What should someone keep in mind when offer is made to partner with small bus 8A cert company?

Question

Should a lawyer get involved? Is it safe to do so? What kinda contract should be signed etc etc...any insight would be good.

Answer 1

Partnering with an 8A company should ALWAYS involve a lawyer just to set up the partnering agreement. Whether you need one after that initial contact is an "it depends" type of call. Like, is the owner of the 8A company honest and highly trustworthy?

Two or three things can happen with an 8A company. First, your 8A company, if it gets big enough through business growth, "graduates" from 8A status. So your teaming agreement needs to specify what happens when that occurs. When your prime contractor is no longer an 8A company and ANY OTHER 8A company bids on the job, the incumbent is NOT ALLOWED TO RECOMPETE. So just watch out for companies that grow so fast that they lose their primary contract too soon. (But if it is growing fast enough, that is not ALL bad. Just troublesome.)

Second, the implication of "8A" means that you will actively seek government contracts with 8A set-aside business. Goverment contracts usually assign rules on how much business MUST be done directly by the primary contractor in an 8A contract, so you need to understand how much of the business will come your way.

Third, remember that if you are doing government contracts, typically they SOUND great - like, 5-year contracts to do thus-and-such, but in reality they are more likely set up as a 1-year contract and four OPTIONAL 1-year extensions. So you have to watch out for just how long you'll be in business and what happens if the prime contractor screws up.

Fourth, 8A firms frequently get investigated because it is ASSUMED that they don't have the knowledge or ability to do a particularly good job - yet. Sadly, it is often a true assumption. One of the nasty issues is that an 8A company might be operating on a shoestring. If you are a sub-contractor to an 8A company, be sure that your teaming agreement addresses late payments. Otherwise, your own cash flow will suffer until the prime contractor's cash flow gets solvent again.