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ConstructionPro Week, Volume: 2 - Issue: 39 - 09/27/2013

Insider Discusses EJCDC's New Document on Subcontracts

By Steve Rizer

 

One of the new documents that the Engineers Joint Contract Documents Committee (EJCDC) has added is “C-523,” which addresses subcontracts. This is one of three new documents that EJCDC Construction and Procurement Subcommittee Chairperson James Brown discussed during a recent WPL Publishing webinar for which a recording recently was added to the ConstructionPro Network (ConstructionProNet.com) Download Library -- free of charge for members.
 
“A lot of the contractors at the table were telling us that while C-700, the General Conditions [document], made it clear that any subcontract that they were to use would bind the subs to the terms of the prime contract, they complained that we never really had a coordinated document that did that, and now we do,” Brown told the webinar audience.

 

 

 

In C-253, the prime contract is incorporated by reference. Brown told webinar attendees that C-523 “clearly spells out that there is no privity with the owner. The subcontractor is not a third-party beneficiary of the prime contractor. It re-spells out all the flow-down obligations from the prime contract, and it ties the subcontractor to the progress schedule, something that contractors were clearly interested in.”
 
EJCDC also inserted a pay-when-paid provision into C-253 (see figure below). Brown pointed out that the pay-if-paid construction contract clause has fallen out of favor in most courts.

 

 


There were several provisions that contractors wanted included in C-253, Brown reported. “We listened to them even much more than we normally do for all of the other documents, where the contractors got final authority regarding conflicts.” Contractors were “adamant” that C-253 clearly made subcontractors responsible for their own workforce as well as other persons and property at the site.
 
Also, Brown explained that if there is a change in a subcontractor’s work, the increased compensation that the subcontractor receives is limited proportionally to what the contractor receives (see figure below). “So, if the sub gives the contractor a quote, then it’s negotiated as part of a change order, the sub’s going to get a proportional part of it.”

 

 

“We were careful to make sure the insurance and indemnification provisions track very carefully with the general conditions of the general contract, C-700,” Brown said.
 
The issue of bonds generated “some mixed opinions” in the formation of C-253, Brown said. “We got some mixed opinions from contractors, and most of them said they don’t always use -- and don’t always require -- bonds from their subs. So, we made it such that it’s required only if expressly stated. Clearly, there are bond provisions between the general contractor and the owner, but the contractors themselves didn’t feel as strongly in terms of the need for bonds from subcontractors.”
 
In C-253, EJCDC made dispute resolution “independent of the prime, but the contractor’s got the right to pull them into any arbitration or other types of dispute resolution,” Brown said.
 
In wrapping up his discussion on C-253, Brown stressed that representations track the C-series. “These are critical representations that are outlined in the instructions to bidders for all prospective bidders.”

 

For immediate access to the complete webinar (full audio and visual) -- as well as more than two dozen other construction-related webinars that are available for download -- sign up to become a member of WPL Publishing’s ConstructionPro Network, a complete training, education, and development resource for the construction industry, at http://constructionpronet.com/info/Charter2012.aspx.

 

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