Whether a teaming agreement is enforceable depends entirely on how it is drafted, not whether it is signed. Most small businesses think a signed teaming agreement guarantees them work after the prime wins. Virginia state courts disagree. In CGI Federal Inc. v. FCi Federal Inc., the Supreme Court of Virginia ruled that the standard “we’ll subcontract you 41%” language was an “agreement to agree” that was legally meaningless. The prime kept the contract. The sub got nothing.
That outcome is not a fluke. It reflects a consistent legal doctrine that has ended the subcontracting dreams of small firms across the country. Understanding why that happens, and exactly how to prevent it, is the purpose of this article.
The short answer: A teaming agreement is only enforceable if it specifies exact scope, price or pricing formula, work-share percentage tied to a statement of work (SOW), delivery terms, and a real remedy for breach. Vague language about future “good-faith negotiation” makes the agreement unenforceable as a matter of law.
This article covers general legal principles. Consult qualified legal counsel before signing or relying on any teaming agreement for your specific situation.
What a Teaming Agreement Is Supposed to Do
A teaming agreement is a pre-award contract between a prime contractor and one or more subcontractors (or other primes) that establishes their working relationship before a federal contract is won. The Federal Acquisition Regulation (FAR) recognizes team arrangements at FAR Subpart 9.6, noting that the government may encourage them when the arrangement enables better performance or allows small businesses to compete for work they could not pursue alone.
The intent is straightforward: the prime and the sub agree, in writing, that if the prime wins, the sub gets a defined piece of the work. That commitment is supposed to be binding. It gives the sub confidence to invest in proposal preparation, lend its past performance or certifications to the bid, and align resources around a potential award.
The problem is that most teaming agreements are written to sound binding without actually being binding. When the prime wins and decides it wants to renegotiate or cut the sub out entirely, the courts often side with the prime, because the agreement gave them that room.
The CGI v. FCi Story in Plain Language
FCi Federal (the prime) and CGI Federal (the sub) signed a teaming agreement before competing for a State Department contract. The agreement promised CGI approximately 41% of the subcontract work if FCi won the award.
FCi won. Then the negotiations began. FCi offered CGI subcontract terms that CGI found unacceptable: the price, scope, and other material terms differed substantially from what CGI believed the teaming agreement implied. CGI refused to sign the subcontract and filed suit, arguing the teaming agreement was an enforceable promise.
The case moved through the Virginia circuit court. The Supreme Court of Virginia addressed the enforceability question and ruled against CGI on June 27, 2018. The teaming agreement was an “agreement to agree”: a document that expressed an intention to negotiate a subcontract later, not a binding commitment to specific subcontract terms.
Because material elements of the would-be subcontract (price, exact scope, delivery schedule, acceptance criteria) were left for future negotiation, no enforceable contract existed. CGI walked away with nothing despite having invested in proposal work and having a signed document in hand.
The case is routinely cited by practitioners as the clearest warning in GovCon teaming law: a signed teaming agreement with vague language is not protection. It is a piece of paper.
Citation note: CGI Federal Inc. v. FCi Federal Inc., 814 S.E.2d 183 (Va. 2018). Readers and counsel should independently verify this citation and the full procedural history before relying on it in any legal proceeding or document.
Why the Court Said No: The “Agreement to Agree” Doctrine
Virginia contract law: like most U.S. jurisdictions: requires that an enforceable contract have definite, material terms. The parties must actually agree on price, scope, and the core obligations. If those terms are left open for future negotiation, courts treat the document as an “agreement to agree”: an expression of intent, not a binding deal.
The doctrine exists for a practical reason. Courts cannot enforce what was never actually agreed upon. If the parties could not settle the price when they signed, the court cannot invent a price for them. It can only note that no binding agreement was formed.
For teaming agreements, this plays out every time a prime and sub sign a document promising to “negotiate in good faith” or to subcontract “approximately” a certain percentage of the work. Those phrases signal that the material terms are still open. The sub believes it has a deal. The prime has the legal room to walk away, renegotiate, or offer terms the sub cannot accept: with no consequence.
FAR Subpart 9.6 does not override this analysis. The FAR acknowledges teaming arrangements but does not make them automatically enforceable. Enforceability is a contract law question, and state contract law governs.
The 5 Clauses That Make a Teaming Agreement Enforceable
Courts look for specificity. Each of the following elements must be present and defined with enough precision that a court could enforce it without guessing what the parties meant.
1. Specific Scope of Work
The subcontract scope must be defined, not deferred. Reference the specific CLIN (Contract Line Item Number), task area, or deliverable the sub will perform. Do not write “sub will perform IT support services.” Write “sub will perform Tier 2 helpdesk support for the State Department Washington, D.C. headquarters as defined in Section C.3 of the solicitation.” Attach the relevant SOW section as an exhibit if possible.
2. Specific Price or Pricing Formula
State the subcontract price or a formula that produces a determinable price without further negotiation. “Rate card attached as Exhibit A” is enforceable. “Price to be negotiated at award” is not. If rates will adjust with CPI (Consumer Price Index), define the index and the adjustment mechanism precisely.
3. Specific Work-Share Percentage Tied to the SOW
“Approximately 41%” lost the CGI case. “41% of total contract value, allocated across the task areas in Exhibit B, measurable against the prime’s monthly invoices to the government” is a different clause entirely. The percentage must be exact, the base must be defined, and the measurement mechanism must be specified.
4. Specific Delivery and Acceptance Terms
Define when deliverables are due, what quality standards apply, and what the acceptance process looks like. Without these terms, neither party knows what performance looks like, and a court cannot determine breach. Incorporate by reference the solicitation’s quality assurance surveillance plan (QASP) or performance work statement (PWS) requirements that apply to the sub’s work.
5. Liquidated Damages or Specific Performance Remedy
The agreement must state what happens if the prime wins and refuses to execute the subcontract on the agreed terms. Options include a liquidated damages clause (a defined dollar amount for breach), a right to specific performance (requiring the prime to execute the subcontract), or an agreed arbitration process with defined remedies. Without a remedy clause, winning in court still leaves the sub without a practical outcome.
The 7 Phrases That Signal an Unenforceable Agreement
If any of the following phrases appear in a teaming agreement you are reviewing or being asked to sign, treat them as warning flags. Each one is a form of legal escape hatch for the prime.
- “Approximately”: modifies any percentage or dollar figure and makes it indefinite
- “Subject to good-faith negotiation”: the classic agreement-to-agree language
- “To be agreed upon”: any term deferred this way is not yet agreed upon
- “Intend to subcontract”: intention is not obligation
- “Will negotiate in good faith”: good faith is not a price, scope, or schedule
- “Best efforts”: an unenforceable standard on its own when applied to material terms
- “Subject to mutually acceptable terms”: if the prime never finds terms acceptable, the agreement is void
These phrases are common because primes often benefit from keeping terms open. A sub receiving a draft teaming agreement with multiple instances of these phrases should treat each one as a negotiation point, not boilerplate to accept.
What to Do If You Have Already Signed a Vague Teaming Agreement
Do not wait for award to discover your agreement is unenforceable. If you have a signed teaming agreement with open or vague terms, take these steps now.
First, identify every material term that is undefined or deferred. Use the checklist above. If scope, price, work-share, delivery terms, or remedy are missing or qualified with any of the seven warning phrases, you have exposure.
Second, propose an amendment before award. A pre-award amendment to tighten the terms is far easier to negotiate than a post-award dispute. Frame it as operational clarity: “We want to make sure we are aligned on scope before we spend more resources on this bid.”
Third, consult a GovCon attorney before award, not after. Attorney review of a teaming agreement is a small investment compared to the cost of losing a subcontract you believed was secured. An attorney can also advise whether your state’s law provides any additional protections.
For a broader look at structuring your approach before a bid, read How to Write a Government Contract Proposal. Teaming decisions belong in capture planning, not in a proposal rush.
Fourth, document every communication about subcontract terms. If the prime makes oral commitments about scope or price, follow up in writing. Those communications can become relevant evidence if a dispute arises, even when the signed agreement is weak.
Frequently Asked Questions
Does a teaming agreement guarantee me subcontract work if the prime wins?
Not automatically. A teaming agreement only guarantees work if it contains specific, enforceable terms covering scope, price, work-share, delivery, and remedy. Vague language about future negotiation gives the prime legal room to renegotiate or exclude you after award. The CGI v. FCi case is the clearest example of this outcome.
What is the “agreement to agree” doctrine?
It is a contract law principle holding that a document expressing intent to negotiate future terms is not an enforceable contract. Courts in Virginia and most U.S. jurisdictions will not enforce agreements where material terms: price, scope, schedule: were left open for future negotiation rather than agreed upon at signing.
Does FAR Subpart 9.6 make teaming agreements enforceable?
No. FAR 9.6 recognizes contractor team arrangements and addresses how the government views them, but it does not govern enforceability between private parties. Whether your teaming agreement is enforceable is a state contract law question, governed by the law of the state specified in your agreement.
Can I negotiate the terms of a teaming agreement the prime sends me?
Yes, and you should. Primes often send standard templates designed to keep terms flexible for their benefit. Every material term is negotiable before signature. Push to define scope by SOW section, fix price by rate card, specify the exact work-share percentage, and add a remedy clause for breach. A prime unwilling to negotiate any terms is a warning sign worth taking seriously.
How is a teaming agreement different from a subcontract?
A teaming agreement is a pre-award document establishing the relationship and intent between a prime and sub before a contract is won. A subcontract is the binding, post-award agreement governing the actual work. The teaming agreement is only valuable if it either contains binding terms itself or includes a clear obligation to execute a subcontract on terms defined in the teaming document.
Teaming agreements are a standard part of GovCon, and most small businesses will sign several before winning their first subcontract. The firms that protect themselves understand exactly what makes these documents enforceable and refuse to accept vague language as a substitute for real commitment.
To learn more about identifying and pursuing subcontracting opportunities, read How to Find Government Subcontracting Opportunities. If a larger prime has shown interest in your firm, the SBA Mentor-Protégé Program may offer a more structured and protected path to building that relationship.
