Subcontracting

Definition

Subcontracting is the assignment by the contractor of part of the performance of the contract to a third economic operator, the subcontractor, under a contract between the two. It is governed by article 131 of Law 4412/2016. It differs from reliance on the capacities of a third party, where the third party lends its experience or financial standing to meet the selection criteria, and from a group of economic operators, where the companies submit a joint bid and are jointly and severally liable.

What is declared in the bid

The contracting authority may require the bidder to indicate in its bid the share of the contract it intends to subcontract and the proposed subcontractors. In practice almost all tender documents require it, through the relevant field of the ESPD. A subcontractor not declared cannot be used without the authority's approval, and a change of subcontractor during performance requires notification and approval.

Checking the subcontractor

When the share subcontracted exceeds 30% of the total value of the contract, the authority verifies that no exclusion grounds apply to the subcontractor, asking the bidder to prove it. If mandatory exclusion grounds apply, the authority requires the subcontractor to be replaced. For smaller shares the check is optional. A separate ESPD for the subcontractor is required when the tender documents so provide, as explained in the guide on the ESPD.

Liability

The contractor remains fully liable to the contracting authority for the performance of the whole contract, regardless of subcontracting. Delay or defective performance by the subcontractor brings penalties and forfeiture of the guarantee for the contractor, who then turns against the subcontractor under their own contract. The authority has no contractual relationship with the subcontractor.

Direct payment of the subcontractor

The tender documents may provide that, at the subcontractor's request and where the nature of the contract allows, the authority pays it directly for the part it performed, deducting the amount from the contractor's payment. The contractor may object to unjustified payments. The rule protects small subcontractors from the contractor's delays, but applies only if the tender documents provide for it.

In public works

In works subcontracting is regulated more strictly: approval by the supervising service is required, the subcontractor must be registered in ΜΗΕΕΔΕ in the appropriate class for the part it takes on, and the share that may be subcontracted without amounting to a de facto transfer of the works is limited.