There are several different avenues you can take to do business with the federal government through the Multiple Award Schedule (MAS) program. 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 5 questions about CTAs and prime/subcontracting agreements:
1. Is it a Direct GSA Sale or an Indirect GSA Sale?
With a Contractor Teaming Arrangement (CTA), two companies work together toward a total solution by each offering something slightly different to the project. Often times, a CTA satisfies socioeconomic goals. 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 Schedule.
Meanwhile, the GSA Small Business Subcontracting program requires large businesses labeled as “Other Than Small” to submit Subcontracting Plans that specify goals and strategies to meet subcontracting quotas. Because there are repercussions for not meeting, or establishing “good faith effort” to meet these goals, many large businesses constantly need to subcontract a portion of their business. This also helps the federal government meet their small business set-aside goals.
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, the entity that will have the rights to establish the terms and incur liability has privity over the contract. In a Contractor Teaming Arrangement (CTA), the privity of the contract lies with each team member, and therefore, each team member can interact with the federal government directly. Because of the agreement, each member is fully accountable for all duties established in the CTA document. This means that if the duties outlined in the contract are not fulfilled, both companies can be held fully accountable and can be subject to whatever penalties .
Under GSA Schedule CTAs, contractors complement each other, and it allows teams to compete for orders for which they may not otherwise qualify. GSA encourages the use of CTAs to meet buyer’s requirements.
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. In this scenario, government purchasing agencies are often encouraged to specify that the Contract Officer (CO) approves using subcontractors before they can perform.
3. How is the GSA Schedule Work Assigned?
In a Contractor Teaming Arrangement (CTA), the team members mutually agree upon which sections of the proposal they could complete based on the core competencies. An agreement is drafted to state who would be responsible for which activities. The nature of a CTA often lends itself to fairly equal workloads for both companies involved.
It's important to note that when forming a team in response to a small business set-aside, all team members must meet the socioeconomic status for the set-aside and the limitations on subcontracting (FAR 52.219-14) apply.
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 the Government?
For a Contractor Teaming Arrangement (CTA), you may identify one team member who will take care of the administration of the invoices, but each team member must still report the sales on their own GSA Schedule.
Regardless of how the structure of the invoice is set up, 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 what is awarded on the prime contractor's Schedule. If you would like more information about specific small business subcontracting goals for this fiscal year, you can visit the Small Business Administration (SBA) website.
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 Large Categories.
For example, an IT Large Category F (formerly Schedule 70) Schedule contractor can partner with a Professional Services Schedule (PSS) contractor. However, when you enter into an agreement as a subcontractor, you can only offer those services awarded on the prime contractor’s GSA Schedule.
Selling to the Government through a GSA Schedule
Both of these channels are excellent ways to expand your footprint in the federal government marketplace. The Contractor Teaming Arrangement (CTA) is more beneficial for GSA Schedule holders trying to meet their minimum sales requirement or companies that are interested in having their own prime GSA contract, but the subcontractor agreement can be a great way to gain past performance with agencies you otherwise would not have had access to. Subcontracting agreements are also required if you are considered an "Other than Small Business."
To help small businesses connect with prime contractors, GSA publishes a subcontracting directory. The directory lists large business prime contractors working for GSA who, by law, are required to establish plans and goals for subcontracting with small business firms. This means they are actively looking for small businesses to partner with.
For more information or assistance on how to decide which method is best for your organization, contact a member of our team today.
