Trimming the Fat in Government Subcontracts -- Recognizing What Really Needs to Be Flowed Down by the Prime

Posted on August 12, 2009 by Sheppard Mullin

Even experienced contractors can find themselves in unfamiliar waters when delving for the first time in the world of government contracts. In many cases, the first step for a commercial company may be acting as a subcontractor (the "Subcontractor") for another company (the "Prime") that is contracting directly with the Government. Even though the Subcontractor's contract is with the Prime and not the Government, certain federal regulations and policies may still apply and place obligations on the Subcontractor. For various reasons, including promoting federal policy and protecting itself contractually, the Government may require that certain clauses included in its contract with the Prime also be included in the subcontract between the Prime and Subcontractor. Similarly, the Prime, for reasons of consistency, to ensure that the Subcontractor's performance will allow the Prime to meet its own contractual requirements, or to protect itself, may include provisions from the prime contract in the subcontract. Such clauses are colloquially known as "flowdown" clauses.
 

Continue Reading...
Tags: , , ,

Teaming Agreement Do's and Don'ts

Posted on October 6, 2008 by Sheppard Mullin

Do

  • Execute a Confidentiality/Nondisclosure agreement before exchanging any proprietary data and ensure that such agreement survives termination and/or expiration of teaming agreement
  • Carefully define the scope of the information subject to the Confidentiality/Nondisclosure agreement to ensure that both written and orally communicated data is protected
  • Carefully consider not only a potential teammate’s skills and resources, but also its performance history to ensure that you will not be caught off-guard by OCI, cost control, or poor past performance issues
  • Consider the advantages and disadvantages of exclusivity and the need for “off ramps”
  • Anticipate Government intervention in or interference with the relationship
  • Clearly define the rights, roles, and responsibilities of each of the parties to the Agreement
  • Clearly articulate the scope of the Agreement – one product line? one contract? an entire program? or a line of business?
  • Include disputes provisions in the Agreement, defining procedure (arbitration or court proceeding), causes of action (contract and/or tort) and available remedies (indemnity, specific performance, injunctions, liquidated damages, limitations on damages)
  • Include a termination provision, inclusive of termination for convenience if desired

Don’t

  • Accept a so-called “standard” Teaming Agreement
  • Ignore the “boilerplate” – e.g., choice of law, limitation of liability, key personnel clauses
  • Narrowly define the information subject to the Confidentiality/Nondisclosure Agreement and ignore the need to protect your know how
  • If you are the prime contractor, include provisions imposing an absolute duty to execute a subcontract
  • Ignore the cost accounting and tax implications of the potential business structure of your teaming relationship
  • Include provisions that may run afoul of the antitrust laws
  • Ignore implications of affiliation rules when teaming with a small business to obtain access to small business set-asides
Tags: