What the Heck is a CTA?

There is no heartier bowl of alphabet soup than federal procurement. While efficient, acronyms can introduce confusion when similar things use the same abbreviation. So, what is a Contractor Team Arrangement (“CTA”)? Turns out, it’s three related things.

Delicious….

What is a CTA under the FAR?

The Federal Acquisition Regulations (“FAR”) acknowledge that it may be advantageous for contractors to collaborate on federal projects. As such, the regulations make accommodations for businesses to work together to submit proposals. These relationships are referred to as “Contractor Teaming Arrangements” (“CTAs”).

The FAR anticipates agreements memorializing collaborative relationships between prospective contractors will be executed prior to proposal submission. As defined, CTAs can refer to either one of two contractual relationships. 

Contractor team arrangement . . . means an arrangement in which-

(1) Two or more companies form a partnership or joint venture to act as a potential prime contractor; or

(2) A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program.

FAR 9.601. In essence, “CTA” under the FAR serves as an umbrella term for the two most common forms of business collaboration in the federal space: joint ventures and prime/subcontractor teams.

Joint Ventures and Prime/Sub Teams are Different.

Had the FAR Council called me prior to publishing FAR 9.601, I would have told them that combining two distinct contractual relationships under a single definition is a recipe for confusion. Unfortunately, the FAR Council doesn’t keep me on speed dial. Their loss; I’m delightful.

While the FAR is correct that both represent business collaborations, the definition of CTA overstates the commonalities between the two types of relationships. As a legal matter, joint ventures and prime/sub teams have significant differences in their formation and operation.

A joint venture is a separate business that is owned by the participating companies. It is this separate legal entity that submits a bid to the government and fulfills the role of prime contractor. To establish a joint venture, the participants must set up a new business entity, which will include filing corporate formation documents with the Secretary of State and Internal Revenue Service. For a joint venture to qualify as a small business, the legal entity must also execute a Joint Venture Agreement that complies with the applicable SBA joint venture regulations.

On the other hand, a team between a proposed prime contractor and its subcontractors does not require the establishment of a new business. There are no required filings with any government office ahead of the bid. The core document to a subcontractor team is a Teaming Agreement. Typically, these are straightforward agreements that commit the proposed subcontractor to aid in proposal development efforts in exchange for the award of a subcontract in the event the prime contractor wins the award.

The legal differences between these collaborative arrangements are not trivial. They result in different compliance requirements for contractors and evaluation procedures for the government. As such, defining CTA to encompass both forms of collaboration leads to the two structures being conflated.

Confusion Abounds when Imprecision Reigns.

The root of much confusion regarding CTAs is that the acronym is often used as though it refers to a single legal structure for collaboration. Indeed, some procurements will proudly announce that offerors may form a CTA to bid collaboratively, as though the “CTA” is the legal structure. As everyone who has made it this far knows, that’s not the case.

Let’s look at an example of how the imprecision of the CTA definition can lead to confusion. C’mon; humor me.

As a legal matter, the obligation of an agency to consider past performance differs between small business joint ventures and subcontractor teams. For joint ventures, the “procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously.” 13 C.F.R. § 125.8(e). The use of “must” makes the instruction nondiscretionary. As such, past performance experience held by either joint venture member is required to be considered during evaluation.

It’s a different story for subcontractor teams. According to the FAR, evaluations in negotiated procurements “should take into account past performance information regarding . . . subcontractors that will perform major or critical aspects of the requirement when such information is relevant to the instant acquisition.” FAR 15.305(a)(2)(iii). The use of “should” makes the instruction discretionary. As such, past performance experience of a subcontractor may be considered during an evaluation, but it’s not required.

Assume that a solicitation instructs offerors to form a CTA for past performance experience of an offeror other than the prime to be considered. While this appears to be a clear instruction, it raises more questions than answers as you drill into the details.

What must a contractor do to qualify past performance from non-primes? A joint venture is a type of CTA and it legally obligates the government to consider the past performance experience of all participants for set-aside procurements. Clearly this structure would satisfy the solicitation provision.

What about a prime/sub team? A team is a form of CTA collaboration. Under the FAR, however, there is no obligation that subcontractor past performance be considered. Is a teaming arrangement enough for a business qualify non-prime past performance experience? Based on the language, it’s not clear.

It’s beginning to look a lot like a protest…

What this example highlights is how common usage of CTA to refer to a specific type of business collaboration creates ambiguities because CTAs are defined as two types of business collaboration. It’s this duality that leads to confusion.

GSA Gets in on the CTA Action.

Adding to the CTA confusion is the General Service Administration (“GSA”). It also uses the “Contractor Teaming Arrangement” nomenclature in the context of Federal Supply Schedule (“FSS”) contracts. 

Officially referred to as Multiple Award Schedule (“MAS”) CTA, the GSA’s implementation of CTAs is unique to the FSS environment. The MAS CTA provides a way for two schedule contractors to collaborate for FSS orders.

Importantly, the MAS CTA refers to a specific type of collaborative relationship. It is a collaboration of two or more contractors, each of which already hold a FSS contract. There is no further distinction between joint ventures or subcontract teams; a MSA CTA is a MAS CTA. This further differentiates the MAS CTA from the FAR CTAs discussed previously.

Adding to the confusion, the GSA CTA blends the concepts of a joint venture agreement and teaming agreement. While creation of a separate legal entity is not required, participants in a GSA CTA must prepare Multiple Award Schedule CTA Agreement that includes many considerations analogous to the SBA’s joint venture regulations.

So, What the Heck is a CTA?

Generally, it’s a catchall acronym for various forms of business collaboration in federal procurement. It encompasses both joint venture and subcontractor team relationships. GSA also leverages the acronym to describe a specific type of collaboration between FSS contact holders. Given the variety of CTA flavors available, contractors need to be vigilant to obtain clarity when discussing CTAs with the government and potential collaboration partners or risk confusion.