Teaming Agreement Was Enforceable Contract

The most important decision parties drafting a teaming agreement need to make is whether they want to make the teaming agreement an enforceable contract. The terms of the teaming agreement and the conduct of the team members can make a generally unenforceable teaming agreement enforceable in a breach of contract lawsuit.

After Cyberlock Consulting, Inc. performed a subcontract for Information Experts (IE) on a contract with the Federal Office of Personnel Management, both signed a teaming agreement for another OPM solicitation. According to the teaming agreement, in the event that IE was awarded a prime contract, IE “agrees to execute a subcontracting agreement” providing for Cyberlock to perform 49% of the work and providing also that IE “will perform 51% of the scope of work.”  Their conduct, as shown in an email between the parties, established that the 49% figure in the teaming agreement meant that Cyberlock was entitled to a 49% share of the value of the Prime Contract. Moreover, both exchanged information pertaining to the nature and scope of work. After Cyberlock did not get the expected subcontract, it sued IE for breach of contract. A federal district judge concluded that this language and conduct was enough to deny IE’s motion to dismiss the lawsuit.

Because a teaming agreement can be such a critical part of a joint marketing effort, the parties must carefully draft it. Berenzweig Leonard routinely drafts teaming agreements for its clients and can make sure that a teaming agreement clearly states the intentions of the parties and avoids the unwanted, unintended consequences of those agreements.

Terrence M. O’Connor is the Director of Government Contracting at Berenzweig Leonard, LLP, a business law firm in the Washington, DC area. He can be reached at TOConnor@BerenzweigLaw.com.