No single business has everything it takes to cover every opportunity, and agencies often prefer a mix of capabilities, past performance, and certifications. Teaming structures give contractors a way to combine strengths, fill gaps, and pursue awards they couldn't win alone. The challenge is that not all teaming models are created equal. Each comes with different costs, rules, and risks, and the wrong choice can eliminate your eligibility before the evaluation even begins.
Prime-Subcontractor Arrangements
Most contractors start with this structure: One company holds the contract, and the others work underneath it. It looks simple, but the risks aren't always obvious. A prime-sub structure makes sense when the prime has the past performance but needs technical depth, or when one company is prepared to shoulder the majority of the risk.
Formation is quick, usually three to seven days, and costs between $5K and $15K in legal fees. Subs typically give up 15–35% of their margin in the process. The bigger danger is hidden in workshare. Go past 50% subcontracted work, and SBA may treat it as an affiliation.
Primes are also required to do a specific amount of the work. There is no such thing as "Sitting back and collecting the money." A Prime is also responsible for alleviating the financial burden of the subcontractors. They minimize risk on the contract by handling not only the Project Management, but they assist in financing a large load of the contractual costs. The Prime is then paid back for their contributions at the time of payment receipt from the contract, and anything additional owed to the subcontractors is cut to them at that time.
Joint Ventures (JVs)
A JV is a separate entity built for federal contracts. It takes more time and money than a prime-sub, but it allows opportunities that neither partner could secure alone.
JVs are not just for contracting on the Federal side, but through commercial ventures as well. JVs can be any number of companies blending together with a shared FEIN, banking details, and Organizational structure.
This structure is ideal when two companies want equal control or need to combine bonding capacity and past performance. An 8(a) teaming with a large business is a common use case. Costs can be between $25K and $150K, depending on whether the JV is populated or unpopulated, and setup takes 30 to 60 days. A new EIN, bank account, and accounting system are required.
If the JV is an 8a, the 8a Contracting Officer must first give approval of the JV before one can be formed. The full process can honestly take up to 120-190 days to complete.
Under current rules, a JV can pursue unlimited contracts within two years, but small business partners must keep at least 40% of the work. For 8(a) JVs, the 8(a) firm must hold 51% ownership.
Contractor Team Arrangements (CTAs)
CTAs are unique to GSA and often misunderstood. Unlike a JV, no new entity is formed. Each member keeps their prime contractor status, but they agree to collaborate by submitting a joint proposal and delivering a single, integrated solution.
CTAs are considered Co-Primes, but the hierarchy is defined during the Teaming Agreement with a specific scope of work listed within the legal document that is signed by the party being offered a subcontracted role. This document is usually followed up with an NDA that makes it almost impossible for that company to then go after the possible contract as a Prime themselves.
They work best when combining multiple schedules to create a single, integrated solution. They're also faster to form than a JV, taking about a week or two and running $10K to $25K in legal costs. Each partner bills the government directly for their share, which can protect margins.
The limitation is clear: CTAs cannot be used on small business set-asides. We've seen small firms lose an award because they tried exactly that. They had the right team but the wrong structure.
Mentor-Protégé Arrangements
Think of this one as more than just a teaming option. It's a formal SBA-approved program that gives protégés real developmental support while opening powerful contracting advantages.
Mentor-Protégé arrangements are designed for businesses looking to scale and gain access to sole-source contracts. For 8(a) set-aside sole-source awards, SBA allows up to $4M for services and $7M for manufacturing. However, under DoW (as the name was officially changed by the new administration back to the Department of War as of 09/05/2025) contracts, the threshold is higher: $100M sole-source awards may be issued to 8(a) firms without justification. The approval process takes about 90 days, but sometimes shorter or longer. The SBA doesn't charge a fee - the $5K–$10K prep cost is for consultants/legal prep. A mentor-protégé JV can bid as long as the MPA is active (up to 6 years), but each JV must have a written JV agreement approved by SBA, and it only applies to contracts the JV bids during the term of the MPA. Annual reporting is required, and mentors must provide genuine assistance.
The trade-offs are worth it. There is no affiliation between the mentor and protégé; the mentor can own up to 40% of the protégé, and the team can form unlimited JVs without restrictions.
Large + Small Business Partnerships
Large businesses need small participation in subcontracting plans, and small businesses often need the resources or a large prime. Put them together, and you've got opportunity, but also risk if it's structured wrong.
These partnerships work when the small brings set-aside eligibility and the large brings bonding or past performance. They're also common when a solicitation requires specific percentages of small business participation. The danger comes when the large company takes too much control or the small becomes too financially dependent on the large or shares too much ownership or management, it risks losing its status. Under SBA regulations, a small business can lose its small business status if it becomes "affiliated" with another firm. Affiliation is determined when SBA finds that one business controls or has the power to control another.
Socioeconomic Combinations
Sometimes multiple certifications are stacked into one team. For example, an 8(a)/WOSB firm may partner with an SDVOSB or HUBZone. Agencies like this because it helps them hit several socioeconomic goals with one award.
These teams are especially effective when pursuing IDIQ contracts or when agencies award evaluation points for multiple certifications. The challenge is alignment between team members. If a JV or a prime-sub, but compliance requirements multiply. Each business must keep its own certification current, which doubles the paperwork and monitoring.
Geographic and Multi-State Teams
Some contracts require local presence. That's where geographic teaming comes in. A small contractor can partner with local businesses in each state or region to meet performance requirements.
This model is often seen in facilities maintenance, OCONUS projects, and jurisdictions with local preference laws. It's also common when Alaska Native Corporations get involved. The costs are typical for teaming, but add local registration fees ranging from $500 to $5K per state. Performance bonds may also vary depending on location.
The key is understanding performance requirements. If 51% of the work must be completed within certain geographic boundaries, the team must be structured to meet that rule. However, the "51% rule" is not universal - it applies only when specifically written into a solicitation, usually at the state/local/tribal level. At the federal level, the governing rule is the SBA Limitations on Subcontracting, which is about who performs the work (small vs. large), not where.
Veteran-to-Veteran Teaming
One structure gaining momentum is veteran-to-veteran teaming. When two SDVOSBs or a mix of SDVOSBs partner together, they can strengthen their positioning for VA and DoD contracts. Agencies are under pressure to meet veteran contracting goals, and veteran-to-veteran teams can achieve those targets more efficiently.
This strategy works especially well on SDVOSB set-asides. A service-disabled veteran-led prime can team with another service-disabled veteran-owned firm to increase capacity while staying eligible. It's also effective when specialized service-disabled veteran-owned firms join forces, such as in healthcare, aerospace, or engineering, where teams combine expertise to deliver a broader solution.
The costs and requirements are similar to other teaming structures, depending on whether it's set up as a JV or a prime-sub. The advantage is credibility. Contracting officers know they are awarding to veteran-owned firms that understand the mission. We've seen contractors win faster by pairing with other veteran-owned companies and leveraging their combined experience.
Choosing the Right Structure
Too many contractors pick a structure based on relationships instead of requirements. The better approach is simple: map out what the solicitation actually needs. If you need past performance but already have bonding capacity, a prime-sub may be enough. If teaming benefits require a JV; for GSA schedule holders, a CTA works; but not for set-asides. For long-term development and sole-source access, mentor-protégé is the way to go.
Every option has its own cost profile. On a $10M contract, a prime-sub might cost the sub $635K in lost margin. A JV might run $140K in setup and operating overhead. A CTA can cost as little as $15K but comes with the set-aside limitation. Mentor-Protégé JVs may cost $50K or more, but the benefits often outweigh the investment. Mentor-Protégé JVs can compete for set-asides and sole-source awards if the protégé qualifies, but the program itself doesn't create sole-source authority. The protégé must still be an 8(a), HUBZone, SDVOSB, or WOSB for sole-source eligibility.
Common Structure Mistakes
We see the same errors repeatedly. Contractors recycle outdated JV templates that fail modern compliance. They pick a structure after reading the RFP, only to find out they don't qualify. They ignore agency preferences. The Air Force leans toward CTAs, the Army prefers prime-sub, and Navy tends to use more mixed strategies. They also assume one structure can work across different certifications, which is rarely true. COs decide based on the solicitation, FAR/DFARS rules, and mission needs rather than formal government-wide policies.
What's Next?
The right teaming structure can mean the difference between winning and losing, or between 40% profit and 15%. The wrong decision can disqualify you outright.
At USFCR, we've structured more than 1,000 teaming arrangements. We know which setups agencies prefer, what triggers size protests, and how to keep agreements compliant. If you're facing a major opportunity, don't guess. Call us at (866) 216-5343 to schedule a teaming structure assessment.
FAQ
Can we change structures after forming our team? Yes, but it's expensive. Moving from a prime-sub to a JV requires forming a new entity, registering in SAM, and, in some cases, re-competing for the award. It can run $75K and add months of delay.
Which structure is safest against protests? Mentor-Protégé JVs. Because SBA pre-approves them, protests rarely succeed. Prime-sub and JV arrangements are more likely to be challenged. CTAs avoid most protests, but still must meet all set-aside qualifications.
How do contracting officers view different structures? Most prefer simplicity. Prime-sub is the most straightforward. JVs take more paperwork. CTAs confuse some COs outside of GSA. Mentor-Protégé JVs are respected because SBA has already reviewed the relationship. Geographic teams require extra compliance checks.
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