XL EagleMOU (Memorandum of Understanding)
MOU stands for Memorandum of Understanding. A memorandum of understanding is a written document that records how two or more parties intend to work together. It is often used between government agencies, or between an agency and an outside group, to describe roles and goals.
An MOU usually does not obligate money or create a binding contract, though that depends on its wording. In the contractor world, companies sometimes call early teaming understandings an MOU, but a teaming agreement or subcontract is what actually sets the deal.
Why it matters to a small contractor
If a prime offers you an MOU to team on a bid, treat it as a starting point, not a guarantee. Ask what happens if the prime wins: will you get a subcontract, for what scope, and at what price? Get those terms in a teaming agreement.
Example
A small grounds company signs an MOU with a prime to support a bid. When the prime wins, it hires a different sub. Because the MOU did not commit the prime to a subcontract, the small firm has little recourse.
MOU: common questions
Is an MOU legally binding?
Usually not, but it depends on its wording. Language that sets firm obligations and exchanges value can make it binding, so read it carefully.
What is the difference between an MOU and a contract?
A contract creates enforceable obligations, often with payment. An MOU usually records intent and cooperation without those binding terms.
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