McAlpine subcontract is ‘one-sided disgrace’

Alfred McAlpine Special Projects' subcontract form is a disgrace, according to the Specialist Engi-neering Contractors' (SEC) Group.

The Amendments to the Dom 1 Standard Terms of Subcontract lists a whole host of "one-sided changes" that put responsibilities and risk firmly in the subcontractor's lap.

SEC Group is so shocked by the document that its chief executive Rudi Klein has taken a copy of the contract to use as an example of traditional adversarial methods to show the review group looking at changes to the Construction Act (see page 6).

Some of the offending clauses picked up by Klein include:

- Clause 40.2, which states that although suppliers are expected to deliver on time, payment of monies to the subcontractor under the terms of this subcontract "may in fact be delayed".

- Clause 40.4 points out that the interest rate payable to the subcontractor shall be no more than 2% per year, rather than the 8% above base as required by law.

- Clause 38.1 outlines that adjudication will be undertaken in accordance with Alfred McAlpine Special Projects' adjudication rules. These conditions state that a subcontractor must pay all of the main contractor's costs. However, if the main contractor is the referring party both sides pay their own costs.

- Clause 21.2.3 reveals changes to payment dates to subcontractors from 17 days to 35 days.

- Clause 4.14.1 calls on subcontractors to provide a ream of documents to the main contractor to prove their financial health.

- Clause 4.8.6 states that the subcontractor shall provide protection and security for the subcontract works at all times including Sundays and bank holidays when workmen are not on site.

"This is as adversarial as these contracts get," Klein said. "It is extraordinary that Alfred McAlpine admits that payment to subcontractors will be late. It is also against the law for the main contractor to offer only a 2% interest rate."

He added: "The delay in payment seems to show a 65-day pay cycle for subcontractors, which is a disgrace, and the demand for so many documents from subbies is unacceptable and probably illegal.

"The fact that the subcontractor has to be responsible for security on site just about sums it up. We have to ask what the main contractor actually does on site if you sign up to this agreement," Klein said.

Alfred McAlpine was unable to comment as CJ went to press.