Contractor Agreements for Airports: 10 Critical Factors

All airports should draft and execute the best contractor agreements for airports to protect against failed partnerships.

Independent contractors are critical for specific airport projects, as their specialized skills and experience complement the existing workforce at a lower cost than hiring more full-time employees.

However, before hiring any third-party company, legal teams should draft, vet, and execute the proper contractor agreements for airports to guarantee that both parties are clear about the job that will be done and protect the airport from liability if the partnership fails.

This article discusses ten steps every airport should take when drafting contractor agreements.

Contractor Agreements for Airports: 10 Necessary Steps

1. Contractor Agreement Should Define the Independent Contractor Relationship

This contract clause declares that the worker is an independent contractor, not an employee. As a result, the contractor does not receive any protections provided by law for airport personnel, including the following:

Liability insurance. Depending on the contractor’s specific services, the airport should require them to provide proof of liability insurance. This insurance must cover the costs of injury on the worksite, as the airport should not be responsible for compensation (discussed in more detail in part 3).

Health insurance. The airport should never be responsible for covering the health-related costs of the contract worker.

Taxes. This part of the contractor agreement should clarify that the worker is responsible for paying their taxes and that no taxes will be withheld from their salary by the airport, as they would be for a full-time employee.

2. List (and verify) the Correct Contact Information

This step might seem obvious to some, but listing incorrect or incomplete contact information is not unheard of in contractor agreements.

As such, airports should verify that the contracts include the following:

  • Name
  • Phone number
  • Email address
  • Physical address

Unfortunately, disagreements can sometimes escalate into legal disputes, and airport counsel will require the contractor’s physical address – not a P.O. Box, for example – to serve a subpoena.

3. Contractor Agreements Should List the Insurance Requirements

When requesting proof of liability insurance (as mentioned in part 1), agreements must require that contractors supply the following detailed information:

  • Account number
  • License number
  • Coverage details
  • Insurance provider contact information

Furthermore, the contract should require all third-party workers to comply with all applicable state and federal licensing requirements.

4. Include a Project Description

The airport and contractor must agree on the overall plan and the specific stages when detailing the extent of repair or construction.

Also, the contractor agreement should cover the specifics of the materials used, including the following:

  • The producer and brand name
  • The color and style of the materials
  • Material characteristics
  • The necessary quantity

5. Define the Project Schedule

The airport and contractor must also agree on a realistic timetable to define the project schedule. The critical factors to consider will include the following:

  • The project start date
  • The available daily hours (may vary based on air traffic, particularly for runway work)
  • The estimated project end date assuming those open hours

Contractors frequently work on multiple projects at once, which can cause difficulties and delays without an agreed-upon schedule to which the contractor must adhere.

6. Define the Payment Schedule

The payment schedule may vary depending on what is mutually acceptable to the airport and contractor. Some contractors require a percentage of the total sum up-front; others may space the sum in payments throughout the project at predetermined periods.

Whatever timetable the parties decide on, the airport should ensure it is detailed completely, from the first to the last payment.

7. Outline the Use of Airport Facilities

Depending on the project, the airport might elect to restrict the use of its facilities, such as terminal bathrooms. As such, the contractor agreement should specify permitted activities in and around the building, particularly those that result in frequent interactions with travelers.

8. Determine the Governing Laws During a Dispute

The airport must also decide how to resolve disagreements over the contract or the labor, including which laws will govern. Typically, the airport’s location will determine the applicable state law.

9. Clarify the Grounds for Termination

Should a dispute result in the need to stop the project, the contractor agreement should include specifics clauses regarding termination, such as the following:

  • Who has the authority to terminate the contract
  • On what grounds is termination viable
  • The advance notice required to terminate
  • The necessary form of communication

The airport must ensure that the grounds for termination are transparent to protect against being forced to accept poor repair and construction work or an unlawful termination suit.

10. Secure the Appropriate Signatures for the Contractor Agreement

Last but not least is obtaining the necessary signatures. Both parties must sign the contract before it is legally binding. Ensure that the form bears the dated signatures of the appropriate airport personnel and contractor.

Ensuring Contractor Compliance Requires the Proper Technology

Contractor agreements for airports are more easily interpretable if you follow the abovementioned guidelines. Setting expectations and laying down terms in the most understandable manner possible will facilitate a successful and productive business relationship.

However, fully exercising the agreement requires monitoring the contractor’s compliance with insurance and related regulations. And ensuring this compliance requires investing in the industry’s premier risk management technology for managing and updating contractor information.

Total supply chain risk management starts here

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