement that the team members plan to enter into good

faith negotiations toward a final subcontract▫ No statement that the team member will be awarded a

subcontract if the other team member wins the prime contract

• Consideration▫ General statement that team members will seek to agree

on compensation• Terms and Conditions

▫ General description of scope of work under the prime contract

▫ Statement that the parties will be released from their obligations if they fail to negotiate a subcontract

▫ Lack of detailed terms and conditions

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• Every Teaming Agreement should contain, at a minimum:1. the purpose of the agreement;2. whether the agreement is exclusive or non-

exclusive3. specific duties of the prime contractor;4. specific duties of the subcontractor;5. specific consideration6. confidential information protection provisions; 7. dispute resolution provisions; 8. payment terms; and9. a term and termination provision.

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Content of a Teaming Agreement

•Additional provisions (not exhaustive):10.non-solicitation11.failure to agree on subcontract12.exclusivity13.organizational conflict of interest14.technology transfer15.disputes16.assignment17.publicity

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Content of a Teaming Agreement

Janice Davis, Esq.Davis & Steele

[email protected]: (202) 508-1492

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Questions?

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