In the late 1990s, the General Services Administration (GSA) created the concept of Contractor Teaming Arrangements (CTAs). Unlike the contractor teaming arrangements described under FAR 9.601, which simply describe a joint venture or prime contractor/subcontractor relationship, the GSA created a wholly new type of contracting team where all members of the team have privity[1] with the federal government and are all co-prime contractors…supposedly. In this blog, PilieroMazza reviews the limited rules governing CTAs and the impact on government contractors’ ability to properly draft these agreements, remain competitive, and lower their risks.
What’s the Purpose of a CTA?
GSA started CTAs to allow companies with different schedules to compete for an award together and bring disparate skills to the table in a single proposal. The GSA contemplated that each team member would do their own work off their own schedules. Thus, each member would be considered a co-prime contractor.
According to the GSA’s website, which is the sole guidance of any kind on exactly what GSA CTAs are and how they function, a Federal Supply Schedule (FSS) CTA allows two or more Multiple Award Schedule (MAS) contractors to team up and compete for orders for which they may not qualify independently. A CTA allows the GSA to procure a total solution that combines the supplies or services from the team members’ separate GSA schedule contracts rather than buying separately from different contractors for each part of the contract’s requirements. The orders placed under a CTA are subject to the terms and conditions of each member’s FSS contract. The roles and responsibilities of the team leader and team member(s) of the CTA are defined by the team in a Contractor Team Arrangement Agreement.
But…What are the “Rules”?
As alluded to above, GSA never created any regulations to support the unique concept of a GSA CTA, and, in turn, the Small Business Administration (SBA) was left without any basis to prepare its own regulations of how such CTAs were to operate in the context of small business set-asides. Procurement law, including the FAR, does not define or prescribe the requirements for FSS CTAs either. Thus, government contractors are left wondering what rules, if any, actually apply.
Until now, compliance was dependent on the requirements of the RFQ/RFP or attempted interpretations of the GSA’s website and how that may or may not overlap with general procurement laws and regulations. This creates a confusing and shifting landscape for contractors where different people hear different “facts” about how GSA CTAs operate from those who clearly do not understand the nuances of how much GSA left out of its guidance. Not to mention the fact that without any regulations from the GSA, it is questionable as to whether any of these rules are legal as they are essentially regulations created by the GSA without following notice and comment rulemaking in violation of the Administrative Procedure Act (APA). Further, due to GSA’s lack of regulations, SBA cannot issue its own guidance or regulations, which leads to serious questions about how the size and status of a team member affects the team’s eligibility for awards. Can a Mentor be in a GSA CTA with a protégé if they have an SBA-approved mentor-protégé agreement? Do all team members have to be small for a small business set-aside order? Do all the team members need to be similarly situated? While we can provide our interpretation, there is no direct statutory or regulatory answer.
The GSA website now provides that if a contractor is competing for a contract set aside for small businesses, all team members must meet the socio-economic status and that the limitations on subcontracting requirements apply to GSA CTA contracts. The small business team member must perform at least 50% of the value of the work to be completed. Again, however, while GSA’s website provides guidance about how CTAs should address small business issues, these do not have the force and effect of law.
Who is the Prime Contractor on a CTA?
Since the inception of CTAs for GSA contracts, contractors have created a wide variety of teaming arrangements. Sometimes, team members act like co-prime contractors, while other times, the arrangement looks more like a prime-sub relationship. There are cases where the team lead acts like a prime contractor and all the members are treated like subcontractors and situations where other than small businesses were part of set-aside contracts. Sometimes, every member of the team signs their own separate contract, whereas other times, only the team lead actually receives a contract document in their name. This raises the question of who is really the prime contractor. Do all the team members really have the privity of the contract if the contract is only issued in one team member’s name?
The GSA website does state that all members of the CTA are prime contractors, but then why are all awards not treating them as such and why are CTAs, which clearly function as prime-sub relationships, allowed? The practical reality is that the relationship that the teaming members have with government customers on GSA contracts varies widely. Government buyers do not approve the agreements and there are no enforcement mechanisms to ensure that all team members have privity of contract with the government. Without any statutes or agency regulations outlining the rules, the use of GSA’s CTAs is truly the Wild West.
Who is the Subcontractor on a CTA?
In a recent decision, the GAO found that CTA “team members” and “subcontractors” do not have the same meaning. MindPoint Group, B-421869.2 et al. (Comp. Gen. Feb. 9, 2024). Rather, based on the facts in the case, GAO rejected the protestor’s contention that the definition of “Teaming Partner” is so broad that it includes “subcontractor” for the purposes of including the past performance of both a teaming partner and a subcontractor in a proposal. Id. at 8-9.
In response to the protest, the agency, the Federal Retirement Thrift Investment Board, argued that, under the FSS program, “a CTA member is treated differently than a subcontractor; the primary difference being that each member of a CTA is treated as a prime contractor enjoying privity of contract with the government.”[2] Although the Government Accountability Office (GAO) decision provides more guidance about the relationship between team members in a GSA CTA and the government, the decision does not cite any laws or regulations that govern this relationship. Without any statutory or regulatory authority, the “rules” for the program seem to be based on the agency website and guidance documents. Inevitably, the lack of clear rules for GSA CTAs creates a lot of confusion and risk for contractors, especially small businesses. Further, the issue of whether such GSA “rules” violated the APA was not before GAO, and even if it were, GAO may lack the authority to make such a ruling. Thus, CTAs may have to be subject to needless litigation to flesh out what the rules are or what they should be.
GSA Takes the Idea of CTAs to STARS III
The GSA’s 8(a) STARS III Government Wide Acquisition Contract (GWAC) is a small business set-aside contract to procure IT services and solutions from a large pool of 8(a) industry partners. STARS III took the concept of CTAs out of GSA Schedules and moved them to standard Indefinite Delivery, Indefinite Quantity Contract (IDIQ) orders. Under this program, all team members must have their own STARS III contract, so all team members will have a traditional co-prime relationship.
While this may work for STARS III as it is an 8(a) vehicle and all contract holders have 8(a) status, the same would not be true for other IDIQ contracts, such as OASIS+. Indeed, in other contexts, the same questions would arise— do all members have to be similarly situated? What if one member is a Small, Disadvantaged Veteran-Owned Small Business (SDVOSB), one member is a HUBZone firm, and one member is an 8(a) firm? When can an agency take goaling credit? Does the agency only count the dollars spent with the eligible team leader or all the members? Again… there is no law or regulation to guide contractors or agencies on how to treat these arrangements.
Takeaways
The proliferation of GSA CTAs allows businesses to compete for orders they would otherwise not qualify for if they competed on their own. However, without any regulations governing the program, CTA agreements take on many different forms, with many different leader/member arrangements. This does not appear to have been the intention of GSA. Yet, without any regulations governing CTAs, contractors have little guidance on how to properly draft these agreements and are often at risk when the relationship between team members turns sour. Now that a similar CTA model is in the 8(a) STARS III program, there is more uncertainty for both agencies and contractors on how to treat these arrangements, especially if the concept continues to spread.
Given this, it is now time for the federal government and the GSA to consider promulgating regulations for CTAs to offer better guidance to contractors on drafting agreements, thereby increasing their competitiveness and lowering their risk while also allowing SBA to issue its own regulations on how CTAs must be governed and how to allow small businesses to avoid possible False Claims Act pitfalls. If you have any questions about CTAs, please contact Cy Alba, Emily A. Reid, or another member of the Government Contracts Group.
____________________
Looking for practical insights on gaining a competitive advantage through a deeper understanding of the government’s compliance requirements? Check out PilieroMazza’s podcasts “GovCon Live!” and “Clocking in with PilieroMazza.”
[1] The underlying premise of “privity of contract” is that only parties to a contract can sue or be sued under it.
[2] MindPoint Group, B-421869.2 et al., at 8-9 (Comp. Gen. Feb. 9, 2024) (citing Softrams, LLC; Chags Health Info. Tech., LLC, B-419927.4 et al., Feb. 7, 2022, 2022 CPD ¶ 57 at 4 n.6 (discussing the differences between CTA members and subcontractors in FSS procurements); see also GSA MAS Ordering Guide (Summer 2020) at 3 (a CTA is not a “sub-prime arrangement.”); www.gsa.gov/cta (“each team member[] will operate as a prime contractor for the portion of work they perform.”) (last visited Feb. 5, 2024).)
