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Subcontractors Discover Power of Bid Conditioning in ASA Workshop

The group learned that it all comes down to Dollars and Sense.

Wed April 17, 2013 - National Edition
Construction Equipment Guide

Subcontractors may feel powerless to negotiate favorable contract terms with general contractors, believing if they don’t sign the GC’s contract, their competition will. But subcontractors participating in a workshop during the ASA Business Forum and Convention 2013 in Las Vegas learned how to get the contract terms and conditions they want.

In the March 21, 2013, workshop, “Conditioning Your Bid,” presenters Daniel McLennon, McLennon Law Corp., San Francisco, Calif., and Scott Holbrook, Crawford & Bangs, Covina, Calif., discussed how subcontractors can transform their bids into powerful tools to secure their preferred contract terms and conditions by using the ASA Subcontractor Bid Proposal.

“The goal is to understand the risk including costs and include these items at the time of bidding,” McLennon said.

McLennon and Holbrook explained that subcontractors can use the bid proposal form by attaching it to a bid, along with a schedule of values. Using the ASA bid proposal form, the subcontractor qualifies or “conditions” its bid on the ASA-endorsed ConsensusDocs 750 Agreement Between Constructor and Subcontractor and the bid form’s other stated terms and conditions. If the general contractor accepts the bid, they noted, the subcontractor benefits from the 750 form’s fair allocation of financial and legal liability among the parties.

If the general contractor accepts the price, but rejects the subcontractor’s terms and proposes its own, the general contractor will have made a “counter offer.” The subcontractor is then in a position to negotiate fair and equitable terms and conditions, McLennon and Holbrook said.

Using the ASA bid proposal allows subcontractors to address price fluctuations, additional insured requirements, schedule of values, schedule changes, warranties, bond requirements, assignment of subcontract, wrap-up insurance, waivers, and temporary site facilities.

“Make it clear who is going to be responsible for things like weather protection, toilet and wash facilities, and electrical,” McLennon said. “Specifying that the customer will furnish temporary facilities controls unforeseen costs to the subcontractor.”

Subcontractors can use either the ASA Addendum to Subcontract or the ASA Short-Form Addendum to Subcontract by forwarding it under a cover letter to the general contractor and stating that the attachment includes proposed revisions to the general contractor’s subcontract. Then, subcontractors may request that the general contractor review the terms and contact them to discuss them.

The addendum does not incorporate the subcontractor’s bid proposal by reference. As a consequence, subcontractors should include their scope of work on the front of the form or as an attachment.

The ASA Addendum to Subcontract and Short-Form Addendum to Subcontract modify the terms of a general contractor’s boilerplate subcontract form so that it is more fair and reasonable. The short-form addendum differs in that it is more limited in scope. Both addenda provide that the terms take precedence (or control) over conflicting terms in the general contractor’s boilerplate language. This aspect is essential since the language in either ASA addendum will conflict with the most one-sided, unfair terms found in many general contractors’ boilerplate subcontract language.

Both addenda eliminate some of the same unfair terms, including broad-form indemnification, additional insured requirements, waivers of subrogation, no damages for delay and pay-if-paid. Combined, the elimination of these terms helps to level the playing field.

The ASA Subcontractor Bid Proposal, ASA Addendum to Subcontract and the ASA Short-Form Addendum to Subcontract are available to members in the “Contracts and Project Management Documents” section under “Advocacy & Contracts” on the ASA Web site.

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