Subcontracting

The reference texts on this subject are the law of 31/12/75 (immediate measures for economic and financial reform) modified by the law of 11/12/2001 called "MURCEF law" and Articles 112 to 117 of the CMP.

Sub-contracting involves a triangular relationship where:

  the main contract is awarded by the government to the contractor. This must be a contract for work to be undertaken, in other words the services must be described in specifications drafted by the administration, and be subject to an individual production programme specific to the contract,
  a sub-contract is a contract between the contractor and the sub-contractor, and must also be for work to be undertaken.

Sub-contracting enhances quality, by using companies that are more efficient in certain fields, and it is a means whereby SME can participate in government contracts.

The contractor may not under any circumstances sub-contract his entire contract.

In contrast to a consortium arrangement, sub-contracting does not establish a contractual link between the administration and the sub-contractor. The sub-contractor does not sign the main contract.

The contractor is therefore solely responsible to the public authority for the contract, including those parts that are sub-contracted. In return, the contractor charges expenses on the value of the services sub-contracted.

The contractor has an obligation to declare its sub-contractors, and have them accepted by the public authority, and to have their payment terms approved prior to or during execution of the contract (by special instrument).

When the amount sub-contracted 600 € or more, the subcontractor who has been accepted and whose payment conditions have been approved by the PRM is paid directly for that part of the contract he performs. However, for industrial contracts awarded by an authority coming under the Ministry of Defence, i.e. notably contracts for building prototypes, manufacture, assembly, testing, routine repairs or upkeep, and intellectual services, the subcontractor is paid directly only if the amount subcontracted is 10% or more of the total contract value.

Sub-contractors who are not entitled to direct payment may resort to the direct action procedure. After serving formal notice on the contractor, and if the latter fails to meet his obligations, the sub-contractor may submit a request for payment to the public authority.

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