Federal court decision underscores importance of thoughtfully crafting government contractor teaming agreements

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In a case that could affect the enforceability of teaming agreements in both state and federal courts, the US District Court for the Eastern District of Virginia recently held that a teaming agreement that, in the court’s view, amounted to an ‘agreement to agree’ was not an enforceable contract under Virginia law.

The case, Cyberlock Consulting Inc v Info. Experts Inc, 2013 WL 1395742 (E.D. Va. April 3, 2013), is significant for government contractors that rely on teaming agreements to form binding contractual commitments to secure and ultimately perform contracts with the US government. While the future of the Cyberlock holding is uncertain — Cyberlock has appealed the district court’s decision and the case will soon go before the Fourth Circuit — the case highlights critical issues for government contractors to consider when entering into teaming agreements. Contractors should no longer assume teaming agreements that are tentative ‘agreements to agree’ will be enforceable in the state and federal courts that ultimately follow Cyberlock. Without concrete and unqualified subcontract terms, those courts applying Virginia law may be reluctant to enforce teaming agreements under this decision. An understanding of the case and its ramifications is thus essential for government contractors that anticipate using teaming agreements to form teams to pursue future prime contracts.

In the fall of 2008, Cyberlock, a company that provides cyber-security services to the US government, entered into a teaming agreement with Information Experts (IE) to secure a prime contract from the US Office of Personnel Management. Upon receiving the contract, IE subcontracted with Cyberlock pursuant to the terms of their agreement, and Cyberlock completed its work on the project in September 2011…

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