Subcontractor payment

Contractor500 said:

Is it legal to deduct the cost of the laptop from the subcontractor's final payment of their invoice? Can we add this type of language to our subcontract's stating that we can take this action?

You are talking about payments to at least a second tier subcontractor from at least a first tier subcontractor.   The legality of such an action would be governed by state law.  In this regard, does the subcontract say what is the law applicable to the contract?  Based on this, I think most people on this forum cannot give you a direct answer.  I know I cannot.

Thank you Retreadfed

Contractor500 said:

I work for a small subcontractor and we had an issue with a sub that did not return government property (laptop). The company is headquartered in VA. Is it legal to deduct the cost of the laptop from the subcontractor's final payment of their invoice? Can we add this type of language to our subcontract's stating that we can take this action? Thank you.

Two questions. The first question is whether the sub's failure to return the government property was a breach of contract? The second question is whether it was theft.

Just now, Vern Edwards said:

Two questions.

I will add a third.   And, have you reported the none return to the prime who has hopefully reported to the Government.

is there a FAR government property clause in your contract with the sub?

Nothing in your facts indicate that you have any grounds to issue a unilateral change to the contract. If you issue a change about the loss of the laptop and payment, it would usually require the sub to agree. If you think they would, propose that solution to your customer and obtain its advise.

Did your company furnish the government property to the sub, or???

I would avoid the talk about "legal" and focus on contracts between the parties and what happened contractually, then re-evaluate your question.

On 3/1/2023 at 8:04 AM, Contractor500 said:

I work for a small subcontractor and we had an issue with a sub that did not return government property (laptop). The company is headquartered in VA. Is it legal to deduct the cost of the laptop from the subcontractor's final payment of their invoice? Can we add this type of language to our subcontract's stating that we can take this action? Thank you.

How are you out any money? Typically, the Government is liable for loss of Government property. Did the contract you received the GFP under make you liable for the loss?

Don Mansfield said:

Typically, the Government is liable for loss of Government property. Did the contract you received the GFP under make you liable for the loss?

Don, we don't know that the laptop was lost.  All we know is that Contractor500 said their subcontractor failed to return the laptop.  Also, note that Contractor500 works for a subcontractor.  Normally, any liability his company might have would be to the prime or higher tier subcontractor.  Also, even if there is a clause ostensibly imposing liability on his/her company, we don't know what law is applicable to interpret and apply that clause.  There simply is not enough information to respond to Contractor500's question as to whether his/her company can deduct the cost of the laptop from final payment to the subcontractor.