3.9. What Is a Nominated Subcontractor and Nominated Supplier

In terms of 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. Examples of situations in which subcontractors may be appointed include: In some circumstances, the customer may want to select (appoint) a subcontractor themselves instead of allowing the contractor to select them. This is called a designated subcontractor. Contractual arrangements that allow for designation are very complicated and attempt to cover all possible contingencies both between the procuring entity and the main contractor and between the main contractor and the designated subcontractor. This may include: the main contractor`s objections to the appointment, the insolvency of the designated subcontractor, the need for a new appointment, etc. However, if you are a developer and want your agreements to work with a prime contractor on a design and construction basis, you need to think about how to specify the exact surfaces you want without retaining responsibility for the design. For example, if you provide an output specification, the prime contractor is free to contact any supplier who can meet that specification, regardless of your product or supplier preferences. As a client, the benefits of 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 potential for insolvency of the designated subcontractor and the resulting impact on the contractor`s program, all of which could be raised by you as principal.

The contractor may be wary of performance issues associated with named contractors, and for fear of being held liable for an alleged third party, he may refuse his appointment or ask for compensation before agreeing to take him back. In any event, most court decisions agree that such matters exempt contractors from any liability with respect to problems caused by designated subcontractors. The appointment of subcontractors allows customers to influence the list of tenders, but does not lead them to take responsibility for the performance of the subcontractor. Indeed, the customer lists at least three subcontractors that he has deemed acceptable for the execution of the work. In many cases, the customer may have already agreed on an offer for the work with each subcontractor. Assistance in solving 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. Notwithstanding the cost of scheduling delays, the designated subcontractor may reject the work practices of the prime contractors on site by being too dictatorial in terms of working conditions, working hours, transfer between trades and what is required for overall completion. This can have a negative impact on the progress of the project, i.e. a prime contractor must have strict control over their supply chain to move the program forward, but when a supplier works effectively directly for the customer, it can strain relationships. A designated subcontractor is the one chosen by the customer to perform an element of the work. Designated subcontractors are taxed on the prime contractor after the prime contractor has been appointed. Regardless of the business benefits of the current appointment, suppliers are more likely to put the customer first in case of high demand. They are also more likely to support the customer when a problem arises with a planning aspect and the customer needs solutions that allow them to obtain the necessary building permit for development to continue. Similarly, situations arise when a client or proponent has a support date by which the project must be completed and realizes that the necessary materials or equipment have a longer lead time than expected. .