A:

Article II.6.2 of Annex II to the model contract requires contractors to ensure that transparent bidding procedures are used before selecting a subcontractor. “Any subcontract, the costs of which are to be claimed as an eligible cost, must be awarded to the bid offering best value for money (best price-quality ratio), under conditions of transparency and equal treatment.” However, this does not mean that a full tendering procedure has to be launched for every subcontract. Many companies have framework agreements with a subcontractor to carry out routine and repetitive tasks. Usually these framework agreements have been established on the basis of competitive tendering principles, therefore individual subcontracts can be entered into in the context of these agreements to carry out tasks necessary for implementing the EC project. Public entities must follow the procurement principles established by their national authorities.(see below) Also subcontracting cannot be used to avoid the rules for participation (i.e. to provide financing to a legal entity that would not otherwise have been eligible for funding under the Framework Programme.

For public entities, the award procedure must comply with any national legislation applicable to them. For subcontracts exceeding certain amounts, the Directive on public procurement of services applies and the publication of a call for tenders is mandatory. For subcontracts below those thresholds, the contractor should follow internal procedures, assuming that they comply with the terms of the EC contract.

Private legal entities follow their internal rules which they apply for the normal selection of procurement contracts (typically a minimum of three offers). The publication of a call for tenders is normally not necessary for private legal entities. At the request of the Commission and especially in the event of an audit, contractors must be able to demonstrate that they have respected the conditions of transparency and equal treatment in selecting a subcontractor. The selection criteria must be based on the best value for money given the quality of the service proposed (best price-quality ratio).