Subcontracting in Public Procurement

Subcontracting is a commercially routine arrangement in which the contractor awarded a public contract passes defined portions of the work to other businesses. In European public procurement it carries regulatory weight: contracting authorities have specific disclosure, approval, and oversight powers that do not exist in purely private-sector supply chains.

What is subcontracting in public procurement?

Articles 71 and 72 of Directive 2014/24/EU and equivalent provisions in Directive 2014/25/EU (utilities) and Directive 2014/23/EU (concessions) set out the framework for subcontracting at EU level. The core principle is that the main contractor remains fully liable to the contracting authority for the entire contract, regardless of how much work it delegates downstream.

Key regulatory features include:

Disclosure. Contracting authorities may require tenderers to indicate, in their tender, which parts of the contract they intend to subcontract and to whom. Where subcontractors are not yet identified at tender stage, the authority may require the contractor to notify them before the subcontractor begins work.

Authority to verify. Before a subcontractor starts performing work, the contracting authority may verify whether that subcontractor is subject to any mandatory exclusion ground under Article 57 of the Directive (for example, a criminal conviction for fraud or corruption). If an exclusion ground applies, the authority must require the contractor to replace the subcontractor.

No approved-supplier-list requirement. EU law does not allow contracting authorities to compel contractors to use only pre-approved subcontractors, except in duly justified cases involving defence and security contracts under Directive 2009/81/EC.

UK position. The UK Procurement Act 2023 broadly mirrors these transparency obligations and extends them. Contracting authorities must publish key subcontracting information as part of contract transparency notices.

Why it matters for bidders

Understanding the subcontracting rules before you submit a tender shapes both your bid structure and your supply chain decisions. If the contracting authority intends to impose a subcontracting percentage limit, you must plan your delivery model accordingly. If it requires a subcontractor declaration, you need to collect that information from intended subcontractors before submission. Failing to comply with notification obligations after award can constitute a material breach of contract.

Subcontracting is also a route for smaller firms: a specialist subcontractor that cannot satisfy the financial thresholds to bid directly may participate in contracts through a larger prime. At the same time, the main contractor bears the delivery risk, so subcontractor selection and management are genuinely consequential.

Example

A Dutch construction company wins a large civil engineering contract for a regional authority. It subcontracts the specialist geotechnical survey work to a smaller firm. Under Article 71 of Directive 2014/24/EU, the authority requests the name of that subcontractor before survey work begins and checks whether any exclusion grounds apply. The main contractor remains the single point of accountability to the authority throughout.

Frequently Asked Questions

Can a contracting authority refuse to allow subcontracting?

In most cases, no. Contracting authorities cannot categorically prohibit subcontracting. They may impose restrictions in specific justified circumstances, for instance requiring that certain critical tasks are performed by the main contractor directly, but blanket bans are inconsistent with Directive 2014/24/EU.

Does the subcontractor have a direct legal relationship with the contracting authority?

Generally no. The contract is between the authority and the main contractor. However, some member states and the UK allow or require direct payment to subcontractors in defined circumstances, which creates a more direct financial relationship without altering the contractual structure.

Are subcontractors covered by the same exclusion rules as main contractors?

Yes, for mandatory exclusion grounds. Contracting authorities may require that subcontractors are checked against the same mandatory exclusion criteria (under Article 57 of Directive 2014/24/EU) that apply to the main tenderer.