Subcontracting

Subcontracting is buying part of the project work from an outside supplier at a market price. It is legitimate and common (testing, certification, clinical work, specialised manufacturing, translation, audit) and it is also the item reviewers question most often.

It must be foreseen in the description of the action, with the tasks and an estimated cost. Subcontracting that appears for the first time in a cost statement invites a finding. The award must follow best value for money and avoid conflicts of interest, and a beneficiary bound by public procurement law must follow that law as well; its own rules do not replace the obligation.

The core tasks of the project cannot be subcontracted. If the work that makes your organisation's participation meaningful is bought from a supplier, the reviewers will ask why the supplier is not a partner instead, and the answer is rarely comfortable.

The flat rate for indirect costs does not apply to subcontracting. Every euro moved from your own personnel to a subcontractor loses the 25% overhead that euro would otherwise have carried, on top of the supplier's own margin. Subcontracting is convenient, but it is not cheap in this budget.

The supplier acquires no access rights to the results and owes none in return, which is exactly right for a commodity service and wrong for anything inventive. Where a subcontractor might produce protectable output, either bring them in as a partner or settle the ownership in the contract before the work starts, not after it succeeds.