I've given deposits simply to hold my place on the calendar for a very busy contractor.Ask if you can give a lower deposit to hold the spot on the calendar and have them connect you with their materials supplier so you can pay for the materials instead of them.

Maybe think about taking contractor #1 to court.Did you get (legal under local law) lien releases from both contractors and their subs and suppliers before releasing partial finish draw pay?

You could offer the tenant some kick back for using that supplier that nets out that costs you less than not having the service plan but gives them some incentive.BTW I would do it as a kickback to ensure they actually use the provider.

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"Cost" is never gonna be "price" for any subs, suppliers, or other pros.

Usually more  important though is Final releases from suppliers/subs. 

Most require some form of Proper Notice from subs and suppliers before they have the right to file a lien.  

While lien rights are important for the protection of contractors, subs and suppliers......No one should ever cave in to the extortion tactics of a scumbag contractor, not saying that is necessarily the case here.

I assume there is some prerequisite to a sub or supplier (a party not in direct contract with the owner) before they can file a lien.  

8.Obtain appropriate lien releases from the contractor, subcontractors and material suppliers, before issuing payment to the contractor.