Friday, March 24, 2017

Subcontract Termination for Convenience

I have had several DBE subcontractors tell me that they have had their subcontracts terminated by a prime contractor after the work performed on their subcontract exceed the DBE commitment on the project.  These DBEs had done good work but the prime contractors took the work away from them because their crews "needed the work."  No notification to the DBEs.  This is a termination for convenience.

If a subcontractor fails to show, does shoddy work, doesn't pay for material then the prime contractor has a right to terminate a subcontract for "cause" and finish the subcontractor's work.  Prime contractors like to have a little cushion over the amount of the DBE commitment because the Iowa DOT requires the prime to subcontract at least that amount, but a subcontract is a subcontract.

I don't know the solution to the problem.  Primes and DBEs need to develop long-term trusting relationships.  I think many have. Some prime contractors are better to work for than others.  The good ones need to be rewarded and the poor ones penalized.

I-74 Bridge in Scott County

The I-74 bridge project spanning the Mississippi River will bid with a special letting on April 25th.  This is biggest project ever let by the Iowa DOT.  I have heard $500 million.  $750 million?  Higher?  There is a 5% DBE goal on the proposals.  Looking through the project I have following comments:

  • DBE contractors who are not certified in Iowa have until 10 days before the bid to get certified in Iowa.  Don't be surprised if you see some names you don't recognize.
  • Expect to see a lot of requests for quotes from the prime contractors.  They are trying to establish their good faith effort.  If you are not interested in bidding respond to the primes and let them know.  If you are interested contact the primes and work with them on how to incorporate your company into their bid.
  • Stainless steel reinforcing is being used.  Millions of pounds of it.  Stainless steel has special requirements.  Stainless steel reinforcement needs to be kept away from carbon steel,  covered with tarps outside, separated from the ground of floor by wooden supports.  
  • There are incentive/disincentive pay dollar amounts per calendar day.  I would include a statement in your quote that limits your overtime exposure. For example this bid does not include working over 10 hours a day or 60 hours per week.