Teaming agreement, prime-sub, joint venture — three different structures with three different sets of rules.
Last reviewed on May 12, 2026.
In federal contracting, "teaming" gets used loosely to describe several different relationships. They behave differently under the FAR and SBA rules, and using the wrong structure for the wrong opportunity is a common source of compliance problems. The three structures:
The two questions that decide which structure fits: does the opportunity need both firms' capabilities to be bid at all, and does the prime want to keep operational control, or share it?
| Dimension | Teaming agreement | Prime-sub | Joint venture |
|---|---|---|---|
| Contract holder | Prime (the sub is invisible to government) | Prime only | The JV entity itself |
| Government privity | Prime only | Prime only | JV (both parents indirectly) |
| Risk allocation | Mostly on prime; sub liable through subcontract | Per the subcontract terms | Joint and several at the parent level |
| Best for | Pre-award pursuit when prime can be defined | Specialized scope under prime's broader contract | Pursuits requiring shared scale, past performance, or set-aside status |
| SBA approval needed | No (governed by FAR 9.6) | No | Yes for set-asides; mentor-protégé JVs need SBA approval |
A teaming agreement (FAR 9.6) is a pre-award arrangement. The companies agree on roles, workshare, exclusivity, and what happens if the prime wins. The TA itself is not a contract for performance — it's a contract about how to compete. If the team loses the bid, the TA expires with no performance obligations.
Effective teaming agreements cover:
TAs are enforceable — courts have ordered parties to negotiate subcontracts in good faith when a prime wins and tries to renegotiate workshare. But enforceability depends on specificity. A vague TA promising "good faith negotiation of fair workshare upon award" is significantly weaker than one with named labor categories and percentage ranges.
A joint venture is a separate legal entity. The two (or more) parent companies form a new entity — typically an LLC — that bids on and holds the contract. The JV files its own SAM registration, gets its own UEI and CAGE code, and operates under its own EIN. From the government's perspective, the JV is the contractor.
This structure makes sense when:
The cost is real: forming the entity, registering it separately, allocating overhead and personnel between parent and JV, and dissolving it cleanly at the end. JVs are not appropriate for one-off opportunities; the administrative overhead only pays back across multiple awards or a single large multi-year contract.
SBA imposes specific requirements when a JV competes for set-aside contracts. The key rules:
Get the JV agreement reviewed by counsel familiar with SBA regulations before submitting any proposal. Defective JV agreements are a routine basis for size protests after award.
For teaming agreements, award triggers conversion to a subcontract. The subcontract takes over from the TA as the operational document. Workshare percentages, IP terms, and dispute resolution should flow from one to the other consistently.
For joint ventures, award means the JV begins performing. Reporting, invoicing, and CPARS (see CPARS ratings) attribute to the JV. Parent companies typically loan personnel to the JV under inter-company services agreements; getting the cost allocation right between JV and parent matters for both contract accounting and tax purposes.
For straight prime-sub structures, post-award is mostly subcontract administration: flow-down clauses, invoice processing, performance reporting, and small business subcontracting plan compliance under FAR 52.219-9 (see subcontracting plans).
A teaming agreement is a contract between two independent companies setting out how they will pursue an opportunity together — typically one will be the prime and the other a subcontractor if they win. No new legal entity is created, the prime holds the contract with the government, and the sub has no privity with the agency. A joint venture creates a separate entity that itself bids for and holds the contract. The JV is the prime; both members are bound to the government through it, and the JV must satisfy the eligibility and performance rules in its own right. The practical distinction is liability and eligibility: in a teaming arrangement each firm's status stands alone, while a JV's status is determined by the JV agreement and the rules governing its members.
The joint venture is the prime contractor. That is the defining feature of the structure. The member firms are not primes and not subcontractors to each other in the ordinary sense — they perform work under the JV agreement, which allocates responsibilities and profit between them. Members do remain jointly and severally liable to the government for the JV's performance, which is why the JV agreement's work allocation and default provisions matter far more than they do in a teaming agreement.
SBA's rule allows a specific joint venture to be awarded contracts over a limited window — generally a two-year period from the date of first award, during which the JV can receive an unlimited number of awards, after which it cannot take new awards (though it continues performing what it holds). Firms that want to keep working together typically form a new JV entity rather than trying to extend the old one. Confirm the current rule before relying on it; SBA has revised the mechanics more than once.
Yes, in one crucial respect. An SBA-approved mentor-protégé JV can pursue small business set-aside work even though the mentor is large, because the mentor's size is not imputed to the JV. Without an approved mentor-protégé agreement in place, the affiliation rules would generally make the JV other than small. The approval must exist before the offer is submitted — it cannot be arranged after the fact.
The small business member must perform at least 40% of the work done by the joint venture, and that share must be more than administrative or ministerial functions. Separately, the JV as a whole must satisfy the limitation on subcontracting for the contract type. The 40% cannot be met by the protégé subcontracting its share onward to another firm — including to a similarly situated entity — because the requirement is about work the protégé itself performs.
Enforceability varies with drafting and governing state law, and courts have frequently found agreements to negotiate a future subcontract unenforceable as agreements to agree. Teaming agreements that specify the subcontract scope, workshare, pricing basis, and duration are far more likely to be enforced than ones that leave those terms for later. Assume that a vague teaming agreement gives you a business relationship, not a legal remedy.