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  Don't Forget the Subcontractors
How the Architect's Contract Administration Affects the Subcontractors

Arthur O'Leary, FAIA, MRIAI

Part Two:

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Subcontractor List
As soon as is practicable after the contract is signed, the contractor must submit a list of all proposed subcontractors and suppliers to the architect. (A201, 5.2.1) If after due investigation the owner and architect have any reasonable objection to any on the list, the contractor must replace that person or entity. If the replacement bid is higher than the contractor’s original sub bid then the owner will have to pay the difference or should receive a credit if it is lower. The contractor is entitled to assume there is no objection to the list if no immediate response is forthcoming. 

A disappointed subcontractor will not usually quietly accept rejection, so the architect and owner must have solid reasons for their action. An architect’s recommendation to the owner that any subcontractor or supplier be rejected must be based on proper research and substantial reasons not motivated by personal prejudice or animosity. An architect who acts in the owner’s best interest and without malice is not likely to be successfully sued for libel or slander. 

After the list of subcontractors and suppliers has been approved, the contractor cannot make any changes if the owner or architect have any reasonable objection. (A201, 5.2.4) Although the owner and architect may suggest subcontractors and suppliers, the contractor is not obligated to contract with anyone to whom the contractor has made reasonable objection.

Subcontract Agreement
AIA’s standard form of subcontract agreement (A401) used by some contractors is in harmony with AIA owner-contractor agreements (A101 and A111) as well as the AIA General Conditions (A201) and the owner-architect agreement (B141).

AIA’s subcontract agreement has been balanced as fairly as possible to respect the rights and interests of contractors as well as subcontractors. The form has been approved and endorsed by the American Subcontractors Association and the Associated Specialty Contractors, Inc. The Associated General Contractors (AGC) has not sanctioned A401 although it has approved the AIA owner-contractor agreements and the AIA General Conditions.

Most contractors are inclined to use AGC’s subcontract form, one similar to it, or one which each firm has perfected over many years of mending and patching to solve practical problems and close loopholes. They generally favor the contractor’s position over that of the subcontractor.

An architect cannot require the contractor to use any particular subcontracting form unless it has been specifically required beforehand in the bidding instructions or supplementary general conditions.

Unwritten Expectations
Regardless of the agreement forms used, subcontractors generally have certain basic unwritten expectations from the owner, contractor, and architect. Underlying all is the fundamental expectation of fair play. 

During the bidding period, subcontractors expect contractors to keep their proposals confidential and not to use them as leverage to obtain lower bids from competitors. The tacit understanding is that the lowest responsible bidder gets the job at the price bid without having to extend further discounts or other concessions. 

Subcontractors would like to be consulted when the construction schedule is being compiled and whenever it is amended. Bid proposals are usually based on the work being performed in normal sequence with no more than the usual interference from other trades. Subcontractors expect reasonable advance notice for start of their part of the work. They expect to receive a reasonable supply of the contract documents so they can run their office, estimating, purchasing, and field operations efficiently. 

They expect to be provided with reasonably located parking, material and trash storage, and reasonable access to water, electricity, telephone, scaffolding, hoisting, and toilets. They rely on the contractor to provide skilled superintendence, accurate vertical and horizontal dimensional controls, fair allocation of space for piping, conduit, and ducts of various trades, proper scheduling of all the other subcontractors, reasonable security, and keeping of order on the job. They expect the contractor to promptly relay all questions and suggestions to the architect or other subcontractors and to return promptly with answers. Above all, they expect to be paid promptly in accordance with the agreement. 

All of these expectations are reasonable and are based on the normal situation on a well run job presided over by a skilled superintendent. All of these wishes and more can be, and usually are, provided by competent experienced general contractors. 

In addition, there are many unspoken aspirations and understandings involving the architect. The architect’s basic duty is to design all subcontract work properly, respecting the normal work sequences and usual interfaces between adjoining trades. Subcontractors trust that the architect has properly researched the specifications so that all catalog numbers and other technicalities are complete and up-to-date. They expect the architect to process submittals promptly and to expedite options and selections which must be made by the owner or architect. They rely on the architect to pitch in and assist when difficulties arise with governmental authority questioning the design or specifications. 

They also rely on the architect’s technical ability, reasonableness, and honesty of purpose in judging materials and workmanship and interpreting the contract documents. They hope the architect will recognize their superior knowledge of their trade and will at least listen when suggestions are being offered. Some architects generally assume that the subcontractor is always motivated by self-interest and is only trying to lower the quality or cost to the owner’s detriment.

Architect’s Authority to Reject Work 
Although the architect has the power to reject work that is not in conformity with the contract documents the architect is under no legal obligation to the contractor or subcontractors either to exercise or not to exercise this authority. (A201, 4.2.6) 

General contractors often find themselves in an awkward position when a subcontractor’s work is not acceptable to the architect but the subcontractor is steadfast in claiming that the architect is unreasonable and is demanding a higher standard than was specified. The general contractor then feels obligated to assist the subcontractor in appealing the architect’s decision. The contractor loses credibility with the subcontractor when unable to sway the architect and will lose the respect of the architect and owner when trying to sell substandard sub-contractor’s work.

Architect’s Administration of Payments 
Many subcontractors do not avail themselves of a significant right given to them in the AIA General Conditions. They are entitled to inquire of the architect of the status of the contractor’s applications for payment. The architect is authorized to release information to a subcontractor pertaining to its portion of the work in respect to dates and amounts paid, percentage of completion approved, amounts disallowed, and amounts of retainage. (A201, 9.6.3 and A401, 12.4.2) Material suppliers are entitled to similar treatment. (A201, 9.6.5) 

Neither the architect nor owner are obligated to pay or to see to it that subcontractors and suppliers are paid. (A201, 9.6.4) 

However, the contract requires the contractor to pay the subcontractors and suppliers from funds that have previously been received on account of their work. (A201 9.6.2) Also, the contractor may not include in any payment request funds that are not intended to be paid to subcontractors or suppliers on account of disputes or any other reason. (A201, 

Should the owner or architect happen to hear of any complaints from subcontractors or suppliers, or rumors in the industry that any have not been paid for previously approved work, this should serve as a serious warning. Concern about the contractor’s incipient financial instability should cause the architect to advise the owner to confer with legal and accounting counsel. The surety, if any, may have to be put on notice, and changes in the contract payment procedure may have to be negotiated to protect the owner’s interest. This will also usually have a side effect of protecting the interests of subcontractors and suppliers. 

The owner is entitled to terminate the contract should the contractor fail to pay subcontractors or suppliers their allocated share from the funds advanced in periodic payments. (A201, 

Should the general contract be terminated by the owner for cause, all notified subcontractors are automatically assigned to the owner. If the work had been suspended for over 30 days, assigned subcontractors are entitled to an equitable adjustment in their contracts. (A201, 5.4.1 and 5.4.2) This will reimburse them for their reasonable costs of shutdown, delay, and start-up.

AIA Documents

Standard AIA Documents used in illustrating the contract relationships discussed in this article. 

Between Owner and Architect: 
Owner-Architect Agreement, AIA Document B141-1997 

Between Owner and Contractor: 
Construction Contract, Stipulated Sum Basis, AIA Document A101-1997 
Construction Contract, Cost Plus Basis, AIA Document A111-1997 and 
General Conditions of the Contract, AIA Document A201 

Between Contractor and Subcontractors: 
Agreement Between Contractor and Subcontractor, AIA Document A401-1997

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