There are many different avenues a GSA Contractor can take to do business with the federal government. Federal agencies are focused on procuring total solutions, so this often requires businesses to form partnerships in order to win larger opportunities.
Two of the most common methods to create a successful partnership are the Contractor Teaming Arrangement (CTA) and a Prime/ Subcontractor Agreement. However, both of these methods can prove to be very confusing for GSA contractors trying to differentiate between the two.
In order to determine which method is best for you and your organization, you’ll need to answer the following five questions about CTAs and Prime/Subcontracting Agreements:
1. Is it a direct sale or an indirect sale?
A CTA is a direct sale to a federal agency while a subcontract is an indirect sale to a federal agency. In order to set up a CTA, both parties must have a GSA Schedule so that each team member gets credit for the sale on their respective GSA Schedules.
In a Prime/ Subcontractor agreement only the Prime Contractor needs to have a GSA Schedule. The Prime contractor would consider the transaction a direct GSA sale, whereas the Subcontractor would consider it a commercial sale to the Prime Contractor.
2. Who has privity of the contract with the government?
In a legal sense, whoever has privity of the contract is the same entity that will have the rights to establish the terms and incur the liability should any of the terms of the contract be breached.
In a CTA the privity of the contract lies with each team member, therefore each team member can interact with the federal government.
In a Prime/ Subcontractor agreement the privity of the contract is solely with the Prime Contractor. The Prime Contractor is therefore responsible for all of the products and services performed by the Subcontractor.
3. How do you assign the work?
In a CTA the team members would mutually agree upon which sections of the proposal they could complete based on the core competencies. An agreement would be drafted to state who would be responsible for which activities.
When you enter into a Prime/ Subcontractor agreement the Prime Contractor will assign the work that needs to be completed by the Subcontractor. There also may be additional requirements for how much work can be performed by each Partner in a Prime/ Subcontractor relationship, particularly if an opportunity is awarded under a certain Small Business Set Aside.
4. How do you invoice?
In a CTA specific terms for who will invoice the federal agency need to be established. You may identify one team member who will take care of the administration of the invoices, but each team member will still report the sales on their GSA Schedule.
Regardless of how the structure of the invoice is set up, when billing the agency the pricing for each product or service must be in line with the pricing awarded on the team member’s GSA Schedule who will either be supplying the products or performing the services.
In a Prime/ Subcontractor agreement the terms, conditions, and awarded pricing will be that which is awarded on the Prime Contractor’s GSA Schedule.
5. What range of products/ services can be offered?
When you enter into a CTA to respond to an opportunity you have the entire breadth of the scope of products/ services on each team member’s GSA Schedule. You enter into CTA’s across different schedules.
For example, and IT Schedule 70 Contractor can partner with a Professional Services Schedule (PSS) Contractor. When you enter into an agreement as a Subcontractor you can only offer those services awarded on the Prime Contractor’s GSA Schedule.
Both of these channels are excellent ways to expand your footprint in the federal government marketplace. The Contractor Teaming Arrangement is more beneficial for GSA Schedule holders trying to meet their minimum sales requirement, but the Subcontractor agreement can be a great way to gain past performance with agencies you otherwise would not have had access to.
For more information or assistance on how to decide which method is best for your organization, contact a member of our team today.