What does subcontractor mean?
A subcontractor (Nachunternehmer, also called Subunternehmer) is a company that the main contractor (general contractor) hires to carry out certain parts of a public contract. The subcontractor has no direct contractual relationship with the contracting authority, only with the main contractor. Still, using subcontractors is highly relevant under procurement law.
In the procurement procedure, bidders usually have to state which parts of the work they plan to pass on to subcontractors. The contracting authority can require that the planned subcontractors are already named in the bid and that their suitability is proven. This serves transparency and lets the contracting authority assess the capability of the whole bidding team.
Using subcontractors must be distinguished from reliance on the capacities of other entities (Eignungsleihe), where a bidder draws on the capacities of another company to meet certain suitability criteria. With simple subcontracting, the bidder itself must have the required suitability. With reliance on other entities, the lending company can make up for the missing suitability. In both cases, however, it must be ensured that the third company's capacities are actually available to the bidder.
Relevance for bidders
Using subcontractors strategically lets bidders take on contracts that go beyond their own range of services. Especially on complex projects with several trades, subcontracting is common practice. Bidders should make sure that their subcontractors are reliable and capable, because the main contractor remains responsible to the contracting authority for proper performance.
When you submit a bid, take particular care to list all subcontracted work in full. Missing or incomplete information can lead to the bid being excluded. Likewise, the required proof of suitability for subcontractors must be obtained and submitted in time.
Legal framework
The use of subcontractors is governed by Section 36 VgV (Public Procurement Ordinance). Reliance on the capacities of other entities is based on Section 47 VgV. For construction work, Section 6a(1) VOB/A governs the information on subcontractors. Under Section 36(5) VgV, the contracting authority can require that a subcontractor who does not meet the suitability requirements or for whom grounds for exclusion apply is replaced. EU Procurement Directive 2014/24/EU governs subcontracting in Article 71.