You have decided to award a $500,000 subcontract to a carpet firm that you have not worked with before. You planned to require performance and payment bonds, but decided not to when you learned that the firm's bond rate was 4% of contract value. The subcontractor has submitted several change order proposals for both changes of scope dictated by the architect and the owner and others for discrepancies in the contract documentation. Most of these change order proposals are pending for one reason or another. The quality of the firm's work is good, and the work is on schedule. You have recently received multiple mechanics' lien notices from the carpet subcontractor's suppliers. The subcontractor has indicated that they are solvent and does not have any problems. You have just discovered that the chief executive officer of the firm has left. You have made a few calls and have caught wind that the company may be going bankrupt.

A. What do you (GC) do?

B. What contractual recourse do you (GC) have?

C. Will their (Subcontractor) suppliers come after you for payment?

D. Can they? Give explanation.

E. What adjustments to the system can you recommend to prevent this situation from happening in the future?