Before you sign a contract with a prime contractor company (or anyone else, for that matter), read it – again and again! All it takes is one bad contract to take down an integration firm.
We recently saw a subcontract agreement shared by a member that was filled with landmines. We know that, due to time constraints and the difficulty in understanding legalese, most integrators would simply sign off and move forward. And it’s understandable, too. Integrators are anxious to win prestigious projects, which increases the temptation to just sign these agreements and hope for the best. But we’ve seen companies go under because of this. It’s important to review a contract carefully for red flags.
For instance, I recently worked with an NSCA member to review a contract they were provided by a prime contractor company so they could avoid these landmines. Once we were finished, the integration firm was able to respond to the contract with a list of items they weren’t comfortable agreeing to. (In other words: “Change the contract or we won’t sign it.”)
Included in this contract was a waiver of subrogation. If something were to happen to an employee while working on the jobsite, a signature on this contract would’ve agreed that the integrator was agreeing to waive any claims from its own insurance company seeking damages against the client or its insurer. Had they agreed to this, the integrator’s own workers’ compensation insurance company – without prior knowledge – would be on the hook for an incident that could’ve been the fault of the client.
The good news here is that, after the integrator came forward with the modifications they wanted, the contracts managers was willing to work with them. And, now, they’ll know exactly what to look for in future contract reviews and negotiations.
Without giving away specifics, a few of the additional requests included:
- A review of labor rates at specific periods throughout the project
- Templates to use to create the reports that the client expected
- Specific training regarding certain processes and procedures that the client expected the integrator to follow
- Specific payment terms and conditions
Also, remember the recent NSCA blog about a big win we had on an 11-year claim? This agreement, had it been signed, would’ve prevented the integrator from applying the recourse now approved under the Little Miller Act to force the agency to pay – even if the project became unfunded by the Feds. If a project loses funding, this act gives our member the ability to be paid for stored materials and work completed to date.
If you have a contract headed your way – or one in your hands right now – that you have questions about, contact NSCA. We’ll help you read through it, and pinpoint any potential landmines. –Chuck Wilson, NSCA Executive Director