When a sub has to sign... or not

Signing Subcontracts on Public Works Jobs: You HAVE to sign… unless you don't.

Generally, subcontractors who submit a bid to a higher-tier contractor (we’ll assume it’s the prime in this case) on a public works job are making a positive affirmation that they are in it for the long haul. In other words, the very act of submitting a bid is basically the same as saying “You getta the contract, I signa the subcontract." (fn 1)

The Subletting and Subcontracting Fair Practices Act (Cal.Pub. Contract Code § 4100 et seq., (fn 2) aka the “Listing Law”) says a number of things. I know, surprise, the law says stuff. But specifically to our purposes, it says that bidders on public works jobs have to list their proposed subs.

So, in our example, you’ve submitted your bid. And then the prime turns around and sends you its “form” subcontract. Which bears as much resemblance to your bid as I do to a supermodel (hint: not much). So what do you do? Do you have to sign the subcontract under the general “signa the contract” rule that we talked about in the first paragraph?

As a general rule, since you “no signa the subcontract,” the prime can request that you be replaced by another sub, and generally the public agency will grant that request, because failure/refusal to sign the subcontract is specifically listed in the Listing Law as a reason for substituting out a sub. If the replacement sub is more expensive than your bid was (and the chances of that are about 110,000% on the yes side), then the prime can turn around and sue you for the difference.

Sound unfair?

Then you’re in the wrong business, bub.

Luckily, however, Cal. Pub. Contract Code § 4107[a][1] provides a possible way out of this situation. It says that the subcontractor can be replaced only if the written subcontract is “based upon the general terms, conditions, plans and specifications for the project involved or the terms of that subcontractor’s written bid…” [emphasis added].

So what’s the upshot? The upshot is, if at all possible, be familiar with the requirements of your scope of work under the prime contract bid documents. That way, if your bid conforms to those requirements, and then the prime tries to get you to sign a contract that has egregiously different terms and threatens to “boota you fanny” off the project if you don’t sign, you will have a much greater chance of either a) calling its bluff and staying on the job or b) suing the crud out of that contractor and recovering your lost profits.

Again, this is all an awareness and preparedness thing (as so much in life is). Know what you’re getting into. Know what the bid docs say (if at all possible). And know that if the prime sends you a subcontract requiring you to carve its name in the moon for all to see as part of your scope of work “or else…” well, you may not have to sign it.

Hope you’ve learned something. If not, it’s notta my fault. Must be a language barrier. Tune in next time, maybe we’ll talk more about substitution issues. Maybe not. I like to keep it mysterious.

(fn 1) I don’t know what that accent is, so please don’t accuse me of racial or ethnic insensitivity. Let’s all just chalk it up to a typo and then everyone’s happy. Except me, because you think I can’t spell. How dare you!

(fn 2) Et seq. means “and the ones following that one.” Why speak in Latin? Because pig-Latin, as we all know, is a ridiculous language, and therefore only used in argument before Congress.