Due to the highly regulated nature of federal government contracts, their formation and administration are governed by a well-defined set of rules. Despite this, government contracts rely on a foundation of mutual trust and cooperation between the government and its contractors. Parts of this invisible layer of obligation are embedded in the implied duties of cooperation, good faith, and fair dealing. Therefore, while related and somewhat interchangeable concepts, these implied duties are inherent to all government contracts and help ensure a successful, productive, and professional relationship between the contracting parties. However, from time to time, the Government may violate these implied duties, giving rise to contractor claims. Understanding these duties empowers contractors to navigate potential issues by identifying causes of action for Government breaches that result in disruption in performance or monetary damages. Therefore, a general discussion distinctly describing these obligations may be helpful to contractors alleging Government violations during contract performance.

o Duty of Cooperation

The Government’s duty to cooperate during the performance phase is as inherent to a government contract as the Government’s right to expect performance in accordance with specifications. Since both parties are required to work together as partners to achieve common contractual objectives, a lack of cooperation during performance by the Government may, and often does, become a source of disputes. When facing scenarios where contractors suspect a lack of adequate cooperation by the Government, they should evaluate the Government’s conduct in the context of the contract’s overall objectives. If the conduct at issue is inconsistent with the Government’s stated mission needs or hinders the contractor’s performance, the Government may be in breach of its duty of cooperation. The Government’s duty to cooperate during performance may be viewed independently by adjudicative forums in accordance with the facts at issue or in contrast with its treatment of other similarly situated contractors. Understanding the government's duty to cooperate empowers contractors to identify potential roadblocks and seek redress for hindered performance.

The Small Business Administration (SBA) mentor-protégé program allows experienced firms to pair with smaller firms to form separate joint venture (JV) entities to pursue federal government contracts. The mentor and protégé firms enter into a JV agreement to meet the program’s regulatory requirements. The JV agreement typically divides the work and the responsibilities of contract performance between the member firms. The JV entities are usually “unpopulated,” meaning they do not have their own employees. Thus, instead of performing the work itself, the JV entity subcontracts the performance to member firms per the JV agreement and any subsequent addendums. Additionally, the JV entity is managed by the protégé firm and requires that the protégé firm hold at least 51% of the ownership interest. The SBA’s mentor-protégé program is designed to be mutually beneficial for participating firms, allowing the protégé to benefit from the mentor’s business development assistance and simultaneously affording the mentor firm access to certain contracts it could not otherwise compete for. Despite the arrangement’s “win-win” nature, disputes between participating firms can and often do arise. In case of such disputes, the JV member firms should be mindful that they are not only bound by the terms of the JV agreement but also by any contractually implied duties and covenants, such as the duties of loyalty, care, and good faith and fair dealing.

Under certain circumstances throughout the procurement lifecycle, contractors may need to establish understandings, agreements, planned actions, or otherwise define the scope and procedures for relationships between themselves and a federal agency to accomplish mutual goals and objectives. When meeting such objectives does not require fiscal obligations or contract awards governed by the Federal Acquisition Regulation (FAR), contractors may negotiate and enter memorandums of understanding (MOUs) or memorandums of agreement (MOAs) with the government. These memorandums provide an overarching framework to govern the relationship between the parties under such circumstances by clearly defining their roles, responsibilities, and expectations. Such memorandums may have binding authority depending on the authority used to execute the memorandum and the facts surrounding other impacted contracts or agreements. In such situations, if the government is in breach of its obligations under the memorandum, contractors may have the right to obtain monetary damages as a party to the memorandum of agreement.

• Memorandums of Understanding

When an effort requires the federal government to provide federal funds, resources, or items for support, and the memorandum is only being used for the limited purposes of establishing a general framework of the parties’ rights and obligations, contractors may elect to enter into an MOU with the government. An MOU is typically used if the circumstances do not require a high level of detail to establish the parties’ specific roles, responsibilities, and actions. MOUs are generally not issued under specific authority and are not usually legally binding.

Teaming agreements are more prevalent in federal contracting than in nearly any other industry. Contractors team with one another to meet the government’s technical and regulatory requirements and to complement each other’s capabilities while offering an optimal solution in terms of cost and performance. The Federal Acquisition Regulation (FAR) § 9.601 defines a contractor teaming arrangement as an arrangement in which a potential prime contractor teams with one or more other companies to have them act as subcontractors under a specified government contract or acquisition program. Depending on the terms and circumstances surrounding a particular procurement, contractors may enter into teaming agreements for various reasons. However, due to the vast network of existing relationships in the federal contracting industry, teaming disputes do not typically spill into the courts. However, when such disputes require adjudication, one of the primary queries before the court is the enforceability of any teaming agreements between the parties.

While teaming agreements entered in response to federal procurements involve considerations relevant to federal regulations, such teaming agreements are governed by state law. Thus, the law governing their enforceability varies depending on the State. Current jurisprudence in this domain illustrates that teaming agreements without the participants' consensus on certain key terms may not be enforceable upon the parties involved. Additional issues relating to enforceability may arise when the parties fail to reduce their agreement in writing or have neglected to execute the agreement either intentionally or through inadvertence. Despite these challenges to enforceability, teaming agreements are typically binding upon the parties. For a teaming arrangement to be enforceable, the parties must intend to enter into a binding contractual agreement, and the teaming agreement must sufficiently define objective criteria that a court may enforce. Determining the parties' intent to enter into a binding teaming agreement, especially in the absence of an executed subcontract, is a fact-specific inquiry, generally depending on the circumstances surrounding the procurement and the agreement. Courts may consider factors such as those outlined below to determine the parties' intent.