J Garner : The Case for Retaining Nominated / Selected Subcontractors

The elimination of Provisional Sums (which lead to the appointment of

Nominated or Selected Sub-contractors) would require that there is
sufficient information available for the specialist sub-contracts to be
measured and the tender documents for such work issued as part of the
main contract tender documents. This is often not the case.

Consider:

 In shopping centres the subdivision into individual shops will

usually develop as construction of the main structure progresses.
Design of shop-fronts can only proceed as the detail division of line
shops and tenant’s requirements become available. As far as
anchor tenants are concerned, they are usually only prepared to
finalise their fit-out requirements as the structure becomes
available to them;

 In major hospitals the technical advancement of services, such as

internal communications (including medicines and food distribution)
and operating theatre equipment, often means that, if all work was
specified upfront, the hospital might be deprived of advances made
during construction of the structure;

 Even in office developments tenants are often only identified as the

development proceeds. The type and extent of partitioning will only
be known once the tenants are signed up.

Further, it is submitted that the Employer should have a choice of

selecting his preferred specialists and delaying detailed design issues
until after the main contract has been let.

The provision in contracts for the use of Nominated Sub-contracts does

not mean that the Employer must use them. Employers are always free to
structure the tender to avoid the use of Nominated or Selected
Sub-contractors. Why eliminate this choice when drafting the conditions
of contract that are to apply?

The use Nominated/Selected Sub-contractors enables a developer to

bring a project to completion earlier by having his professional team deal
with design of the specialist services at a later stage. Tenders for the
basic structure can be put to tender within a couple of weeks of a
developer acquiring a site. There are risks in the process but how does
one justify the professional team deciding to use a form of contract that
removes this option? Why must the developer wait until the design is
sufficiently advanced to call for tenders for the entire Works? Why should
developers accept that the choice of specialist sub-contractors will rest
with the Contractor, not them?

Whilst there is considerable merit in the suggestion to avoid using

Nominated and Selected Sub-contractors, it is suggested that elimination
of the possibility of using them is a step too far. It suggests a dictatorial
attitude by the drafters of the standard conditions that are offered; “we
know best”, but often they do not! In any event is not the party paying for
the project, the Employer, entitled to make that decision having received
advice, but not demands, from the professional team?

Part of the argument used against providing for Nominated

Sub-contractors is that:

“Usually the provisions of the Principal Contract will contain certain

clauses which will provide for relief of the main Contractor in the
event of default by the Nominated Sub-contractor”.

An example is given concerning delay by Nominated Sub-contractors and

the Contractor’s right to extension of time. This is not the case in FIDIC or
GCC and in JBCC is only the case if the Employer elects to use
Nominated instead of Selected Sub-contractors. The Employer is free to
make that choice. In, FIDIC, GCC and JBCC (with Selected
Sub-contractors) any default by the sub-contractor is the responsibility of
the Contractor.

There are both advantages and disadvantages implicit in a decision of

whether or not to utilise Nominated/Selected Sub-contractors on any
particular project. It is difficult to see why the professional team and
Employer concerned should adopt a form of contract that removes the
choice. There is no advantage in removing the choice.

The use of Nominated and Selected Sub-contractors in JBCC

Agreements also facilitates design of specialist services being allocated to
specialist sub-contractors within the framework of a “Design by Employer”
form of Agreement.

In both the FIDIC Red Book and GCC 2010 design is generally allocated
to the Employer but with elements of the Works having design
responsibility allocated to the Contractor. This is often not dealt with
satisfactorily. It introduces the need for the Contractor to insure the
design work (professional indemnity insurance) for which they are
responsible, as it has complications relating to design interface where the
design responsibility is divided.

JBCC is the only form of agreement that unequivocally allocates design

responsibility (other than for temporary Works such as formwork and
scaffolding) to the Employer.
The provision for Selected Sub-contractors in GCC 2010 is simply a
variation on Nominated Sub-contractors “a rose by any other name …”.
The position under this form of contract is very close to selected
subcontractors in JBCC; indeed the title ‘selected’ subcontractor, was
coined and first used in JBCC documents.

Nominated Sub-contractors under FIDIC are very close to Selected

Sub-contractors under GCC and JBCC. What objection can there be to
JBCC also offering a further alternative which eliminates the need for
consultation with the Contractor before tenders are called for these
services? Is not the availability of more options an advantage?

Note: Under JBCC, main contract tenderers will know if and for what
specialist services each of:

 Nominated; and

 Selected Sub-contractors

are intended and can programme and price accordingly.

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