Named sub-contractor

[edit] Introduction

Sub-contractors are appointed by main contractors to carry out part of the works on their behalf. As construction has become more complicated and more specialist construction techniques have been developed, it has become increasingly common for contractors to sub-contract others rather than employing a large workforce themselves.

The use of sub-contractors enables the main contractor to undertake more complex projects whilst not unacceptably increasing their risk, however, concerns have been expressed about the prevalence of sub-contractors because of a perception that the main contractor has less control over the skills and training of sub-contractor employees and so there may be a negative impact on quality and health and safety on site.

Sub-contractors can be classified as:

In addition, on management contracts the works will be carried out by 'works contractors' and on construction management contracts the works will be carried out by 'trade contractors', although technically trade contractors are not sub-contractors as they are contracted by the client, and only managed by the construction manager.

[edit] Named sub-contractors

Naming sub-contractors allows the client to influence the main contractor's selection of sub-contractors, whilst leaving responsibility for their performance with the main contractor. It can be seen as an alternative to nominating sub-contractors as the contractual relationship is less complicated, and indeed, some forms of contract (such as Joint Contracts Tribunal (JCT) contracts) no longer include provision for the nomination of sub-contractors.

To name sub-contractors for a particular package, the client first identifies a list of potential sub-contractors. They may invite these potential sub-contractors to submit tenders for the package. The client then names a short-list of acceptable sub-contractors in the tender documents for the main construction contract. The tender documents allow for the sub-contract package by including a provisional sum.

When tendering for the main contract, the main contractor makes allowances for mark up, attendance and programme in relation to the sub-contract package. Once appointed, the successful contractor seeks tenders for the package from the named sub-contractors (although they may reasonably object to any of the named sub-contractors).

If the client previously sought tenders from the named sub-contractors, they may pass these on to the main contractor, although it is the responsibility of the main contractor to negotiate an actual price.

Once the main contractor has selected and appointed a sub-contractor the provisional sum is replaced with the actual price agreed.

Under this arrangement the main contractors assumes responsibility for the sub-contractor’s performance. In effect the named sub-contractor becomes a domestic sub-contractor, they are paid by the main contractor and the main contractor is responsible for their works.

On public sector projects, a sub-contract for which the client intends to provide a named list of possible sub-contractors may be subject to the requirements of the OJEU procurement rules.