Pursuing a CTA Team Solution? Make Sure You're on an Eligible Team!

June 14, 2018

Practice Area: Government Contracts Law

Contractor Team Arrangements (CTA) formed to pursue GSA Schedule task order opportunities are unique animals in the government contracting universe. A mashup of elements taken from joint ventures and more traditional prime-sub relationships, CTAs allow two or more Schedule contract holders to combine their respective Schedule contract offerings in response to an ordering agency’s solicitation. GSA guidance is clear that for Schedule obligations—such as reporting sales and paying the Industrial Funding Fee (IFF)—each CTA Team Member is considered to be a “co-prime” for the awarded task order. Therefore, each CTA Team Member is responsible for reporting the sales charged to its various labor categories or product offerings and is also responsible for remitting to GSA the IFF for these sales.

But, because GSA requires the CTA to choose a “Team Lead” that is usually the interface and point of contact with the ordering agency, in many instances the Team Lead can become the de facto “prime” for the task order. For example, the task order will usually be awarded under the name of (and assigned the DUNS number of) the Team Lead, and the Team Lead is often in charge of invoicing and distribution of payment from the ordering agency. But, despite the main role the Team Lead assumes, technically all CTA Team Members are considered co-primes to the task order by GSA and maintain privity with the ordering agency.

Practically speaking, however, it has been our experience that many CTA teams treat the CTA Team Lead as the de facto prime contractor for the awarded task orders and that their “CTAs” are more or less prime-subcontractor relationships. This may stem from confusion regarding the eligibility of the Team Members to the CTA. Because all CTA Team Members are considered co-primes, they all must be able to meet the small business and socioeconomic designations of the task order set-aside. In this respect, CTAs are different from joint ventures under SBA’s recently revised joint venture rules, which, for example, allow a joint venture that is majority-owned by a participant in one of SBA’s socioeconomic programs to pursue a set-aside opportunity if the other joint venture participants are small businesses under the size standard assigned to the opportunity (or are the majority-owner’s SBA-approved mentor). Not so in the case of CTAs: if a Schedule task order has been set-aside for HUBZone small businesses, for example, all CTA Team Members, and not just the Team Lead, must be HUBZone small businesses under the size standard assigned to the procurement.

This means that a CTA pursuing an 8(a) set-aside task order under a Schedule must consist of only eligible 8(a) Team Members that would otherwise be capable of priming the task order on their own. The same is true for small business, HUBZone, SDVOSB, and ED/WOSB set-aside task orders. One common scenario we have seen is a large business trying to participate in a CTA “team” for small business set-aside task orders, so it can charge its own Schedule rates during contract performance. However, under GSA’s current guidance, it is never appropriate for a large business to be a CTA Team Member for a small business or socioeconomic set-aside opportunity (even if that large business is the SBA-approved mentor of the Team Lead). This is because the large business would not be eligible to bid on the task order opportunity as a prime contractor. A large business may team with an eligible prime contractor as a subcontractor; however, only the prime contractor’s Schedule rates can then be proposed and charged to the ordering agency.

If you have any questions regarding the eligibility of your CTA team or need assistance in drafting a compliant CTA agreement, please contact Katie Flood of PilieroMazza’s Government Contracts group for assistance.

About the Author: Katie Flood is counsel with PilieroMazza in the Government Contracts Group. She may be reached at kflood@pilieromazza.com.
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