Handyman Insurance, What is the Difference Between Teaming and Forming a Joint Venture?
Many people confuse teaming (sometimes referred to as a “Contractor Teaming Agreement” or “CTA”) and joint venturing. In truth, these two types of partnerships have some major differences, and raise different types of compliance concerns.
“Teaming” is really just a special kind of subcontracting, where (in the small business set-aside context) a small-business that fulfills a certain procurement’s set-aside requirements serves as the prime contractor, and subcontracts a substantial portion of the work to another (often larger) business. The “team” is set up before the bidding/proposal process, the contractors work together on the bid/proposal, and the procuring agency is made aware of the “team” prior to the source selection process. The teaming agreement is customarily submitted as part of the bid/proposal itself.
In comparison, joint venturing is when two companies (in the small business set-aside context, usually one large and one small) form a third, joint venture or “JV” entity. If the JV is formed and structured appropriately, the JV itself will be eligible to compete as a “small” business.
By now you might be asking, “how do companies know whether teaming or JVing is better for them?” The answer is that they have to consider a multitude of issues, including those set forth below.