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Last edited 29 Sep 2020
Nominated subcontractor v named subcontractor
Contractors may not have all the required skills or resources necessary to complete the works described in a construction contract, and so sub-contractors are commonly appointed to undertake those aspects of the project.
This can happen; where the client has involved a subcontractor in the design process, where the client wishes to achieve a very specific outcome, where they have an existing relationship, or where the client needs to secure the supply of long lead-time items. Nominated subcontractors may be selected before or after the contract is entered into with the main contractor.
Ultimately, the nominated subcontractor is still appointed by the main contractor, but they are imposed on them by the client. This can be allowed for in the contract by a prime cost sum, to which the contractor is permitted to add profit and attendance.
Nominated subcontractors are less common in the UK than they used to be, and some forms of contract (such as Joint Contracts Tribunal (JCT) contracts) no longer include provision for the nomination of sub-contractors. This is because the contractual arrangements allowing nomination are very complicated, and as the main contractor has no choice in the selection of the nominated sub-contractor, the contract may, or may not hold them entirely responsible for failure of the nominated sub-contractor to perform (depending on the exact wording of the contract). The contractor will however generally be allowed the right to object to the subcontractor under certain conditions, and if the client still wishes to use the subcontractor, some contracts allow them to indemnify the main contractor against the possible consequences of this.
Because of these and other complexities, nomination is generally not used in UK contracts (such as JCT contracts), where the use of named sub-contractors is now generally considered to be a simpler alternative. However, some contracts still allow nomination, particularly international contracts such as FIDIC.
The client names a short-list of subcontractors that would be acceptable to them in the tender documents for the main construction contract. The tender documents allow for this by including a provisional sum for the subcontract package. When tendering for the main contract, the main contractor makes allowances for mark up, attendance and programme in relation to the subcontract package.
Once appointed, the main contractor seeks tenders for the package from the named sub-contractors (although they may reasonably object to any of the named subcontractors). Once the main contractor has selected and appointed a subcontractor the provisional sum is replaced with the actual price agreed.
The main contractors assumes responsibility for the subcontractor’s performance. In effect the named sub-contractor becomes a domestic subcontractor, they are paid by the main contractor and the main contractor is responsible for their works.
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