If you're in federal contracting, teaming up might be your ticket in—but only if you understand the rules of the game.
Many small businesses confuse teaming agreements with subcontracting. They both involve working with other companies. They both can help you win more contracts. But they’re not the same—and mixing them up can cost you opportunities or worse, land you in compliance trouble.
Let’s break it down.
What Is a Teaming Agreement?
A teaming agreement is a pre-award arrangement between two or more businesses that want to go after a specific contract together. Usually, one company agrees to serve as the prime contractor, and the other(s) commit to being subcontractors, if the bid is successful.
It’s not a contract to perform the work. It’s a contract to pursue the work together.
Companies use teaming agreements to:
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Combine capabilities they couldn’t offer alone
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Meet eligibility requirements for set-aside contracts
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Increase competitiveness by strengthening the proposal
You’re essentially saying, “We’ll bid together. If we win, we’ll work together.”
What Is a Subcontracting Agreement?
Subcontracting kicks in after the award. This is when the prime contractor hires other businesses (subcontractors) to fulfill parts of the contract.
Unlike teaming agreements, subcontracting agreements are enforceable performance contracts. They outline things like:
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Scope of work
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Payment terms
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Delivery schedules
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Flow-down clauses from the prime contract
The subcontract is what makes the relationship legally binding during contract execution.
Key Differences at a Glance
| Teaming Agreement | Subcontracting Agreement |
|---|---|
| Happens before the contract is awarded | Happens after the contract is awarded |
| Used to submit proposals | Used to perform the work |
| Often includes intent, not obligation | Legally binding and enforceable |
| Focused on winning the contract | Focused on delivering the contract |
Why This Matters in Real Contracts
Let’s say you're a small SDVOSB looking to get into the federal space but don’t yet have the resources to fulfill an entire project. Teaming with a larger firm gives you a seat at the table.
That’s what Jesse Carlow did. His company, Veteran’s Choice Procurement, was SDVOSB-certified but brand new to federal contracts. He teamed up with Ecolab, who supplied the products, while Jesse submitted the bid and managed delivery. That relationship turned into six awarded contracts in less than a year.
But here’s the kicker: Had Jesse not clearly defined the subcontracting terms upfront during the teaming phase, that partnership could’ve led to disputes or even disqualification.
💡 Pro Tip: Teaming agreements should always anticipate the subcontracting terms. Don’t wait until after you win to negotiate scope or price—it’s too late by then.
78% of Federal Work Goes to Subcontractors
This stat alone shows how important it is to understand both roles. Whether you're trying to get your foot in the door or you're an established prime trying to expand your reach, knowing when and how to use teaming and subcontracting correctly gives you a competitive edge.
The government doesn’t just buy from one company. They buy from teams. And those teams are built on clear agreements, clear expectations, and clear execution.
What’s Next?
If you’re forming a team or submitting a joint bid, don’t leave your subcontracting terms to chance. USFCR can help you set up a compliant teaming agreement and lock in the right relationships before you bid. You’ll go in stronger and come out with a better shot at winning.
Learn the full “What’s Next?” strategy for federal contractors.
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