Question from a reader:
I have been asked to submit a breakdown of the contracts between the second and third-tier subcontractors as part of the construction management ledger by the general contractor after entering the site as a second-tier subcontractor for a public works project. Is it acceptable to refuse this request? I will submit the order form and acceptance letter
that specify the amounts, but I have been asked to provide estimates to confirm the statutory welfare costs of the lower-tier contractors. Since I usually work as a general contractor, I have never faced such a request before. Previously, an inspector for public works advised me to refuse anything that lacks legal grounds. An explanation of the basis is also necessary. What should I do?

Request for Submission of Contract Breakdown for Second-Tier Subcontractors in Public Works

Hello to everyone involved in public works. Today, I will discuss a real question regarding the situation where “I have entered the site as a second-tier subcontractor for a public works project, but I have been asked by the general contractor to submit a breakdown of the contracts between the second and third-tier subcontractors as part of the construction management ledger.” Many of you may have faced similar situations while working in public works.

Background of the Issue

First, the questioner usually works as a general contractor. It is common for a very important document called the construction management ledger to be required at public works sites, but the request to submit a breakdown of the contracts between second and third-tier subcontractors may be a bit excessive. Public works involve many stakeholders, so ensuring transparency is particularly emphasized. However, what to submit and to what extent depends on legal grounds and the content of the contracts. Understanding the law is crucial as we proceed with our work.

What is the Legal Basis?

Now, regarding the legal basis, the “Law on the Properization of Bidding and Contracts for Public Works” serves as the foundation in public works. This law states that the general contractor is responsible for appropriately selecting subcontractors and ensuring the quality of the work, so it can be said that the general contractor’s request for information from subcontractors is part of legitimate business operations. However, as the questioner pointed out, the request to “provide estimates to confirm the statutory welfare costs of lower-tier contractors” raises the question of whether this demand is legally justified. In particular, if the general contractor’s reason for requesting the breakdown of the second-tier subcontractor’s contract is limited to confirming statutory welfare costs, it raises doubts about the actual necessity of this request.

Do I Have the Right to Refuse?

This leads to the question: Can I refuse? In short, yes, you have the right to refuse. However, there are several points to keep in mind when doing so. First, check whether you are obligated to provide estimates based on your company’s contract terms and business flow. Typically, second-tier subcontractors have contracts with the general contractor. The extent of the information to be provided should be specified in that contract. Next, review the content stated in the contract or terms and conditions to confirm whether the request from the general contractor is indeed a contractual obligation. If there is no legal basis or if the basis is weak, it is important to clearly explain this point to the general contractor.

Practical Handling Methods

When I faced such a situation, I made it a point to calmly discuss the matter with the general contractor. For example, I asked straightforward questions like, “How will submitting this contract breakdown affect our operations?” and “Why is this information necessary for confirming statutory welfare costs?” As a result, if the general contractor provides an explanation and there is a convincing reason, it is also important to show a willingness to cooperate. Conversely, if you find the request unacceptable, it is crucial to firmly communicate that “this is not a contractual obligation.” Additionally, if legal support is needed, consulting with an expert can be a good option. I have consulted with law firms a few times and received specific advice.

Conclusion

A solid understanding of contracts and legal requirements in public works is essential. Especially as a second-tier subcontractor, it is important to demonstrate a resolute attitude toward requests from the general contractor and to verify the legal basis. Ultimately, it is ideal to build a cooperative relationship while protecting your company’s interests. I encourage everyone to use this case as a reference in your actual work. Remember, you have colleagues you can consult with whenever you have questions! Well then, good luck with your work!