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New ASA Bid Proposal for Subs Improves Negotiating Power

Wed November 02, 2005 - National Edition
Construction Equipment Guide

The ASA Subcontractor Bid Proposal (2005) is a new tool from the American Subcontractors Association (ASA) that promises to help subcontractors “level the playing field” in contract negotiations through a straightforward and effective strategy: conditioning bids. ASA’s two-page document helps subcontractors define a scope of work, price, and conditions of a bid so that a prime contractor’s acceptance of the bid proposal includes acceptance of the subcontractor’s terms and conditions as well.

“The best estimators are already aware that job costs are premised upon a certain level of risk, whether or not the bid actually states that level,” said 2005-06 ASA President Vincent Terraferma. “ASA’s Subcontractor Bid Proposal helps subcontractors make explicit the level of risk that their prices are conditioned upon. Every contract term is a job cost, and with ASA’s Subcontractor Bid Proposal, subcontractors can offer a price that accounts for all the variables.”

If used as-is, the ASA Subcontractor Bid Proposal (2005) makes a subcontractor’s bid scope and price contingent on the client’s acceptance of the terms and conditions of the bid proposal and of the American Institute of Architects (AIA) A401-1997 document, which is endorsed by ASA. A subcontractor that commences work after submitting the bid proposal has a strong legal claim to the rights set forth in the AIA A401-1997 and the bid proposal.

The ASA Subcontractor Bid Proposal (2005) includes other conditions, including a price adjustment clause for significant changes in material prices: “A change in the price of an item of material of more than five percent between the date of this bid proposal and the date of installation shall warrant an equitable adjustment in the subcontract price.”

Other conditions of the bid proposal include:

• The subcontractor reserves the right to approve the customer’s credit.

• The subcontractor is not required to name “additional insureds” to its general liability policy, nor waive subrogation rights for claims covered by workers’ compensation or commercial general liability insurance.

• The subcontractor’s schedule of values determines progress payments.

• Attorney fees and other collection costs are paid by the client.

• The subcontractor has a right to an equitable price adjustment in case of delays, accelerations, out-of-sequence work and schedule changes beyond its reasonable control, and can terminate the subcontract in case such events delay work by more than 90 days.

• The subcontractor disclaims express and implied warranties, limits warranty claims to claims received within a year, and has the right to inspect and correct work that is under warranty.

• Unless specifically stated in the subcontractor’s scope of work, the client furnishes temporary site facilities.

• The subcontractor has the option to indicate that it will or will not participate in a controlled insurance program, and if it does participate, under what conditions.

• Waivers of lien or bond rights do not include retainage or unbilled changes, and are limited to amounts for which the subcontractor has been paid.

The ASA Subcontractor Bid Proposal (2005) comes with an instruction sheet that informs subcontractors how to modify and attach documents to the bid proposal to ensure their bids are properly defined. Page one provides space for writing scope and price information, as well as rates and mark-ups for extra work. Page two specifies the bid conditions.

The ASA Subcontractor Bid Proposal (2005) is licensed for use by current members of ASA. ASA members can either use the bid proposal as-is, or insert and adapt the language from the proposal in their own bid proposal documents.

ASA’s Task Force on Model Contract Documents completed the bid proposal at the ASA Leadership Forum in San Antonio in September 2005.

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