Nominated Subcontractors

Sometimes, the client of a project wishes to have a particular subcontractor engaged in some work items because of his knowledge of that subcontractor’s skills, of his knowledge of some process, materials or plant particularly required by the client, of the specialized work that is beyond the skills of a general contractor, of need for applying of latest or new technology, or the client has a preference for using a particular subcontractor.

(There must be sound and viable reasons for this preference).

Accordingly, by engaging a nominated subcontractor, the client gets the assurance that the right party does the specialized works.

Difference between the nominated and domestic subcontractor

In Sri Lanka, according to the ICTAD / SBD / 01, sub-clause 63.4 (a) & (b), Nominated subcontractor means a subcontractor who is stated in the contract as a nominated subcontractor or whom the consultant instructs the contractor under Clause 39 – Variations, to employ as a subcontractor.

Usually, the client or consultant selects the nominated subcontractor through a separate bidding or procurement process. This process involves calling bids from companies that specialize in a particular field.

After selection, the client handover the sub-contractor to the main contractor. Nominated Subcontractor is the subcontractor selected in this way.

Then the main contractor enters into a subcontract with a nominated subcontractor, as with any other subcontractor, subject to certain rights of objection. The main contractor may object to the nomination for good and sufficient reasons – Sub-clause 63.5 – ICTAD / SBD / 1. (e.g. lack of experience or financial strength of the nominated sub-contractor).

Engagement against the wishes of the main contractor will probably disturb harmony on the site. Once the nominated subcontractor has been accepted by the main contractor, the main contractor is responsible for the work of the nominated subcontractor to the same extent as applies to the work.

Contractual Responsibilities

The main contractor accepts all contractual responsibility for the performance of the nominated subcontractor. Once appointed, the nominated subcontractor’s relationship with the contractor is
defined in a subcontract agreement drawn up and signed by the main contractor and the subcontractor. The important element in the arrangement is that the client wishes the contractor to be responsible for the administration and coordination of the subcontract and pays the contractor for such services.

This is not the case where the client enters into a separate direct contract for such work. In those circumstances, the consultant provides the administration and coordination on behalf of the client.

Examples of works that are likely to award to a nominated subcontractor include the supply and installation of lifts for high rise buildings, supply and installation of fire fighting equipment, etc.
The contractor shall pay to the nominated sub-contractor the amounts which the consultant certifies to be due according to the subcontract – Sub-clause 63.6 of ICTAD / SBD / 1.

Attendance

The main contractor is entitled to get a payment of a pre-determined percentage of the nominated sub contractor’s bill as attendance fee and profit – as stated in the bill of quantity – Sub-clause 63.7 – ICTAD / SBD / 1.

There are two types of attendance fees – general attendance and special attendance.

The general attendances are the already available facilities at the work site for use by the subcontractor. Examples are standard scaffolding, temporary lighting, temporary water supplies, sanitary accommodations, and welfare facilities.

Special attendance are the things specific to the particular subcontractor if requests to be provided by the main contractor. For instance, special scaffolding and special storage facilities come under this category.

Prime cost sum (PC sum) and Provisional sum

In Standard Method of Measurements in Sri Lanka – SLS 573:1999 states prime cost as a sum provided for work or services to carry out by a nominated subcontractor. It further states that such sum shall be exclusive of any profit of the main contractor. And those mention separately.

Further, it says that general attendance and special attendance to give as items following each prime cost sum. However, for special attendance, the client shall give all the necessary particulars.

Also, according to SLS 573:1999, a provisional sum in the bill of quantities shows the amount of money needed for any work to carry out by nominated subcontractors. However, there should be a provision for the inclusion of attendance fees and profit after each provisional sum.

Example:

BOQ items showing the main contractors request for profit and attendance at the bidding stage;

The following example shows the sub-contractor’s interim bill and values added by the main contractor for his profit and attendance.