Clause 26.2 requires the Contractor to submit names of Subcontractors for approval. The Project Manager requires us to submit the names of Labour Only Suppliers as well.
The PM has accepted under the contract the Labour Only falls under people in the SOC - People (14), but he also thinks it falls under the definition of 11.2(17) definition of a Subcontractor under the bullet provide a service necessary to Provide the Works. Can it fall under both?
I believe that a labour only supplier is treated as People in the same way as an agency QS or agency site engineer where no approval is required under clause 26.
The fact that that labour only suppliers are being paid throught the subcontact ledger to comply with CIS regulations does not make them subcontractors under the contract. I also think that the SOC states that: “An amount is included only in one cost component and only if it is incurred in order to Provide the Contract Works”
Is approval required under clause 26?
The answer to this question revolves around the defintion of a Subcontractor in clause 11.2(17):
“A Subcontractor is a person or organisation who has a contract with the Contractor to
. construct or install part of the works,
. provide a service necessary to Provide the Works or
. supply Plant and Materials which the person or organisation has wholly or partly designed specifically for the works.”
The nec3 definition of a Subcontractor is all about ‘providing a service’ thus it excludes suppliers and only concerns persons or organisations that perform the three bullet points. ‘Labour only’ subcontractors are suppliers of labour, they do not set the scope of work i.e. the service, they do not manage, supervise or control the labour on the site this is done by the Main Contractor under the supervision of a foreman under the control of the Main Contractor management.
The view that ‘Labour Only’ subcontractors are not Subcontractors is stated in the NEC3 Guidance Notes page 34 Explanatory note 11.2(17), the only supplier that is considered being a Subcontractor is that highlighted in bullet point 3 and that is because as a part of their supply they are providing a service of designing. In respect of actual payment NEC3 recognises that invoiced costs may be submitted for such ‘Labour Only’ people under clause 14 of the Schedule of Cost Components.
A long way to say that the Contractor does not have to submit the names of ‘labour only’ subcontractors for acceptance (the Project Manager only ever accepts he never approves - approval is the right of the Employer or others).