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Working in U.S. Markets
Other Key Information
There are several means of operating in the U.S. to better improve your procurement opportunities. You may opt to establish a presence in the U.S. or seek teaming and sub-contracting opportunities with established U.S. contractors.
Teaming and subcontracting are excellent methods for accessing the U.S. government market, and are less costly channels to access end-users Your nearest Canadian Trade Commissioners – In Canada or Abroad, may have advice on prospective partners, subcontracts, potential benefits and risks.
Establish a U.S. presence
You may enhance your opportunities to participate in the federal market by establishing a presence for your business in the U.S. by:
- appointing a local representative;
- establishing a U.S. address; and/or
- establishing a subsidiary company and local office.
Depending on how deeply you establish this presence and the degree to which your product or technology is manufactured in the U.S., you may be able to avoid common barriers to U.S. procurement, such as the Buy American Act and Buy America Provisions.
Teaming and subcontracting
While primes normally subcontract 50% of their contract dollar value, other benefits would include:
- permit pooling of technical, financial and networking resources (assuming proper non-disclosure agreements);
- enable you to expand contacts within the U.S. government market;
- permit you to develop technology that will help secure future procurements (assuming appropriate technical data/computer software protections are stated in the teaming agreement or subcontract);
- provide experience needed to compete successfully for future business;
- provide an opportunity to build past performance experience under U.S. government subcontracts; and
- provide access to small business set-asides.
The size and complex nature of federal contracts won by large firms provides subcontracting opportunities for smaller firms. In addition, teaming with medium sized firms with complementary needs can increase your firm's share of medium sized contracts.
The prime is ultimately responsible for ensuring that contracted work meets minimum standards and is delivered on time however, since subcontracting provides access to such a large portion of the market, competition among subcontractors can be just as fierce as among contractors, often requiring concessions to the prime.
Since many subcontracting agreements are not entirely binding, primes often change one or more of their subcontractors for a better offer during a process called "technology refresh."
A basic method for reducing risk with a potential partner is through an executed "Non-disclosure Agreement" (NDA) with the potential partner or prime contractor. An NDA permits you to conduct a routine due diligence and begin developing the structure of your agreement. When doing so:
- Confirm that your teaming partner or prime contractor is financially stable and has a solid business history. You will want to be paid.
- Determine if teaming or subcontracting with this particular U.S. company will increase your competitiveness for a specific contract opportunity as well as for future contract opportunities.
- Confirm that your potential partner has technical capabilities complementary to yours.
- Confirm that your potential teaming partner or prime contractor has performed well on past U.S. contracts by requesting copies of their past performance information made available by them under FAR Subpart 42.15.
- Check the solicitations (especially the numbered notes) to find out whether a particular contract of interest is set aside for U.S. small business. Determine if your potential prime contractor qualifies for U.S. small business or any other set-aside preference program. Its qualification status will affect the amount of subcontract work available to you.
If your initial due-diligence results are positive, the next agreement to execute is a written Teaming Agreement to define your new business relationship. In government procurement, a teaming agreement is generally an enforceable contract (with Virginia a notable exception) between two or more companies who agree to cooperate in the joint proposal to a U.S. government solicitation and in the joint performance of any contract awarded from the proposal.
The teaming agreement
A teaming agreement should specify at least the following:
- The scope of work that each team member will perform on the contract as identified in the jointly-developed proposal (usually set forth in an appendix, an attachment or in an exhibit to the agreement).
- Payment terms for each participant in the teaming agreement.
- The scope of the relationship between the participants, i.e. joint venture or prime-sub relationship.
- Define the explicit handling, transfer and protection of each participant's technology exchanged between the participants for performance of the contract, and specific protection of each participant's technology vis á vis the U.S. government. Check closely any proposed "flowdown" clauses from the prime contract concerning data rights that will be granted to the U.S. government.
- Identify the specific agreement on marketing rights to future potential markets and territories and agreement for rights to jointly developed intellectual property.
- Define the termination and/or expiration of the teaming relationship.
Teaming with small businesses
Certain U.S. government contracts are "set aside" for U.S. small business. Although Canadian firms do not normally qualify as prime contractors for U.S. small business set-asides, by subcontracting with U.S. small businesses, Canadian firms may gain access to such opportunities.
Set-aside contracts require substantial American content, and Canadian firms must strategically structure their partnerships with U.S. small businesses to meet U.S. content rules.
A U.S. small business prime cannot exhibit "unusual reliance" on its Canadian subcontractors or allow any non-U.S. small business to perform 50 percent or more of the contract work. See Barriers – Other Considerations for a discussion of small business set-asides and the requirements for qualifying as a small business.
Other ways to find partners
Ask agency contracting officers for recommendations; research an agency's contracting history for large companies that have won contracts; review agency subcontracting reports; join industry associations and attend industry-specific conferences.
From FedBizOpps, register as an "Interested Vendor" for individual notices and solicitations that you would like to pursue. This feature is set by the buyer and allows vendors to indicate interest in a particular notice as well as, review the list of other interested vendors monitoring the same notice.
Often, prime contractors advertise for subcontractors under the Small Business Administration's SUB-Net. Some are looking for small business subcontractors only, and others are looking for both small and large ones. The GSA Subcontracting Directory, also offers a listing of prime contractors.
Only prime contractors can protest agency solicitations and contracts. As an offeror or bidder, they are considered "interested parties" (see FAR Subpart 33.101), whose business would be affected by a contract award or the failure of an agency to make an award. As a potential subcontractor you are not eligible to file a protest against the U.S. government independent of the prime.
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