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New Trends in Teaming Agreements

New Trends in Teaming Agreements. Breakout Session # 703 James R. Vickers, Sr. Manager, Contracts Veronica Garcia, Sr. Supplier Manager Raytheon Missile Systems 21 July 2010 10:00am – 11:15am. 1. Agenda. Purpose of the study Definition of Teaming Agreements Uses of Teaming Agreements

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New Trends in Teaming Agreements

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  1. New Trends in Teaming Agreements Breakout Session # 703 James R. Vickers, Sr. Manager, Contracts Veronica Garcia, Sr. Supplier Manager Raytheon Missile Systems 21 July 2010 10:00am – 11:15am 1

  2. Agenda Purpose of the study Definition of Teaming Agreements Uses of Teaming Agreements Types of Teaming Agreements Basic, expanded and unique Teaming Agreement content Methodology of study Results Trends over time Conclusions and Recommendations

  3. Purpose of the Study Identify trends See what has changed over time Capture unique terms Look for improvement areas Provide recommendations

  4. Definition – FAR 9.601 “Contractor team arrangement” means an arrangement in which: Two or more companies form a partnership or joint venture to act as a potential prime contractor; or 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

  5. Uses of Teaming Agreements Better compete; strengthen weaknesses Share results Complement each Party’s unique capabilities Offer the best combination of performance, cost, and delivery Ensure source of critical parts or know-how NOT to take someone off the street

  6. Types of Teaming Agreements Exclusive Non-exclusive Multi-party Collaborative Research

  7. Basic Teaming Agreement Content Parties Recitals Definitions Proposal Activities Award of Contract Customer Interface Exclusivity Publicity and News Releases

  8. Basic Teaming Agreement Content (Continued) Proprietary Information Intellectual Property (IP) Termination Notices Relationship Assignment Modifications Severability

  9. Basic Teaming Agreement Content (Continued) Limitation of Liability Classified Information Governing Law Arbitration ITAR Entire Agreement Signatures Exhibit A

  10. Typical Expansions of Teaming Agreement Content Foreign Corrupt Practices Act (FCPA) Non-solicitation of employees Specific exclusivity language Joint investment Specific Limitation of Liability Steering Committee Best pricing Offset

  11. Very Unique Terms Prime/Sub role reversal Executive Committee in addition to Steering Committee Allocation of jointly developed IP (other than 50/50 split) Specifics on how to calculate best price Right of first refusal Sub-tier Subcontracting approval

  12. Methodology of Study Scores of Samples Analyzed Various Raytheon Business Units Period of 1999 – 2010 Large and Small Businesses Defense and Commercial entities Domestic and International Single and Multiple Pursuits RFP and Collaborative Research/IRAD Joint Ventures/Ownership Agreements excluded

  13. Data Compared Size of Company Year of Effectivity Parties, (number) Defense or Commercial Domestic or International FCPA Single or Multiple Pursuits Exclusivity

  14. Data Compared (Continued) For RFP or Collaborative Research Term Choice of Law Arbitration Agency Offsets Taxes Limitation of Liability Steering Committee

  15. Data Compared (Continued) Non-solicitation of Employees PIA protection ITAR Workshare Defined Data Rights Best Pricing Terms Prime/Sub Role Reversal OCI

  16. Data Compared (Continued) Investments Sub-tier Subcontracting Approvals Approval of Use of Agents Language (International) Level of Signatures Recitals (number) Termination (number) Unique Terms Identified

  17. Findings - General Large: 85% Small:15% Defense: 78% Commercial: 22% New: 33% Domestic: 59% International: 41% 2 Party: 93% 3+ Parties: 7%

  18. Findings – General (Continued) Single Pursuit: 54% Multiple Pursuits: 46% Types of Pursuits: US Govt. Prime: 66% Intl. Govt. Prime: 10% Collaborative/New Markets: 24%

  19. Findings - Terms Exclusivity: 80% Subcontracting Approval: 17% Non-solicitation of Employees: 12% Investments Specified: 22% Offset: 24%

  20. Findings by Business Size 49% of Large businesses took part in Single pursuits (vs. multiple) compared to 67% of Small businesses 100% of Small businesses took part in exclusive agreements compared to only 77% of Large businesses None of the Small businesses sampled included a Non-Solicitation of Employees term

  21. Findings by Domestic/Intl. 59% of International agreements were for multiple pursuits compared to 42% of Domestic agreements 17% of Domestic agreements included the Non-Solicitation of Employees term compared to 6% of International agreements 76% of International agreements included an FCPA term compared to 13% of Domestic agreements

  22. Term (in Years) over Time Avg. Term over Time Trend is toward shorter term Large and Small businesses have been getting better about including a term limit

  23. Avg. No. of Recitals Recitals by Business Size Recitals by Domestic/Int’l. Over time • Assumed Large businesses would have more recitals due to Antitrust concerns • Small businesses have just as many recitals

  24. Use of FCPA terms over Time % use of FCPA in International Agreements • 13 % of Domestic Agreements include FCPA term even if not an International agreement

  25. Use of Termination Terms Over Time • Avg. No. of Termination Terms Over Time • More focus on how to end agreements

  26. Dispute Resolution % Use of Different Arbitration Agencies Agreements between Domestic parties are more comfortable with U.S. courts

  27. Trends over Time (1999-2010) Teaming Agreements are becoming more common More Small businesses are parties to Teaming Agreements Average Term of Agreements has decreased Termination clauses are becoming more important to parties Increased use of unique terms

  28. Conclusions from Evaluations Most Common Form of Dispute Resolution is via use of AAA, even on International agreements Many terms (ex: IP, Arbitration) addressed in Teaming Agreements become moot when superseded by PO How much time is spent on these?

  29. Recommendations Since most agreements are between two Parties for a Single Pursuit, standardizing these types of agreements (within company and industry) would save time Optimize re-use of standard terms Better address follow-on pricing Better define Workshare split 75%,25% Workshare = 2/3, 1/3 $ split

  30. QUESTIONS Contact Information Jim Vickers: jrvickers@raytheon.com Veronica Garcia: Veronica_Garcia@raytheon.com

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