Construction Law/Subcontractor

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Question
My friend Mansur helped me to contact you.
We are acting under FIDIC 2005 MDB.
As per Cl.5.1 Definition of nominated subcontractor, sub-paragraph (b) of the contract the Consultant instructed the Contractor to employ a particular company as a subcontractor. The matter is that the nominated Subcontractor was already engaged in subcontract works and commenced works around 6 months ago (project began 6 months ago), however the Contractor failed to obtain our consent and did not give any notice as per clause 4.4 b,c of the contract. it means that the time alloted for the contractor to give notice already passed (28 days, cl.4.4c)however, despite our instruction letter the contractor keeps silence. We asked the contractor to provide us the subcontract agreement, but the contractor still keeps silence. And later we got the subcontract agreement from the Subcontractor (yet not employed officially) and we found that the contract did contain a clause where it says "the subcontract agreement will be effective on that day when either the Employer or the Engineer will approve the Subcontractor". Via our instruction letter we kinda gave an instruction to the Contractor to employ this subcontractor, but the contractor is silent. My question is taking into account breach of contract clauses by the contractor, what, the Consultant, can undertake to make the contractor employ the subcontractor officially? What actions or measures can the Consultant take to make them responsible for the breach of the contract? The contractor keeps silent. Thank you very much in advance.

Answer
26-Feb-2013
Dear Karimbek (Uzbekistan),
Thank you for your inquiry.  It seems that your friend and you are engaged in a rather deeply contested site with many controversial issues.   Whether you act under FIDIC MDB 2005, or any other set of contract conditions issued by awarding authorities around the world, the issue of nominating a “nominated” sub-contractor is always complex, because it provides more rights to a nominated Sub- as compared to the set of rights allotted to an “elected,” or freely-chosen, sub-contractor.  You may analogize the status of a nominated sub with a status of beloved favorite son who enjoys more privileges from the parents.   
Now, speaking of a breach of contract asserted in your inquiry, I would like you to differentiate major breaches of material terms and minor breaches of trivial provisions.  The difference is that the breach of major term of a contract may, and often does, call for enforceable remedies under a contract or the governing law, such as delay penalty, such as pulling a bond on a non-responsive contractor, or remedy of termination of a contractor, or forcefully evicting him off-site.
Without being on-site and getting all minute variations in facts interpretations by various folks – i.e. full-time involvement in the day-to-day administration of the project – I may not be able to tell you who is in the right or wrong with any degree of definitiveness that you and Mansur are seeking. (See my response of 17-Feb-2013).  
It appears to me that the Engineer has spotted a minor breach of contract which does not call for a “nuclear war.”  It appears that even though the Contractor failed to file a request for approval of a sub-contractor within 28-day timeframe, the tenor of the Engineer’s instructions to nominate this Sub-, and the Contractor’s actual employment of this same Sub- reflect a bi-lateral meeting of the minds to employ this Sub- as a “nominated” Sub-, i.e. under a preferred status.  
Judging from the prior inquiry by Mansur, it appears that the 68% of this Sub-‘s scope has already been installed.  It seems that the minor breaches by several parties could easily be cured by a clerical act of the Engineer and the Contractor to back-date the actual effective date of the Sub-contractor’s entry on site under a valid agreement – and respective approval by the Engineer – back to the actual start of this Sub-‘s entry on-site.  Elect any verifiable date, say date of NTP issued to this Sub-, or when he supplied his Performance Bond to the General / Main / Prime Contractor, and back-date Engineer’s approval to that date, and the treat this Sub- as nominated from date on.  Would it not solve all the problems stated in your inquiry?
I hope that you will learn in time to discern which breach of a contract is nominal and could be cured by a simple clerical act of the Engineer, and contrast that to the major breaches of material conditions which may call for substantively-serious remedies.  It appears to me from your inquiry, that the current breach is of a minor inconsequential nature and easily curable by mutual agreement of all parties concerned.  
Hope this helps.
Respectively,
Gerry Sverdlin, PE, Esq.  

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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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