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What Is the Difference between a Nominated and Selected Subcontractor

As a client, the benefits for the program and design are obvious, but there are significant drawbacks that can lead to complex legal implications. This includes performance issues that result in a delay in the project, as well as the possibility of the designated subcontractor going bankrupt and the resulting impact on the contractor`s program, all of which can be raised on you as a principal. In addition, since the contract for the designated subcontractor is concluded with the main contractor and not with the customer, the customer can ensure that he has a direct guarantee with the designated subcontractor to guarantee performance and compensate him for any losses. In the industry, it is common for subcontractors to require an upfront payment before they can start working. This deposit varies from one contractor to another. Some prescribe 50%, others can even go up to 70% deposit for more specialized work. Similarly, there are situations where a client or proponent may have a deadline by which the project must be completed and realize that the materials or equipment they need have a longer time frame than expected. If they work according to their current schedule, they will not have hired a timely contractor who could place an order for long-term positions, so the customer must intervene early and place the order himself. When acquiring the contractor, you ask him to take over this supplier, in which case you indicate that he is named in the contractual documents. Structal then withdrew its offer and the employer`s contract manager entered into negotiations with another subcontractor, Nelson Tectonics, for the supply and installation of another curtain wall system, Schuco. The contract administrator asked Nelson Tectonics to present its price to the contractor, which Nelson Tectonics did, and informed the contractor that the price had been agreed with the contract manager.

The quantity surveyor submitted a revised offer that took into account Nelson Tectonics` contract price and which the contractor accepted. The contractor received instructions from an architect in which the words `Structal (UK) Ltd systems` were removed from the tender specifications. In terms of appointment, the risk imposed on the client is quite significant, as he is responsible for the execution of the designated subcontractor. This is outlined in the standard construction contract of YCW 98, section 25.4.7, which provides for an extension of time if the designated subcontractor causes delays. It is likely that, for these reasons, JCT has since 2005 removed the possibility for designated subcontractors to be included by default in the use of their terms. In fact, in the 2005 series of YCW contracts, the use of appointed subcontractors replaces appointment, although named subcontractors have been used in one form or another in YCW contracts since 1984. However, the procedure was not followed in the present case. Instead, on behalf of St. Modwen Developments (“the Employer”), the engineer solicited bids from specialized subcontractors for the design, delivery and installation of the qualified work, and the contractor was ordered to award a contract to the selected subcontractor. The court concluded that this was an abuse of the procurement procedure and an appointment in all names except name. The judge did not really state that the subcontractor had been appointed, but for the purposes of the contractor`s final settlement, he treated the subcontractor as designated so that the contractor could claim attendance, overhead and profits. The contractor may be wary of performance issues associated with named contractors and, for fear of being held liable for a perceived third party, he may reject his order or attempt to be compensated before agreeing to accept it.

In any event, most court decisions agree that such matters relieve contractors of liability for problems caused by designated subcontractors. Assistance in resolving early technical issues and value engineering in the development budget is provided by a designated subcontractor, and the subcontractor in turn has preferential payment terms. In older versions of YCW contracts,. B e.g. JCT SBC 98, the customer even had the option of making a direct payment to the designated subcontractor in certain circumstances, i.e. where an additional payment was appropriate to speed up the programme and avoid the resulting delay costs charged by a prime contractor in the event of a failure of a designated subcontractor. Since the prime contractor has some control over the selection, he then becomes responsible for the procurement and work of the selected subcontractor as if he were a domestic subcontractor. It is therefore important that the contractor is satisfied that the selected subcontractor is fit to perform the work. When it comes to named subcontractors, the customer is still able to influence the supply chain list, but it`s not absolutely like an appointment. The procuring entity may include subcontractors designated in a tender, but the contractor has the right to reject some of the names, although any dispute must be made before the contract is awarded. However, there is still a desire for appointment in some circles, which is why YCW has included the Appointed Specialist option in its SBC YCW starting in 2011.

This allows the customer to choose the subcontractor and the terms, and the contractor must engage this subcontractor, although it can provide reasons for a reasonable refusal. The level of control that the contractor exercises in the selection and hiring of the subcontractor will also be an important factor in deciding whether or not to appoint a subcontractor. If the employer was directly involved in the negotiation of the subcontract, the argument that such a subcontractor is appointed has much more power. It is therefore important to consider not only what the construction contract says, but also how this construction contract came into being. If the subcontractor is designated before the main contractor, it is advisable to provide the subcontractor with the proposed ex ante requirements to be imposed on the subcontractor and to require the subcontractor to clearly indicate in its offer which inputs are included in its offer and which inputs it expects to be supplied by the main contractor. Another common feature is that the terms of the subcontract are settled only after the conclusion of the main contract. This description is broad and, of course, its accuracy in a particular case depends on the terms of the respective contract. This is intended to avoid privacy between the employer and the designated subcontractor, while maintaining substantial control over the subcontracting work in the hands of the employer. The contractor may or may not be held liable for the non-performance of the designated subcontractor, depending on the exact wording of the specific contract used. However, since the subcontractor is imposed on them, the contractor is usually granted the right to oppose the subcontractor under certain conditions. .