Clause and Effect: Use of Outside Contractors

Clause and Effect: Use of Outside Contractors

Tyra W. Hilliard

Byline: Tyra W. Hilliard, Esq.

CLAUSE: Group will not be required to use Facility’s in-house, exclusive, or preferred contractors or vendors for services such as audiovisual, security, exhibition services, and similar types of goods and services. If Group brings in outside contractors, Group will not be required to pay surcharges for use of outside contractors, nor will Group be required to pay Facility’s employees or agents to supervise outside contractors. Group agrees that this provision does not include services provided by unions with current agreements with Facility.

EFFECT Many hotels and convention centers have agreements with contractors that grant them preferred or exclusive rights to provide particular goods or services. Exclusive agreements are common for catered food and beverage, concessions, audiovisual equipment, and cleaning services, and may cover services such as security, floral, decoration, and drayage.

Exclusive or preferred vendor agreements can be good for the facility because management can work with known vendors and provide training and information on unique aspects of the building.

Facilities may also receive extra compensation from exclusive or preferred vendors in the form of a paid lease (for in-house contractors) or a percentage of sales. Meeting planners may choose to use a facility’s exclusive or preferred vendor because of the vendor’s familiarity with the facility or ease of communication – the vendor often has an office in the facility.

On the other hand, some planners feel that being required to use these vendors drives up the cost of services and increases the risk of poor service because of the lack of competition. A clause such as the one above preserves planners’ right to shop around for the best price and service. This clause can be customized to exclude facility services restricted or reserved by union or other contracts.

Tyra W. Hilliard, CMP ( ) is a meeting industry lawyer and assistant professor of event and meeting management at The George Washington University in Washington, D.C.

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