Variation Vs Nominated Subcontract

Sathis,



Thanks, glad to be of help.

Sathis,



If it’s to do with the expenditure of a Provisional Sum - yes,



otherwise No.

Sathis,



Subcontractor is a Nominated Subcontractor, additional work does not involve the expenditure of a Provisional Sum.



I assume that you have no problems with the NSC doing the additional work and your main concern is whether you will get paid under Cl 52 or Cl 59.



So:



Engineer’s power to instruct additional work by Nominated subcontractor: Cl 58.2 Power to instruct exists only “in respect of every Provisional Sum”, therefore the Engineer does not have the authority to instruct that a NSC does this additional work.



The Engineer can obviously instruct additional work under Cl 51.1(e) and the Contractor can then choose to instruct the NSC to carry out this work. (assuming the NSC subcontract with the Contractor allows it which I’m guessing it will).



Additional work under Cl 51.1(e) normally falls to be valued under Cl 52 BUT:



Once a Nominated subcontractor always a NSC. A Nominated subcontractor is a NSC due to the selection process used, (Employer/Engineer selected), not the type of work they are doing. Back to Cl58.2 again:



All specialists, merchants, tradesmen and others executing any work or supplying any goods, materials, Plant or services for which Provisional Sums are included in the Contract, who may have been or be nominated or selected or approved by the Employer or the Engineer,



and all persons to whom by virtue of the provisions of the Contract the Contractor is required to subcontract shall,



in the execution of such work or the supply of such goods, materials, Plant or services, be deemed to be subcontractors to the Contractor and are referred to in this Contract as “nominated Subcontractors”.



And Cl 59.4 says:



“For all work executed or goods,…… by any Nominated subcontractor, …….”



So this applies whether or not the work is anything to do with a Provisional Sum – ALL work done by ANY NSC. Therefore payment for the additional work falls under this clause, not Cl 52.



To avoid arguments in the future over payment I would confirm the above with the Engineer in writing before agreeing that you will use the NSC for this particular additional work instructed under Cl 51.1.



If the Engineer doesn’t agree then the next option is to enter into a separate contract with the Employer for the additional work if he insists that the NSC must do it.

Sarif,



I should rephrase that first sentence -



The only clause under which the Engineer can issue instructions regarding the work done by a NSC is Cl 58.2(b) and this restricts instructions to being in connection with Provision sums.



The Engineer still has to issue instructions through the Contractor - which is not what my previous post quite inferred.

Sathis,



Maybe! The only clause under which the Engineer can directly instruct a NSC is Cl 58.2(b) and this restricts instructions to being in connection with Provision sums.



Hence the need to sort out whether the subcontractor is really a NSC and is the instruction to do with a Provisional Sum.



So back to questions:



1. Is the subcontractor actually a NSC? (I’m thinking the answer will be yes from your last post)



2. Is the additional work involving the expenditure of a Provisional Sum?



Then I can answer your query for you.

Sathis,



The coma splits the sentence to make it easier to read and associate different parts.



The important word is “ALL”, (hence why it was highlighted).



“All” people includes everyone in the second definition irrespective of whether the first condition applies.



Consider everybody to who this clause should apply:



There will be those people who carry out work that involves expenditure of Provisional Sums and the Engineer/Employer has a say in who they will be, in fact the Engineer/Employer will usually choose who it will be and substantially do all the negotiations, etc.



Of these people:



They may be named in the Contract. This group satisfies conditions one and two. Nominated subcontractors by the first AND second definitions.



They may not be named in the Contract,: This group doesn’t satisfy condition two but they are still Nominated subcontractors because of definition one ONLY.



Then:



There may also be those people who carry out work which is nothing to do with Provisional Sums, but are named in the Contract and therefore the contractor has to use them. Not unusual that the Employer wants somebody in particular to do some of the work but he doesn’t want to employ these people directly - he wants the contractor to manage everyone, single point of responsibility, etc – These are Nominated subcontractors by the second definition ONLY.



The two definitions are separate and as long as one is satisfied the subcontractor is a Nominated subcontractor.



In a nutshell, anybody that the contractor does not have freedom of choice over who to use because the Employer or Engineer has an input into who it will be, (notwithstanding the usual approval process for all domestic subcontractors), is a Nominated subcontractor – which is exactly what you would expect to happen in a construction contract.

Sathis,



It is “and” but note the coma’s splitting the clause: Read it as follows:



All specialists,

merchants,

tradesmen and others executing any work or supplying any goods,

materials,

Plant or services for which Provisional Sums are included in the Contract,



who may have been or be nominated or selected or approved by the Employer or the Engineer,



and all persons to whom by virtue of the provisions of the Contract the Contractor is required to subcontract shall,



in the execution of such work or the supply of such goods,

materials,

Plant or services,



be deemed to be subcontractors to the Contractor and are referred to in this Contract as “nominated Subcontractors”.



It reads as two separate lists. "and all persons" referring to another category of people. If it had said:



All specialists,

merchants,

tradesmen and others executing any work or supplying any goods,

materials,

Plant or services for which Provisional Sums are included in the Contract,



who may have been or be nominated or selected or approved by the Employer or the Engineer,



and are persons to whom by virtue of the provisions of the Contract the Contractor is required to subcontract shall,



in the execution of such work or the supply of such goods,

materials,

Plant or services,



be deemed to be subcontractors to the Contractor and are referred to in this Contract as “nominated Subcontractors”.



I would read as needing both conditions satisfied – "and are" would refer to the same category of people - very subtle but important difference.



I think I’ve said in other threads, one word can change the entire meaning of a contract clause.

Sathis,



Read Cl 59.1:



A subcontractor is ONLY a Nominated subcontractor if either:



1. They are executing work or supplying goods, materials, Plant or services FOR WHICH PROVISIONAL SUMS are included in the Contract: OR



2. BY VIRTUE OF THE PROVISIONS OF THE CONTRACT the Contractor is REQUIRED to subcontract with. ie the Contractor HAS to subcontract with them because they are named in the Contract or some other similar reason in the provisions of the Contract.



Question 2: Is the subcontractor a Nominated subcontractor or not? YES/NO?

Sathis,



Read Cl 58.1 definition of what a Provisional Sum is:



“means a sum included in the Contract AND SO DESIGNATED IN THE BILL OF QUANTITIES for the execution of ….., on the instruction of the Engineer.



Question 1: Are we talking about additional work which will require the expenditure of a Provisional Sum or not? YES/NO?

Sathis,



If the circumstances don’t fall within either of the definitions, why do you believe that the subcontractor is a nominated subcontractor and not a normal domestic subcontractor to you?



If it’s nothing to do with the expenditure of a Provisional Sum (first definition) or you don’t HAVE to use the subcontractor due to something in the contract, (second definition - eg named in the contract), then the subcontractor is not a nominated subcontractor.

Sathis,



Could you please explain a little more about your last request.

Sathis,



That’s the first time you’ve confirmed that it isn’t a provisional sum we are talking about, therefore I will assume it’s is just a normal item of work.



So the nominated subcontractor does not fall within the definition:



“All specialists, merchants, tradesmen and any others executing any work or supplying any goods, materials, Plant or services FOR WHICH PROVISIONAL SUMS are included in the Contract, who may have been or be nominated or selected or approved by the Employer or the Engineer, “



Does the subcontractor fall within the second definition of nominated subcontractor:



“ all persons to whom by virtue of the provisions of the Contract the Contractor is required to subcontract,”



ie was a subcontractor named by the Employer/Engineer in the original contract as someone you had to use?



If so they are still a nominated subcontractor and therefore the Engineer can instruct the Contractor that work will be carried out by them.



If not then the Engineer can not instruct the Contractor to use them to carry out the work.

Sathis,



Just to emphasise the point - the Engineer only has the authority if it is to do with a Provisional Sum.

Sathis,



The Engineer can issue instructions to the Contractor under Cl58.2(b) concerning:



the execution of work

the supply of goods

the supply of materials

the supply of Plant

the supply of services



BY a nominated Subcontractor in respect of a Provisional Sum.



So as long as it’s to do with the expenditure of a Provisional sum and the varied work falls within one or more of the above headings, then the Engineer has authority to instruct.



As far as payment to the Contractor, Cl59.4 applies.



How best to deal with it between the Contractor and nominated Subcontractor will depend on what’s in the contract between those two.

Sathis,



From memory (haven’t got a copy in front of me) Cl 58.2 springs to mind, think it’s section (b) - instructions by Engineer regarding provisional sums as Cl 59.1 defines nominated subcontractors as those who carry out work, etc in relation to provisional sums (and or those otherwise required under the contract).



If it isn’t a provisional sum then the Engineer can’t instruct the Contractor as to who carries out the work but given the contents of Cl 59.2 & 3 (liability of a nominated subcontractor to the Contractor), assuming the terms have been properly put in the nominated subcontract, why you would want to object.