By Bruce Jervis
Project owners have legitimate concerns regarding the subcontractors utilized by their contractors. Quality of work is an obvious concern. Issues of job site safety and security also arise. Public project owners have limited control over their contractors’ choice of subs. Private owners have broader discretion, but this authority is not foolproof.
On a private construction project in Ohio, the project owner learned that its prime contractor had awarded a subcontract to a company owned by an individual with a grudge against the owner. The individual had threatened an employee of the owner and was engaged in ongoing litigation against the owner. When the project owner directed the contractor to replace the subcontractor, the sub sued the owner for tortious interference with contract.
Private project owners are entitled to retain, under the terms of the prime contract, the right to approve in advance all subcontracts. Owners are sometimes reluctant, however, to include this contract language. The implicit control over subcontractors carries with it potential responsibility and liability. Should owners exercise this control or is it better to leave subcontracting to the discretion of the prime contractor? Your comments are welcomed.