Teaming Agreement (Kenya)

A Teaming Agreement in Kenya governs the relationship between the parties by fixing what each must do.

Teaming Agreements are widely used in Kenya's construction, engineering, information technology, professional services, and defence sectors where a single company lacks the full technical capability, financial capacity, or geographic presence required by a tender specification but can combine resources with one or more complementary businesses to submit a competitive bid. The Public Procurement and Asset Disposal Act No. 33 of 2015 and the Public Procurement and Asset Disposal Regulations 2020 administered by the Public Procurement Regulatory Authority (PPRA) permit consortia and joint bids, subject to each member meeting the eligibility requirements of Regulation 52 of the Public Procurement and Asset Disposal Regulations 2020 — including holding a valid KRA Tax Compliance Certificate under Section 26 of the Tax Procedures Act No. 29 of 2015 and a current business permit.

The key distinction between a Teaming Agreement and a Joint Venture Agreement in Kenya is that a Teaming Agreement is typically pre-contract and deal-specific — it governs the collaboration for the purpose of winning and, if successful, executing a specific identified contract. A formal Joint Venture, by contrast, may create a new legal entity registered with the Business Registration Service under the Companies Act No. 17 of 2015 or the Partnership Act Cap. 29, and may have a broader or more permanent mandate. A Teaming Agreement expires automatically if the bid is unsuccessful or, if successful, is superseded by a more detailed subcontract or consortium agreement once the main contract is awarded.

The Law of Contract Act Cap. 23 governs the enforceability of Teaming Agreements in Kenya. The agreement requires offer, acceptance, lawful consideration, and parties competent to contract. Each party's contribution to the bid — whether technical expertise, equipment, personnel, financial standing, or geographic presence — constitutes the consideration for the other party's reciprocal commitments. The Competition Act No. 12 of 2010 administered by the Competition Authority of Kenya (CAK) must be considered: Teaming Agreements that restrict competition by allocating markets or fixing bid prices may attract scrutiny under Section 21 of the Competition Act, which prohibits restrictive trade practices. However, a genuine collaboration to submit a competitive joint bid that neither party could make alone is generally permissible under competition law.

The forms-legal.com Kenya Teaming Agreement template is designed for use in both government procurement under the Public Procurement and Asset Disposal Act No. 33 of 2015 and private sector project bids, and incorporates provisions addressing exclusivity, intellectual property, confidentiality, and the transition to a subcontract or consortium agreement upon contract award.

A Teaming Agreement in Kenya is required whenever two or more independent businesses wish to combine their capabilities to bid for or execute a specific contract that neither could pursue alone, and they need a legally binding framework governing their collaboration from the bid stage through to contract execution.

A Teaming Agreement is needed when a Kenyan engineering firm with strong local presence and procurement relationships joins forces with an international technology company to bid for a large infrastructure or IT systems contract tendered by a Kenyan government ministry or state corporation under the Public Procurement and Asset Disposal Act No. 33 of 2015. The Teaming Agreement defines each party's bid role, technical scope, and revenue share if the bid is won.

The agreement is required when two or more small and medium enterprises (SMEs) registered under the Companies Act No. 17 of 2015 or the Business Names Act Cap. 499 pool their resources to meet the minimum financial qualification thresholds set by a procuring entity's tender documents. The Public Procurement and Asset Disposal Regulations 2020 allow consortia to aggregate the members' financial standing, but the Teaming Agreement must clearly designate the Lead Party who will sign the main contract.

A Teaming Agreement is needed when a construction company qualified under the National Construction Authority (NCA) Act No. 41 of 2011 partners with a specialised mechanical and electrical contractor to bid for a building project requiring both civil works and specialist systems installation. The NCA registration categories of each party should be documented in the agreement.

The agreement is required when a consulting firm responding to a Request for Proposals (RFP) from a bilateral donor or international organisation in Kenya designates a local subcontractor or community organisation to provide local knowledge and support stakeholder engagement, and both parties need documented agreement on deliverables, fees, and confidentiality obligations before the proposal is submitted.

A Teaming Agreement is needed when two competing companies in the same sector agree to pursue a specific large contract together on an exclusive basis — meaning neither will pursue the contract independently or team with a third party — and they need an enforceable exclusivity commitment that protects each party's investment in the bid preparation process.

A Kenya Teaming Agreement under the Law of Contract Act Cap. 23 must contain the following essential elements to be enforceable, to allocate risk appropriately between the parties, and to comply with the Public Procurement and Asset Disposal Act No. 33 of 2015 where a government tender is involved.

Parties and Roles: Full legal names, Business Registration Service (BRS) numbers, KRA PINs, and physical addresses of all parties. The agreement must clearly designate the Lead Party — the entity that will sign the main contract with the client if the bid is successful and will be primarily responsible for overall delivery — and each Team Member, identifying their specific technical, financial, or operational contribution to the bid.

Target Contract Description: A precise description of the specific contract or tender being pursued — the procuring entity, tender number, project title, and brief scope of works or services. The Teaming Agreement is deal-specific and does not cover other contracts. For government tenders under the PPRA framework, the tender reference issued by the procuring entity under the Public Procurement and Asset Disposal Act No. 33 of 2015 should be stated.

Exclusivity Obligation: A commitment by each party not to submit a competing bid for the target contract independently or as part of another team without the consent of the other parties. Exclusivity protects each party's investment in bid preparation and is typically the central commercial obligation in the agreement. The exclusivity period should run from signing until the contract award decision is announced or the bid is withdrawn.

Scope of Work Allocation: A detailed description of each party's responsibilities — the technical scope, deliverables, personnel to be deployed, and equipment to be provided. For government tenders under the National Construction Authority Act No. 41 of 2011, the NCA registration category covering each party's scope of work should be referenced.

Revenue and Cost Sharing: The agreed split of contract revenue between the Lead Party and Team Members if the bid is successful, expressed as a percentage of the contract sum or as a fixed amount for defined scopes. The basis for sharing variations, claims, and retention money should also be addressed. The Income Tax Act Cap. 470 implications of the revenue split — in particular withholding tax obligations on subcontractor payments under Section 35 of the Income Tax Act Cap. 470 — should be considered.

Intellectual Property and Confidentiality: Ownership of intellectual property developed during bid preparation, the obligation to keep bid strategies and pricing confidential, and restrictions on use of the other party's proprietary information after the teaming relationship ends. The confidentiality provisions should survive termination of the agreement for a period of not less than 3 years.

Transition to Subcontract: A commitment that if the bid is successful and the Lead Party is awarded the main contract, the parties will execute a formal subcontract within a specified period — typically 30 days of contract award — on agreed commercial terms. The Teaming Agreement should set out the key terms of the intended subcontract to reduce the risk of disagreement at the execution stage.

Termination: The events that terminate the Teaming Agreement — bid failure, withdrawal of the bid, contract award to a third party, or material breach by either party. Upon termination, each party should return or destroy the other's confidential information.

Governing Law and Dispute Resolution: The agreement is governed by the laws of Kenya under the Law of Contract Act Cap. 23. Disputes may be referred to arbitration before the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995, or to the courts of Kenya. The forms-legal.com Kenya Teaming Agreement template incorporates all these provisions and is suitable for both government and private sector bids.