PART 2 of
A Contractor's Guide to Understanding Public Works Contracts
Many subcontractors do not pay attention to this statement, but it is important because it holds subcontractors to similar accountability standards. In regard to insurance and indemnity provisions, for example, the prime contractor must make sure that all subcontractors add the City and Country of San Francisco as an additional insured on their insurance policies and as a covered party under the indemnity clause.
CT: What should a subcontractor know / do before signing a contract? What actions would you recommend a subcontractor take before entering into a contract?
CC: Be sure to check out any general contractors with whom you have not previously worked, so you have some idea of how they do business before you get into a subcontract with them. Many times I’ve had clients tell me that they’d already signed a subcontract and then were talking with a peer of theirs who said, “You signed with that prime? I didn’t even bid on that project because they’re nothing but trouble.” If it’s a local contractor, you can actually check the court records to see how often they have been sued or have a professional do that for you, but you can also learn a lot just by asking around, and might want to avoid working with prime contractors who do not have a good reputation.
Subcontractors should have a good attorney, C.P.A., and insurance representative to advise them on projects. Educate yourself about what to look for in subcontracts and request a copy of the prime contract in addition to the subcontract; review these with an attorney or other experienced professional to determine what prime contract provisions will also be applicable to you and your work on the project. Being a subcontractor does not excuse you from having many of the same prime contract provisions apply to you, so do your homework.
Out-of-state general contractors, in particular, can include in their subcontracts some very strange provisions which do not apply in California, so it’s a good idea to have these reviewed by a professional before you sign. In some cases, you might request that the prime contractor delete those clauses before you sign, while in other cases, you may just need to be aware of what the clauses mean and if and how they apply to you.
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