Navigating Contract Negotiations: Tools and Guidance for Challenging Conditions

By Courtney Little

For more than 50 years, the American Subcontractors Association (ASA) has provided tools to help its members use best practices and protect their interests during subcontract
negotiations. This also helps assure a successful construction project. One of ASA’s most valuable tools is the ASA Subcontract Documents Suite.

Negotiating Help

Many members, including contract glaziers, use this suite as a source for solving common and not-so-common negotiating challenges. For example, these documents offer a solution for members who are concerned about the uncertainty of construction material
prices. The Subcontractor Bid Proposal, one of the documents included in the
suite, limits the validity of a bid to 30 days. In addition, paragraph three of the Subcontractor Bid Proposal establishes grounds for an equitable price adjustment if the cost of materials increases by more than 5 percent. Specifically, it states: “A change in the price of an item of material of more than 5% between the date of this bid proposal and the date of installation shall warrant an equitable adjustment in the subcontract price.”

This two-page document can help contract glaziers define scope of work, price and conditions of bids. The document also makes bid scope and price contingent on the customer’s acceptance of the terms and conditions of (1) the bid proposal and (2) the ConsensusDocs Form 750, Standard Form of Agreement Between Contractor and
Subcontractor. That way, the glazier has an industry-leading, best practice subcontract agreement, rather than a draconian document developed by a third party that is trying to push the project risk to the subcontractor.

If a customer accepts a bid proposal conditioned on the glazier’s terms and conditions, the glazier then has leverage to negotiate a more acceptable final subcontract agreement. This is because the customer already has accepted the offer. The glazier can give its customer
the choice to abide by the conditions enumerated in the bid proposal or negotiate other terms and conditions.

When a contract glazier submits an ASA Subcontractor Bid Proposal with its bid, it becomes an offer to the prime contractor. It’s up to the prime contractor to determine if it wants to accept the subcontractor’s offer to contract. By submitting the form, no subcontract has been formed. If the prime contractor objects, or tenders a proprietary
subcontract with different terms, the contract glazier has received a counter-offer. However, if the prime contractor directs the sub to begin work, the bid proposal governs the subcontract.

A contract glazier can modify this bid proposal document so that it reflects its own unique business practices. Modifications will vary among trades and geographic areas, but, the more a subcontractor specifies its scope of work, the stronger its contract becomes.

The ASA Subcontract Documents Suite also includes a Subcontract Addendum, which includes language that may help the contract glazier address volatility in prices for
construction materials.

Alternately, if a prime contractor sends a proprietary subcontract to the glazier with unacceptable price escalation language, the glazier may want to return the document with
a markup or its own addendum that includes fairer terms. For example, as above, Paragraph 2 of the ASA Subcontract Addendum states: “A change in the price of an item of material of more than 5% between the date of subcontractor’s bid proposal and the date of installation shall warrant an equitable adjustment in the subcontract price.

The contract glazier can attach an addendum to the contract where the contractor has not included the glazier’s bid proposal, where the scope of work has changed, or where the glazier conditioned its bid on mutually-agreeable terms. My experience has been that providing industry recognized alternative contract language is much more palatable than
just marking out disagreeable language.

Resources For You

The ASA Subcontract Documents Suite is just one of the many free negotiating tools
available to members. Other resources include ASA’s Subcontractor Negotiating Tip
Sheets, white papers, videos-on-demand on key subcontract terms, and frequently
asked questions on the most problematic terms. These tools are located in the members-only section of the ASA website at www.asaonline.com. As always, we have to strive to be good business operators and not just good at our trade. These tools can help you do just that.

Courtney Little is president of ACE Glass Construction in Little Rock, Ark., and serves as the 2018-19 president of the American Subcontractors Association (ASA).

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