Subcontractor

A subcontractor is a company commissioned by the main contractor of a public contract to perform a partial service. The crucial point: there is no direct contractual relationship between the subcontractor and the public client. The contractual partner of the public client is and remains the bidder who received the award. The subcontractor is a contractual partner of the main contractor, and this structure creates a liability chain that is tightly regulated under German procurement law.

Terminology: subcontractor, Nachunternehmer, Unterauftragnehmer

In German usage, three near-identical terms exist side by side:

• Nachunternehmer, the preferred term in the VOB/A and in the construction sector; common in EU law and German case law. The specific partial service is then called Nachunternehmerleistung.
• Unterauftragnehmer, the formal term used in the VgV (§ 36 VgV); on the European level the corresponding subcontractor is established.
• Subunternehmer / subcontractor, colloquial variant, especially in construction and industrial practice. Substantively identical to Nachunternehmer.

For precision: in the bid, the partial service is declared as a Nachunternehmerleistung, while the executing company is referred to as Nachunternehmer or subcontractor.

Distinction from related arrangements

A subcontractor must not be confused with:

• A bidding consortium, there several companies appear jointly as bidder and bear joint and several liability.
• A general contractor, which regularly engages subcontractors but is itself the contractual partner of the client.
• A pure supplier relationship: a company that only delivers material without providing a partial service of the contract is not considered a subcontractor.
• Own staff in the form of temporary agency workers, here the relationship is not a subcontractor agreement but an agency contract.

When are subcontractors typical?

In practice, subcontractors appear almost always where a contract involves multiple trades or requires specialist expertise that the main contractor does not have in-house. Classic examples:

• Construction contract: general contractor engages electrical, plumbing, heating and drywall subcontractors.
• Major IT project: main contractor engages specialist providers for data migration, hosting or training.
• Facility management: main contractor uses subcontractors for cleaning, security and grounds maintenance.
• Pharma distribution services: lead provider engages regional logistics partners for last-mile delivery.

With Patterno you find all current tenders in which subcontractor regulations are relevant, across industries and across more than 180 procurement portals.

The use of subcontractors in public contracts is regulated in several laws and ordinances. The provisions differ by contract value and type of service.

Above EU threshold. The key sources are:

• § 36 VgV, subcontracts for supplies and services. The contracting authority may require bidders to state in the bid which parts of the contract they intend to subcontract. The authority may also require naming of subcontractors and proof of their suitability.
• § 47 VgV, capacity lending / reliance on third parties. If the bidder relies on the capacities of third parties to demonstrate technical or economic capability, the commitment declaration of the third party must be submitted with the bid. Capacity lending creates joint and several liability.
• § 132 GWB, contract modifications, including subcontractor changes. Replacement is only permissible under narrow conditions.
• § 36 SektVO, parallel provision for utilities (water, energy, transport).
• § 4 EU VOB/A, suitability requirements for bidders in construction works above threshold, with specific rules for subcontractors.
• § 6 EU VOB/A, participation conditions and subcontractor duties in the open procedure.

Below EU threshold:

• § 26 UVgO, subcontracts for supplies and services below threshold.
• § 6c VOB/A, subcontractors in construction below threshold.
• State procurement acts, several Laender (e.g. NRW, Berlin, Bavaria) impose additional subcontractor duties, in particular regarding collective agreement compliance.

Social-law liability chain. Engaging subcontractors carries substantial liability:

• § 14 AEntG (Posted Workers Act): the main contractor is liable as a guarantor for the minimum wage that the subcontractor pays its employees. This guarantor liability extends across the entire subcontractor chain.
• § 13 MiLoG: comparable guarantor liability for the general statutory minimum wage.
• § 28e (3a) SGB IV: general contractor is liable for social security contributions in construction.
• § 13b UStG: reverse charge for construction services, the recipient owes the VAT.

Grounds for exclusion. Subcontractors must not have any grounds for exclusion under §§ 123, 124 GWB (e.g. final conviction for corruption, tax evasion, money laundering). The bidder must confirm this in the procedure, typically via a self-declaration or via a commitment declaration from the subcontractor.

Subcontractor change. A subsequent change of subcontractor after award is not freely possible. Under § 132 GWB it requires the consent of the contracting authority, in particular if the bidder's suitability was based on the capacity of the replaced subcontractor.

A state construction authority publishes an EU-wide tender for a new courthouse with a contract value of EUR 28 million (procedure: open procedure under VOB/A Section 2). A medium-sized general construction company decides to submit a bid.

Subcontractor structure in the bid:

• Own performance (45 %): shell construction, site management, project management.
• Subcontractor 1, electrical engineering (15 %): specialist company from the region. Engaged under § 47 VgV as capacity lending because the main construction company cannot itself demonstrate the required reference for building automation.
• Subcontractor 2, HVAC and plumbing (20 %): established partner from previous projects. No capacity lending, only capacity supplement.
• Subcontractor 3, drywall and interior finishing (12 %): not yet named in the bidding phase, the authority requires naming only before contract start.
• Subcontractor 4, outdoor facilities (8 %): landscaping company, also an established partner.

What must the general construction company submit?

1. Subcontractor list with service shares per trade.
2. Commitment declaration of the electrical engineering subcontractor (capacity lending, mandatory with the bid).
3. Self-declaration on grounds for exclusion under §§ 123, 124 GWB for all named subcontractors.
4. Suitability evidence for the electrical engineering subcontractor (references, turnover, ISO certificate).
5. Collective agreement declaration under state procurement law.

After award, the company must name the drywall subcontractor in good time before start. A subsequent replacement of the electrical engineering partner (capacity lending) would only be possible with the authority's consent and only if the new subcontractor meets the same suitability requirements.

Patterno's construction solution supports exactly this workflow: the subcontractor agent automatically creates tender packages per trade, sends them to matching subcontractors and centrally tracks the bid status.

Mistakes when handling subcontractors regularly lead to bid exclusions or later contract issues. The most frequent pitfalls:

• Missing commitment declaration with capacity lending. When the bidder relies on a subcontractor's suitability (§ 47 VgV), the commitment declaration must be submitted with the bid, not only on request. Omissions often lead to exclusion.
• Concealed subcontractor services. Some bidders overstate their own performance share to appear more capable. This shows up in the procurement record, result: exclusion for false statements or breach of contract.
• Confusing capacity lending with simple subcontracting. A bidder lacking own references must formally rely on capacity lending, not simply name a subcontractor. Otherwise the suitability test fails.
• Sham self-employment. Anyone factually working for only one client, subject to instructions and without entrepreneurial risk is not a subcontractor under labour law but an employee. This triggers social security back-payments and criminal risks (§ 266a StGB).
• Overlooked grounds for exclusion. Bidders must check the grounds for exclusion under §§ 123, 124 GWB also for subcontractors. Failure to do so risks own exclusion or later contract challenges.
• Underestimated minimum wage liability. The guarantor liability under § 14 AEntG and § 13 MiLoG extends across the entire chain, including sub-sub-sub-contractors the main contractor may not even directly know. Without a compliance chain, liability remains.

Professional handling of subcontractors significantly reduces exclusion risks and liability exposure. Six recommendations:

• Maintain a subcontractor pool. A versioned pool of 5-15 established subcontractors per trade with current suitability evidence (references, insurance, ISO certificates, financial standing) allows rapid bid assembly. Refresh quarterly.
• Collect commitment declarations in advance. Standardised templates for commitment and self-declarations are kept on file and can be completed for each procedure in hours, not on the last day of the bid deadline.
• Compliance check for grounds for exclusion. Before each bid, a short check on §§ 123, 124 GWB is performed for all named subcontractors: insolvency register, trade central register, public sanctions lists. With documentation.
• Cleanly separate capacity lending from simple subcontracting. Clearly mark in the bid which subcontractors are used for capacity lending (with commitment declaration) and which are pure capacity supplement. Mixing creates queries.
• Document the minimum wage and collective agreement chain. Contractually require every subcontractor to pass through minimum wage and collective agreement compliance, and check on a sample basis. Otherwise guarantor liability hits the main contractor.
• Automate the subcontractor process. Instead of contacting each subcontractor manually by email, Patterno's construction solution automates tender package distribution per trade, collects bids centrally and tracks status, typical time savings per tender: several person days.