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Construction Law/Nominaton of the subcontractor

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Question
Dear Sir,

We are construction supervising consultant acting under FIDIC MDB 2005. the non-nominated subcontractor (officially named by the Contractor "Mterial Supplier") intends to stop works (this non-nominated subcontractor carries out 68% of the whole amount of works) on site due to nonpayment by the contractor for the works already carried out and is requesting to nominate him as a subcontractor officially. they are requesting the Engineer to nominate them as a subcontractor as per Section 5 Nominated Subcontractors, clause 5.1 (b)
"In the Contract, “nominated Subcontractor” means a Subcontractor:
(a)  who is stated in the Contract asbeing a nominated Subcontractor, or
(b)  whom the Engineer, under Clause 13 [Variations and Adjustments], instructs the Contractor to employ as a Subcontractor".
My question is can we as a Consultant "instruct" the Contractor to nominate this material supplier as a subcontractor based on facts we possess? or is there any soft way we can do it? Becasue the works on site are halted due to this delemma between the contractor and this subcontractor.
Thank you in advance

Answer
17-Feb-2013
Dear Mansur (Uzbekistan),
Re:   FIDIB MDB 2005
Thank you for your inquiry.  Let us address the questions in the order stated:
1.   If the Consultant has the authority to nominate a sub-contractor / supplier under the terms of the Contract - considering not only the General, but the Special Conditions as well – then the Consultant may so nominate a sub, albeit with an approval of the Owner/Employer.
2.   Although not all facts necessary to properly answer your inquiry are stated in your inquiry, I surmise that a petition to change the sub-contractor’s status from an elected sub- (not-originally-nominated) to a nominated sub- has to do with the right of a nominated sub- to petition the Owner to get a direct payment for the work already installed where the Main Contractor had failed to pay for the 68% of the already-installed scope.  It all has to do with the privity of the contract, or rather the lack thereof between the Owner and the sub-contractor of whatever tier.  
3.   In the event of a direct payment application made to the Owner – by-passing the Main Contractor - the Owner may pay the nominated sub- directly amounts owed for 68% of his scope installed and thereafter withdraw the same amount from the interim payment to the Main Contractor, as the Owner has to pay with this scope only once, AND the Main Contractor had a responsibility under FIDIC (whatever edition) to timely pay to the subs for all work installed, if the work was compliant with the conditions of the Contract / Specs, and was accepted as compliant by the Main Contractor.
4.   In the event of delayed forceful nomination of a certain sub- or supplier, the Owner also would have to adjust the Main Contract to reflect the difference in price between the originally-included price of the sub-contracted works into the Main Contractor’s price done by elective sub-contractor – i.e. Contract Price – and that of the newly-nominated Sub-, as there may well be a difference in overall Contract Price attributable to the newly-nominated work, performed under the different contract terms applicable to the newly-nominated sub-.
Although without many more site-specific facts I can’t be more specific, I hope that the answer I provided here is responsive to your query.
Respectfully,
Gerry Sverdlin, PE, Esq.

Construction Law

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Gerry Sverdlin

Expertise

Questions I can answer or provide assistance to reflect the following subjects: contract terms and conditions, interpretation of ambiguity, construction management and practices, claims for costs and time, variation / change orders, disputes, dispute resolution techniques and organizations, claims for extra work or materials, delay analysis, disruption or interference, defective design and negligent supervision, construction risks and mitigation, warranties and insurance. Questions I can NOT answer: too numerous to list here.

Experience

Mr. Sverdlin provided over 20 years of services in dispute resolution and expert opinion of complex construction claims for extra work, delay & acceleration, defective design & installation, unauthorized deviations, differing site conditions, productivity loss, labor & material shortage, owner’s interferences, force majeure, bonding, warranties and insurance coverage. Mr. Sverdlin participated in dispute resolution proceedings regarding 10 mile sub-aqueous outfall tunnel at Deer Island Treatment Plant – Boston Harbor Project, and claims arising out of construction of the South Boston / South Bay Interchanges for the Central Artery/Tunnel Project in Boston, Massachusetts, USA, and multiple proceedings Middle East. Specialties: Mr. Sverdlin established expertise in construction contract preparation under EJCDC, AIA, FIDIC and agency-specific bespoke contract frameworks: procurement administration, resolving defects in scope of work coverage, specification and estimates, change order processing, project controls & cost recovery. Engineering practice encompasses design & procurement management of highway & rail transportation systems, wastewater treatment and drainage networks, key performance indicator regimen.

Organizations
2011 - CIArb Member Grade 1999 - Attorney at Law – Massachusetts Bar, BBO # 642980 1992 - Registered Professional Engineer - PE: Lic. MA-36839 - Civil Affiliated Memberships: MBA - Massachusetts Bar Association DRBF - Dispute Review Board Foundation TASA - Technical Advisory Service for Attorneys

Education/Credentials
2010 - 2011 - American University in Dubai -Grad. Sch. of Business Administration Construction Contracts, Means & Methods, Claims & Changes, Project Controls March 2009 - Chamber of Commerce, Colombo, Sri Lanka – Construction Management Seminar Changes & Claims, EOT/Delay Damages, Loss of Productivity – Measured Mile 2000- 2007– Boston Architectural Ctr & Wentworth Inst. of Technology - Construction Law 1991- 1993 - Northeastern University, Boston, MA – Land Surveying, Sewage Disposal System Numerous continuing education specialty courses Suffolk University Law School - Juris Doctor, law -1993 – 1997 Northeastern University - MS, Construction / Public Works Management - 1993 Polytechnic University - BS, Civil Engineering 1982 – 1985

Past/Present Clients
Representative Projects Dubai International Airport UAE Muscat & Salalah Int'l Airports Oman South River Dredging Mechanical Scituate, MA Permitting / Boundary Dispute (Title V) Worcester, MA Hazardous Material Site Assessment New Bedford, MA Groundwater Pollution Monitoring Burlington - Woburn, MA Hazardous Material Disposal - Site Clean-up Wrentham, MA Sewer Rehabilitation Project – STEP Abu Dhabi, UAE Dubai Metro - Road & Transportation Authority, Dubai, UAE Boston Harbor Project - Deer Island MWRA - BHP Winthrop, MA 1,200 MGD Waste-Water Treatment Plant Doha North Sewerage Treatment Works Ashghal, Doha, Qatar 254K m3/d STP, 25-km triple force mains, 33-km Interceptor Sewers 10,000 l/s PS Central Artery / Tunnel Project - MHD / MTA Boston, MA 116 lane-miles Old Colony Railroad - Commuter Rail (Boston, MA 70+ mi) Cherry St. Reconstruction Full-Depth Bridgewater, MA 2.1 mi Scenic Roads Reconstruction Town-wide Wayland, MA 8.7 mi Strawberry Hill Rd Reconstruction Full-Depth Concord, MA 1.7 mi Craigsville Beach Rd Reconstruction Full-Depth Hyannis, MA 3.4 mi Water Main Replacement Southborough, MA EMAAR – Gulf III Towers, Dubai, UAE Mixed-Use Hi-Rise Peabody Properties Residential Hi-Rise Lynn, MA Bristol Properties Shopping Mall Attleboro, MA May Institute (children w/special needs) Institutional Randolph, MA Bear Hill Executive Park Commercial Waltham, MA Prospect Hill Executive Park Commercial Waltham, MA Residential Community Subdivision 128 lots Hopkinton,MA Retirement Community Subdivision Residential – 126-lots Warren,MA Independence Mall Retail Kingston, MA Mashnee Village Subdivision Residential – 54-lots Buzzards Bay, MA Hyannis Industrial Park Heavy Commercial

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