Contractor is not a subcontractor

Publication / 31.01.2024

The majority of contractors executing public procurement contracts choose to use other entities. This is a common phenomenon, and no wonder, since public procurement law is based on the rule of broadly allowing subcontractors to carry out public investments, except for special situations in which ordering parties require personal performance in whole or in part of a given public contract.

However, the question arises as to whether, in such a situation, a third party performing a public contract will always have the attribute of a subcontractor? The answer to this seemingly insignificant question actually impinges on a number of important issues, starting with the ESPD document. It should be recalled that in proceedings where the value equals or exceeds the EU thresholds, the ESPD is an obligatory document to be filled out not only by the contractor, but also by the subcontractor – assuming, of course, that the subcontractor will in some part carry out the public contract in question.

The assessment of whether or not there is subcontracting in a given situation should be made after an analysis of the legal relationship between the contractor and the third party.

If it is a direct legal relationship, which occurs, for example, with an employment contract or a contract of mandate, then we are not dealing with subcontracting. This position is also confirmed by the case law of the National Appeals Chamber. Particularly noteworthy in this regard is the judgment of January 28, 2021, ref. KIO 22/21, in which the Chamber indicated that: “The conclusion of a mandate contract results in a direct disposition relationship between the principal and the contractor, which means that the Contractor will perform the contract with its own resources, and not with the participation of a subcontractor.”

Thus, we will be dealing with subcontracting when the contractor and the third party do not have a direct legal relationship, which in practice will be the use of employees of another entity who have been delegated to carry out the contract in question.