Subcontracting in Grant Projects
Official Definition & Legal Scope
Subcontracting occurs when a grantee engages third parties to deliver core project activities. Article 29 LGS establishes percentage caps and mandatory prior authorization thresholds.
- •Ley 38/2003 General de Subvenciones (Artículo 29: Subcontratación)
- •Real Decreto 887/2006 (Artículo 68)
Subcontracting vs ancillary service contracts
Subcontracting involves delegating core project activities to third-party providers.
Procuring operational inputs required for self-execution (audits, IT hosting, room rentals) does not constitute statutory subcontracting.
Statutory thresholds and prior approval rules
When subcontracting exceeds 20% of the grant and 60,000 €, written contracts and prior agency approval are mandatory.
Subcontracting with related parties is strictly prohibited unless expressly authorized at verified market rates.
Frequent compliance breaches
Executing subcontracts exceeding statutory thresholds without prior formal agency approval.
Procuring services from board members' affiliated companies without transparency disclosures.
How FundingQuarry monitors subcontracting limits
FundingQuarry parses budgets to compute subcontracting percentages, alerting when prior authorization is required.
Key Regulatory Takeaways
- Maximum subcontracting caps are defined in regulatory terms (defaulting up to 50%).
- Exceeding 20% and 60,000 € requires written contracts and prior administrative authorization.
- Unauthorized subcontracting triggers expenditure disallowance and partial clawbacks.
Need to ensure supplier subcontracts comply with Article 29 LGS?
Related Glossary Terms
Official References & Sources
- Ley 38/2003 General de Subvenciones (Artículo 29: Subcontratación de las actividades subvencionadas)
Frequently Asked Questions
Can an NGO subcontract 100% of project execution?
Only if explicitly authorized by regulatory terms; by default, total subcontracting is legally restricted.
Who is liable for subcontractor performance before the public agency?
The primary grantee maintains exclusive legal and financial liability before the public grantor.
How is subcontracting with related entities approved?
Through prior administrative authorization demonstrating that costs do not exceed verified market benchmarks.
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