Subcontracting in Public Procurement — Rules and Risks

Subcontractors are indispensable in many public contracts — from specialised installers in construction to IT consultants in digital projects. But subcontracting is also one of the most underestimated risk factors. A subcontractor who falls under an exclusion ground, fails to deliver, or is replaced without approval can jeopardise the entire contract.

What is subcontracting in public procurement?

Subcontracting is the arrangement whereby the main contractor has part of the contract performed by a third party — the subcontractor — under its own contractual responsibility towards the contracting authority. The subcontractor has no direct contractual link with the authority; it contracts with the main contractor.

Three defining characteristics:

• Vertical relationship. The main contractor wins the contract, the subcontractor performs on its behalf.
• No direct link with the contracting authority. The subcontractor is not a party to the main contract.
• Full liability stays with the main contractor. Failures by the subcontractor are contractually attributed to the main contractor.

The legal basis lies in Article 12 of the Royal Decree on Award of 18 April 2017 and Articles 12-12/3 of the Royal Decree on Execution (AUR) of 14 January 2013, for the execution phase. At European level: Article 71 of Directive 2014/24/EU.

Subcontracting, reliance on third parties, or temporary association — not the same

A common point of confusion. The three structures each have their own legal regime:

The distinction has substantial consequences: in subcontracting, the main contractor remains solely liable; in a temporary association, everyone is jointly and severally liable; in reliance on third parties, the third party is only liable for what it committed to in the selection. Choose the right structure already at the tender stage — correcting it during execution is difficult and rarely possible without a formal modification procedure.

→ Deeper explanation: Reliance on third parties and consortia.

The basic rule: freedom with disclosure obligation

European and Belgian law do not in principle restrict the use of subcontracting. A tenderer may subcontract the entire work or part of it, unless the specifications explicitly restrict or prohibit this for certain core tasks.

What the law does require is transparency. The tenderer must indicate in the tender which part of the contract it intends to subcontract and who the intended subcontractors are, insofar as they are known at that time.

When must you declare subcontractors?

For contracts above the European threshold, the tenderer is required to indicate in the ESPD whether it will use subcontractors. If the authority requests it in the specifications, the tenderer must also disclose the identity of the proposed subcontractors.

The authority may also require in the specifications that the tenderer states what percentage of the contract will be subcontracted, and for which specific tasks.

Exclusion checks on subcontractors

An important aspect: the authority may (and in certain cases must) check whether the proposed subcontractors fall under a mandatory exclusion ground. Belgian law allows the authority to require the replacement of a subcontractor in an exclusion situation.

In practice, this means the authority may request:

• a criminal record extract from the subcontractor,
• a social security certificate,
• a tax certificate,
• or a declaration that the subcontractor is not in a state of bankruptcy.

The tenderer is therefore well advised to collect these documents in advance — even if the check is not standard for every contract.

Chain liability

The main contractor remains fully liable to the authority at all times for the execution of the contract, including the work of its subcontractors. The fact that a shortcoming was caused by a subcontractor does not release the main contractor from its responsibility.

Direct payment to subcontractors

The Royal Decree on Execution provides for the possibility of direct payment by the authority to the subcontractor, when the main contractor fails to meet its payment obligations. This mechanism protects subcontractors against non-payment by the main contractor.

Joint and several liability for social security and tax debts

An overlooked but heavy risk for the main contractor is the joint and several liability for wage, social security and tax debts of its subcontractors. The legal basis:

• Article 30bis of the Act of 27 June 1969 (NSSO Act) — joint and several liability for social security contributions.
• Article 30ter of the Act of 27 June 1969 — joint and several liability for wage debts.
• Articles 402-403 of the Income Tax Code 1992 — joint and several liability for tax debts owed to the tax authority.

In practice this means: when you engage a subcontractor that, at the time of the works, has social security or tax debts, you as main contractor can be held liable for (part of) those debts — sometimes up to 35% of the invoice amount.

How do you protect yourself?

1. Check Telemarc before each payment. The Telemarc platform shows whether the subcontractor has NSSO or tax debts. A Telemarc check is free and legally recognised.
2. Apply withholdings. If the subcontractor has debts, a withholding of 35% (social) and/or 15% (tax) is mandatory, to be paid directly to NSSO/tax authority.
3. Use registered enquiries. When in doubt about the fiscal or social position of a subcontractor, request an attestation by registered post. The absence of a reply does not automatically protect you — active verification remains your responsibility.

SME protection — Act of 22 December 2023

The Act of 22 December 2023 (in force from 1 September 2024) has further strengthened the position of subcontractors (especially SMEs):

• Mandatory advance — for contracts above €30,000 performed by an SME, an advance of 5-20% of the contract amount can be made mandatory in the specifications.
• Payment chain transparency — the contracting authority can verify whether the main contractor pays its subcontractors on time.
• Limit on payment terms — subcontractors must be paid within 30 days, in parallel with the rules for the main chain.

For main contractors: adjust cash flow planning, and include explicit payment terms in subcontracting agreements that comply with these rules.

Changing subcontractors during execution

Replacing a subcontractor during execution is not without risk. The authority may require that any change of subcontractor — particularly if that subcontractor brings specific capabilities for which it was proposed in the tender — be approved in advance.

If the original subcontractor was considered an essential element of the tender (for example because its references contributed to the selection), a replacement may be refused if the new subcontractor does not possess equivalent qualifications.

Procedure for changes

1. The contractor notifies the authority in writing of the intended change.
2. The authority checks whether the new subcontractor meets the selection criteria and does not fall under an exclusion ground.
3. The authority approves or refuses the change with reasons.

Specific rules for construction

Additional rules apply in the Belgian construction sector. Subcontractors performing works requiring contractor qualification must themselves hold the appropriate qualification (correct category and class). The main contractor cannot “lend” its qualification to an unqualified subcontractor.

Regarding social legislation, the chain of subcontracting is particularly relevant: the main contractor can be held jointly liable for wage and social security debts of its subcontractors. The Belgian Act on chain liability (Chapter IV/1 of the Social Security Act) applies here.

Contractual clauses

Experienced contractors include specific clauses in their subcontracting agreements:

Back-to-back clauses. The obligations from the main contract are mirrored to the subcontractor: the same quality requirements, the same penalty clauses, the same deadlines.

Exclusion declaration. The subcontractor declares that it does not fall under an exclusion ground and undertakes to inform the contractor immediately if that changes.

Replacement clause. The contract provides for the possibility of replacing the subcontractor if it underperforms, with a reasonable transition period.

Confidentiality and IP. The subcontractor respects the confidentiality obligations from the main contract and transfers relevant IP rights.

Sources

• Act of 17 June 2016, Articles 12/1-12/3 — Belgian Official Gazette
• Directive 2014/24/EU, Article 71 — EUR-Lex
• Royal Decree of 14 January 2013 — AUR — BOSA