News Release
Contacts: Brian Pallasch (703) 684-3450, ext. 333
FOR IMMEDIATE RELEASE

ASA Addendum Neutralizes Pay-If-Paid Clause in New AGC Subcontract

ALEXANDRIA, Va.-Construction subcontractors facing the prospect of not being paid because they are asked to sign the Associated General Contractors of America's (AGC) recently issued Form 655, which contains a pay-if-paid clause, now have ammunition to fight back.

The American Subcontractors Association Inc. (ASA) published the Addendum to Standard Form of Agreement Between Contractor and Subcontractor AGC 650/655. Subcontractors can refer to the addendum in contract negotiations on AGC Form 650 and Form 655, which were formally approved by AGC's board of directors on Sept. 27, 1998.

ASA's addendum negates provisions in AGC's forms that ASA's leaders have warned are "perilous for subcontractors."

"The addendum has been designed to protect subcontractors from the one-sided provisions in the AGC 650 and 655," explained Donald Gregory, chairman of the ASA Task Force on AGC Contracts, and a member of the law firm of Kegler, Hill, Brown and Ritter in Columbus, Ohio. "Subs should seriously consider using the ASA addendum in their contract negotiations. More importantly, they should consider conditioning their bids on the use of the addendum."

AGC's board of directors approved AGC Form 650 and Form 655 despite concerns expressed by members of ASA and other industry groups.

ASA President Maynard Hulm, president, Hulm Construction Co., Parker, Colo., said other model subcontracts include terms "more acceptable to all members of the construction team." Hulm cited the American Institute of Architects' (AIA) A401 Standard Form of Agreement Between Contractor and Subcontractor as an example. ASA endorses the AIA A401 but does not endorse either of AGC's new model subcontracts.

As AGC developed the AGC 650/655 over the course of 1998, ASA provided subcontractors with up-to-date negotiation tools to help them protect themselves from onerous contract provisions.

In January 1998, AGC announced that it was withdrawing its endorsement of the Standard Form Construction Subcontract, a model subcontract jointly developed and endorsed by ASA and the Associated Specialty Contractors (ASC). AGC also announced it would unilaterally develop and publish a model subcontract containing a pay-if-paid clause, a provision absent from the jointly crafted subcontract.

After AGC distributed "interim" versions of the forms (AGC Forms 650i and 655i) in spring 1998, ASA's task force developed an "interim" addendum that negated potentially harmful provisions in these earlier forms.

Members of ASA will receive copies of ASA's new addendum in the mail. In addition, copies may be ordered by calling ASA Director of Government Relations Brian Pallasch at (703) 684-3450, ext. 333.

ASA is the only national trade association representing both union and non-union construction subcontractors. Founded in 1966, ASA serves more than 6,500 member companies through a nationwide network of local and state chapters. These subcontractors work together to protect their rights as an integral part of the construction team.