How Small Businesses Team Up to Bid on Government Contracts

In 2011, two event-planning firms teamed up with a company called Navar to go after a US defence agency contract neither of them was allowed to bid on alone. One of the two firms wrote 80 to 90 percent of the content for the 38-page presentation the team gave the agency. Navar won: a five-year contract worth up to $55 million. Then talks about who'd do which work fell apart, and Navar didn't give either firm a subcontract.

They sued. In 2016, Virginia's Supreme Court held that their teaming agreement couldn't be enforced, because all it promised was to negotiate in good faith later. There was no sum, no formula for one, and no commitment that they'd be the subcontractors.

Teaming up is how a business too small to bid alone gets onto a contract it couldn't carry by itself, and both the Canadian and US governments allow it in writing. It works when two things are true: the deal between you is specific and signed before the bid goes in, and the buyer knows the team exists. This guide covers both countries' federal rules. It's general information, not legal advice, and it says where you'll want a lawyer.

It isn't for every bid. If you can deliver the whole contract yourself, bid alone: a team adds an agreement to negotiate and, in a joint venture, responsibility for someone else's part of the work. And if you'd rather not carry contract risk at all yet, being a subcontractor is the lighter way in.

Can two small businesses bid on a government contract together?

Yes. In the US, the Federal Acquisition Regulation says the government will "recognize the integrity and validity" of contractor team arrangements as long as they're identified and fully disclosed in the offer. In Canada, the standard instructions most federal tenders still incorporate set out how a joint venture bids, and PSPC's guidance says joint ventures may respond according to the conditions in each solicitation.

So read the tender before you build a team around it, because the solicitation decides who can be the bidder.

What's the difference between a teaming agreement, a joint venture, a consortium and subcontracting?

There are really two shapes. Either one company bids as the prime and names the others as its subcontractors, or the companies bid together as one bidder, which is a joint venture. A teaming agreement is the private contract that sets up either shape before the bid, and "consortium" is mostly another word for joint venture.

The US definition covers both shapes in one sentence: a contractor team arrangement is two or more companies forming a partnership or joint venture to act as the prime, or a prime agreeing to have others act as its subcontractors on a specific contract. Canada's standard instructions define a joint venture as two or more parties combining "money, property, knowledge, expertise or other resources in a single joint business enterprise, sometimes referred as a consortium, to bid together."

Subcontracting is the simplest version. In Canada, the "Bidder" is whoever submits the bid, and the definition expressly leaves out subcontractors. As a sub, your contract is with the prime.

Who's the prime, and who carries the risk?

The prime is the business that signs with the government, and it carries the contract. In a joint venture, every member carries all of it.

In the US, the government can hold the prime "fully responsible for contract performance, regardless of any team arrangement" between the prime and its subs. If your sub misses a deadline, that's your problem with the agency.

In Canada, if a contract goes to a joint venture, all members are "jointly and severally or solidarily liable" for performing it. In plain terms, the government can look to any one of you for the whole job. If a financial capability check is done, every member is assessed. If you're a sole proprietor, that liability is yours personally, so our guide to staying a sole proprietor or incorporating is worth reading before you sign.

How do you split the work and the money?

In Canada, the federal standard instructions don't set a split; your agreement does. In the US, set-asides come with floors you have to build around.

Whatever the country, write the split as a firm share of the work, by tasks, roles or a percentage, and price your own piece the way you'd price any engagement (our post on pricing your services when you're starting out covers the basics). The Navar subcontractors pointed to a 51 percent figure for the prime and argued they were owed the other 49. The court found no written agreement that actually governed the split.

On US small business set-asides, the split isn't entirely up to you. On a services contract, the small business prime can't pay more than 50 percent of what the government pays it to firms that aren't "similarly situated" (roughly, firms without the same small business status). A teaming agreement doesn't change that math. And if a subcontractor does the core work of the contract, or the prime is unusually reliant on it, SBA can find the prime isn't small for that bid at all.

How does CanadaBuys treat a joint venture bidder?

As its own supplier, with its own account. Under the standard instructions, a joint venture bidding through CanadaBuys must register a separate account, created by the lead member, with a supplier questionnaire that applies only to the joint venture.

CanadaBuys' guide to registering a joint venture supplier adds that the account must be separate from the lead's own, and its name is each member's legal name in order, ending with "IN JOINT VENTURE". You can't edit that name later without the service desk, so get it right the first time.

The bid and any contract must be agreed to by every member unless one has been appointed to act for all, and the buyer can ask each of you to confirm that appointment. You don't need a business number to submit a bid, only before award. For the rest of the bidding process, start with our guide to bidding on government contracts in Canada.

What are the SBA rules for a joint venture on a small business or women-owned set-aside?

A joint venture can bid as a small business if each partner is small under the contract's size standard, or if it's between an SBA-approved mentor and a protégé that's small. It has to be in writing, do business under its own name, and be identified as a joint venture in SAM.

It also has a clock. A specific joint venture can keep submitting offers for two years from its first contract award; after that, SBA treats the partners as affiliated and counts their size together, so you'd form a new one.

For a women-owned (WOSB or EDWOSB) set-aside, 13 CFR 127.506 adds its own conditions. The written agreement has to:

• name the women-owned business as managing venturer, with a named Responsible Manager
• give her at least 51 percent ownership if the joint venture is a separate legal entity
• give her profits at least in line with the work she does
• run payments through a joint venture bank account that needs every partner's consent
• have the women-owned partner do at least 40 percent of the joint venture's work, and more than administrative tasks

A women-owned business also can't be a partner in more than one joint venture bidding on the same set-aside. Getting the agreement or the work share wrong can be grounds for suspension or debarment.

The SBA Mentor-Protégé program lets a small business joint venture with a larger mentor, but SBA is clear it's not a matchmaking program: you apply with a mentor already identified, and SBA's stated processing time is 105 days. Our guide to bidding on federal contracts as a woman-owned small business covers certification itself.

Where's the line between teaming and bid-rigging?

Disclosure draws most of it. In Canada, an agreement between bidders over who bids or what they bid is a crime unless it's made known to the buyer at or before the bid, so a team that bids openly as a team is on the right side, and the same conversation kept quiet is not.

Section 47 of the Competition Act defines bid-rigging as agreeing that someone won't bid or will withdraw a bid, or submitting bids arrived at by agreement between bidders, where the arrangement isn't made known to the buyer at or before the bid. It carries a fine set by the court, up to 14 years in prison, or both. The Competition Bureau recognizes that bidders may form consortia to bid on projects, and notes that a disclosed consortium can still be reviewed under section 90.1 if it substantially lessens competition among bidders.

In the US, the Sherman Act prohibits any agreement among competitors to rig bids, with fines up to $100 million for a corporation and up to $1 million or 10 years in prison for an individual. Disclosing your team is what lets the government recognize it, but the same FAR subpart says it doesn't authorize any team arrangement that breaks antitrust law. The DOJ's Procurement Collusion Strike Force reports 215 or more investigations and 90 or more convictions as of 30 September 2026.

For a small business, the risk sits in the side conversation with someone who's bidding separately: agreeing one of you will sit out, sending in a "cover" bid meant to lose, or the winner handing a subcontract to whoever stepped aside or bid high. The DOJ lists that subcontract as a common payoff, and PSPC lists it as a warning sign. If you're bidding on your own, keep your price, your formula and your decision to bid to yourself. The Competition Bureau's model Certificate of Independent Bid Determination lists exactly those topics, and asks a joint venture to disclose its full details instead.

How do you find a partner to bid with?

Start where the tender is. Every CanadaBuys notice has a "Partner with another business" section where you can add your company to a public list of businesses interested in teaming on that tender, and get an email when someone else joins it.

In the US, large primes post subcontracting work on SBA's SUBNet, and they search SBA's Small Business Search, so a complete profile there is how they find you. SBA also points to APEX Accelerators for help with the search. Before you sign with a prime you don't know, look up its past contracts on USAspending.gov or SAM.gov, which GSA suggests for researching a contractor's history.

The partner you already trust is often the better bet: the designer you've subcontracted to, the bookkeeper whose clients overlap yours. A team that's delivered together before is easier to describe in a bid.

When do you need a lawyer?

Before you sign a teaming agreement or a joint venture agreement, and before you form a separate entity for a bid. Get one sooner if the bid is a US set-aside, where the SBA rules are detailed and the penalties for getting them wrong include debarment.

Also call one if you've already talked about a tender with a business that's bidding separately, or if your team would include most of the firms that could do the job. Those are the cases where competition law stops being general information.

Quick answers

Is a teaming agreement legally binding? It can be, but a vague one may not be. The Navar agreement failed because it was only an agreement to negotiate later, with no sum, formula or commitment to subcontract.

Can I join two teams for the same tender? On a US women-owned set-aside, not as a joint venture partner: one joint venture per contract. In Canada, PSPC can reject multiple bids from the same bidder or joint venture that distort the process. Ask a lawyer before trying it anywhere.

Does a teaming agreement get me around the US subcontracting limit? No. On a set-aside, your teammate's work is still subcontracted work for the limit.

Do these rules cover provincial, state or city contracts? No. This guide covers federal buying in Canada and the US, and other buyers set their own terms. The bid-rigging line still applies: section 47 covers any call for bids, and the DOJ Strike Force works on federal, state and local buying.

Finding your other half of the bid

If you've been reading federal tenders and thinking "I could do half of this", someone else may be thinking the same about the other half. Athena Collective members can post that they're looking for a team-up on a tender, see other members whose line of work fits it, message them, and form a team that each member confirms, with the bid-rigging warning on every contract. If that's the piece you're missing, here's how membership works.

Then pick one tender closing next month, read who it lets bid, and write down the piece you'd need someone else to bring.