A Teaming Agreement can be used where two businesses agree to cooperate in submitting a proposal to a customer which has issued a request for tender. Effectively, one party agrees to be the contracting party and the other agrees to be the subcontracting party in the event the joint tender is successful. Typically, the contracting party will be the one which has the greater stake in the bid, whilst the subcontracting party will be providing a smaller, yet critical, component of the goods or services being offered.

Factors to consider when drafting a Teaming Agreement

One important issue to be addressed in negotiations will be the question of whether the teaming arrangement is exclusive or non exclusive — in other words, whether either of the tendering parties is free to form an alliance with another bidder or alternatively to bid in its own name if it wishes.

While this document contemplates a specific project, which is the subject of the teaming arrangement, other teaming agreements might involve a broader form of alliance, by which the parties agree to explore the possibility of collaborating in a range of future, as yet unspecified, tenders. In such circumstances, it is necessary to determine the term of such an arrangement and the geographic area to which it applies.