FAQs: C199™-2010, Standard Form of Agreement Between Single Purpose Entity and Contractor for Integrated Project Delivery

Does the AIA publish an agreement for use between the Single Purpose Entity formed in AIA Document C195™–2008 and a non-member contractor?

Yes, document C199–2010 is an agreement between the Single Purpose Entity (“SPE”) and a non-member contractor to the SPE. C199–2010 is intended to be used by contractors providing constructing the project under contract with the SPE. The C199-2010 can be used for a single prime contractor or multiple trade contractors. All non-member contractors enter into separate C199–2010 agreements with the SPE. The C199–2010 provides the terms and conditions under which the non-member contractor will provide construction services to the SPE for the completion of the project.

 

What is Contractor Goal Achievement Compensation under C199–2010?

Contractor Goal Achievement Compensation is a profit payment from the SPE that the non-member contractor may be entitled to receive if certain Contractor Project Goals are met. The SPE and the Contractor establish certain Project Goals in Exhibit C to C199–2010. The Contractor Project Goals may relate to goals the SPE establishes in the Target Cost Amendment of C195–2008 or they may relate solely to the Contractor’s portion of the project. If a Contractor Project Goal is achieved, the non-member receives the amount available for achievement of the goal as Contractor Goal Achievement Compensation.  Contractor Goal Achievement Compensation is payable upon achievement of a goal. If the Actual Cost exceeds the Target Cost, the non-member contractor can still retain Contractor Goal Achievement Compensation for any goals previously paid.

 

What is Contractor Incentive Compensation under C199–2010?

Contractor Incentive Compensation is a profit payment from the SPE that the non-member contractor may be entitled to under C199–2010. If the Actual Cost of the project is less than the Target Cost, as those amounts are determined in C195–2008, the non-member contractor is entitled to a portion of the savings as Contractor Incentive Compensation. The SPE and non-member contractor will establish the portion of any savings the non-owner member is entitled to in C199–2010. Any Contractor Incentive Compensation the non-owner member is entitled to receive becomes payable upon final reconciliation of the project accounting. If the Actual Cost of the project is equal to or greater than the Target Cost, there are no savings from which Contractor Incentive Compensation can be paid.

 

Does C199–2010 require the contractor to obtain insurance?

C199–2010 requires the contractor to purchase and maintain insurance in the types and amounts of insurance set forth in the agreement, including Exhibit A, Terms and Conditions. If the SPE institutes a Company-Controlled Insurance Program (CCIP), the contractor is required to obtain any insurance the CCIP requires.

 

What services are required of the contractor in C199–2010?

C199–2010 is intended to be a flexible document that can be used for both a contractor providing pre-construction and construction services or a contractor only providing construction services. If the contractor will provide preconstruction services, C199–2010 initially requires the contractor to collaborate with the members in the provision of the services described in C195™–2008, the Single Purpose Entity Agreement, in order to develop a Target Cost proposal that the SPE can present to the owner as they relate to the contractor’s portion of the project. Upon the owner’s acceptance of the Target Cost proposal and the SPE’s execution of the Target Cost Amendment, which includes a table in which the responsibilities for services are assigned, the contractor is required to perform those services required of it in the Target Cost Amendment as it relates to the contractor’s portion of the project. Upon commencement of construction, the contractor is required to provide the work during the Construction Phase for its portion of the project as required in the Contract Documents.

 

What is the contract sum in C199–2010?

C195–2008 requires the SPE to endeavor to enter into fixed-price contracts with its contractors.  Accordingly, the contract sum is a fixed price for C199–2010. The parties may choose between a Stipulated Sum or a Cost Plus with a GMP for the Contract Sum.

 

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