Subcontracting in FIDIC

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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4.4 Subcontractors

• The Contractor shall not subcontract the

whole of the Works
• The Contractor shall be responsible for
the acts or defaults of any
Subcontractor as if they were the acts
or defaults of the Contractor

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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 • Unless otherwise stated in the
Particular Conditions:
(a) the Contractor shall not be required to
obtain consent to suppliers of
Materials, or to a subcontract for which
the Subcontractor is named in the
Contract;
(b) the prior consent of the Engineer shall
be obtained to other proposed
Subcontractors;
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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(c) the Contractor shall give the Engineer not

less than 28 days’ notice of the intended
date of the commencement of each
subcontractor’s work, and of the
commencement of such work on the Site

(d) each subcontract shall include provisions

which would entitle the Employer to require
the subcontract to be assigned to the
Employer under Sub-Clause 4.5
[Assignment of Benefit of Subcontract] or in
the event of termination under Sub-Clause
15.2 [Termination by Employer]

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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 • The Particular Conditions can indicate a
limit for subcontracting
• For example, the Jordanian Particular
Conditions cape this limit at 33%:
– The maximum size of subcontracting work
is 33% of the “Accepted Contract Amount”
……the Contractor should submit details of
every subcontracted amount along with the
proportion of that amount to the contract
amount. The Engineer should make sure
that the 33% is not exceeded
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
٥

• Also the Particular Conditions may:

– Promote the use of local subcontractors:
• …the contractor shall give fair and reasonable
opportunity for local subcontractors

– Waive the requirement of Engineer’s

consent when the subcontract is less than
a certain percentage of the Accepted
Contract Amount:
• ...prior consent shall not be required if the value
of the subcontract is less than 0.01% of the
Accepted Contract Amount
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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 – Require the consent of the Engineer for
suppliers of certain materials:
• …the prior consent of the Engineer shall be
obtained to the suppliers of the following
materials…….

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
٧

4.5 Assignment of Benefit of

Subcontract

• If a Subcontractor’s obligations extend

beyond the expiry date of the relevant
Defects Notification Period and the
Engineer, prior to this date, instructs the
Contractor to assign the benefit of such
obligations to the Employer, then the
Contractor shall do so
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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 • Unless otherwise stated in the
assignment, the Contractor shall have
no liability to the Employer for the work
carried out by the Subcontractor after
the assignment takes effect

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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5 - Nominated Subcontractors

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١٠

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 5.1 Definition of Nominated
Subcontractors

• In the Contract, “nominated Subcontractor”

means a Subcontractor:
(a) who is stated in the Contract as being a
nominated Subcontractor
(b) whom the Engineer, under Clause 13
[Variations and Adjustments], instructs the
Contractor to employ as a Subcontractor

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١١

• Usually, Contractors select

Subcontractors under Sub-Clause 4.4
• On the other hand, Clause 5
[Nominated Subcontractors], deals
with a special situation where the
Employer selects a Subcontractor
• Even though the Subcontractor is
selected by the Employer, the
Contractor is still fully responsible for
the acts of the Subcontractor

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١٢

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 • The second sentence of Sub-Clause
4.4 [Subcontractors] is still enforced:

“the Contractor shall be responsible

for the acts or defaults of any
Subcontractor as if they were the acts
or defaults of the Contractor”

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١٣

5.2 Objection to Nomination

• The Contractor shall not be under any

obligation to employ a nominated
Subcontractor against whom the
Contractor raises reasonable objection
by notice to the Engineer as soon as
practicable, with supporting particulars

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١٤

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 • An objection shall be deemed
reasonable if it raises from (among
other things) any of the following
matters, unless the Employer agrees
to indemnify the Contractor against
and from the consequences of the
matter:
(a) there are reasons to believe that the
Subcontractor does not have sufficient
competence, resources, or financial
strength;
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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(b) The subcontract does not specify that

the nominated Subcontractor shall
indemnify the Contractor against and
from any negligence or misuse of
Goods by the nominated
Subcontractor; or

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١٦

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 (c) the subcontract does not specify that, for
the subcontracted work, the nominated
Subcontractor shall:

(i) Undertake to the Contractor such

obligations and liabilities as will enable the
Contractor to discharge his obligations and
liabilities under the Contract;
(ii) Indemnify the Contractor against and from
all obligations and liabilities arising under or
in connection with the Contract and from
the consequences of any failure by the
Subcontractor to perform these obligations
or to fulfill these liabilities
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١٧

5.3 Payments to Nominated

Subcontractors
• The Contractor shall pay to the
nominated Subcontractor the amounts
which the Engineer certifies to be due
in accordance with the subcontract

Contracts & Specs

Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
١٨

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 5.4 Evidence of Payments

• Before issuing a Payment Certificate which

includes an amount payable to a nominated
Subcontractor, the Engineer may request
the Contractor to supply reasonable
evidence that the nominated Subcontractor
has received all amounts due in accordance
with previous Payment Certificates, less
applicable deductions for retention or
otherwise
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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• Unless the Contractor:

(a) Submits this reasonable evidence to the

Engineer, or

(b) (i) satisfies the Engineer in writing that the

Contractor is reasonably entitled to withhold
or refuse to pay these amounts, and
(ii) submits to the Engineer reasonable
evidence that the nominated Subcontractor
has been notified of the Contractor’s
entitlement
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
٢٠

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 • Then the Employer may (at his sole
discretion) pay direct to the nominated
Subcontractor, part or all of such
amounts previously certified (less
deductions) as are due to the
nominated Subcontractor and for
which the Contractor has failed to
submit the evidence
• The Contractor shall then repay, to the
Employer, the amount which the
nominated Subcontractor was directly
paid by the Employer
Contracts & Specs
Dept. of Civil Eng. ©FIDIC 1999: except underlined text Spring 2008
Hashemite University Dr. M. El-Mashaleh
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