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Posted: Sun Dec 22, 2024 5:15 am
Subcontracting is a concept that comes from English, called “outsourcing”, which describes what happens when a company is hired to perform a service, but it does not have the technical knowledge to carry out all the stages of the process.
Therefore, on these occasions, the company uses the services of a third party, that is, it seeks an external supplier (outsourcing), or subcontracts.
In this way, the company focuses on doing what it specializes in, with the paid help of a supplier.
This ensures that the product or service will be delivered in the highest possible quality to the end consumer, as all parties involved are doing what they are experts at.
Read also: Surety bond: why require the contract during the bidding process?
In the world of bidding , subcontracting serves to allow the winning bidder to perform more specialized services by hiring third parties on its own behalf.
Bidders are allowed to qualify for tenders by presenting certificates from the companies they subcontract, provided they undertake to sign a contract exclusively with that company.
To make it easier to understand, let's use an example. Take the construction of an airport passenger terminal, for example.
There is equipment and systems required to perform this type of service that, due to their specialty, are unlikely to be performed by the company that won the bid, such as elevators, baggage conveyor belts, fire detection systems, etc.
In this case, subcontracting is even more recommended than allowing consortia, even if they are cumulative.
This is because these equipment and systems represent a very small portion of the object, and it is not necessary for the companies that will execute them to appear in the contractual relationship with the Administration.
However, there are some rules that allow subcontracting of part of the object. In fact, it is necessary that the notices that allow subcontracting have clear and objective rules, establishing the following:
The motivation and presence of public interest;
The need for prior authorization from the administration;
The specification of the reasons for the service to be subcontracted and the desired deadline;
The specification of the maximum percentage that may be subcontracted, with the maximum limit of up to 30% of the object usually used.
Subcontracting vs. Consortium
Subcontracting vs. Consortium
A consortium is when two or more companies join together with the aim of participating in a common activity or sharing resources to achieve a common goal.
In the context of bidding, subcontracting is different from consortium because the subcontractor is not part of the contract signed with the public administration.
In these cases, compliance with contractual obligations is the exclusive responsibility of the company that won the bid.
Furthermore, in the case of tenders, the subcontracting of the entire uk business email database contract or of a predominant portion of the contract is not permitted, under penalty of non-compliance with the bidding principle.
In other words, in the consortium, the administration would be responsible for all contracts with other companies involved in the delivery of the object in addition to the winner of the bid.
Furthermore, the other company could also bear a larger part of the project, which is not the objective of the tenders.
In the case of subcontracting, no, since the company that wins the bid is responsible for executing the entire contract with the subcontractor and only part of the work can be done by the subcontractor.
Subcontracting vs. Outsourcing
Two other concepts that are often confused are subcontracting and outsourcing. Contrary to what many people think, there is a difference between the two.
While subcontracting is the hiring of outsourced professionals by service intermediary companies, outsourcing involves businesses specialized in offering labor that maintain their own teams qualified to carry out tasks.
Outsourcing, on the other hand, concerns processes that can be organized by the company's own internal team.
Conditions for subcontracting to occur
As we have seen, public procurement allows subcontracting in some cases. However, there are some rules that must be observed.
What does the law say?
What does the law say?
Today, all tenders in Brazil are governed by Law No. 14,133/21 , also known as the New Tender Law or the Law on Tenders and Administrative Contracts.
The law deals with the rules for subcontracting in bidding processes in its Article 121, which also establishes some rules. Check it out:
Art. 122. In the execution of the contract and without prejudice to contractual and legal responsibilities, the contractor may subcontract parts of the work, service or supply up to the limit authorized, in each case, by the Administration.
§ 1º The contractor shall present to the Administration documentation that proves the technical capacity of the subcontractor, which shall be evaluated and attached to the corresponding process records.
§ 2 Regulations or bidding notices may prohibit, restrict or establish conditions for subcontracting.
§ 3 The subcontracting of a natural or legal person shall be prohibited if the person or the directors of the latter maintain a technical, commercial, economic, financial, labor or civil relationship with a director of the contracting body or entity or with a public agent who performs a function in the bidding process or acts in the supervision or management of the contract, or if they are their spouse, partner or relative in a direct line, collateral line, or by affinity, up to the third degree, and this prohibition must be expressly stated in the bidding notice.
In other words, according to Brazilian legislation, companies contracted by the public administration may subcontract a company to carry out part of the work, provided that the following conditions are met:
The company that wins the bid must present proof of the subcontractor's technical capacity, which will be assessed and included in the case file;
The company that wins the bid cannot subcontract any individual or legal entity with whom it has a technical, commercial, economic, financial, labor or civil relationship with the public administration staff responsible for carrying out the contest and supervising the contracts.
Furthermore, it is worth remembering that the administration can prohibit, restrict and establish rules for subcontracting.
Advantages of subcontracting for the public sector
Now that you know what subcontracting is and what it is for, check out its advantages for the public sector:
There is no legal relationship between the subcontractor and the Public Administration
The main advantage of subcontracting for the public sector is that payment to subcontractors is not the responsibility of the administration.
Therefore, on these occasions, the company uses the services of a third party, that is, it seeks an external supplier (outsourcing), or subcontracts.
In this way, the company focuses on doing what it specializes in, with the paid help of a supplier.
This ensures that the product or service will be delivered in the highest possible quality to the end consumer, as all parties involved are doing what they are experts at.
Read also: Surety bond: why require the contract during the bidding process?
In the world of bidding , subcontracting serves to allow the winning bidder to perform more specialized services by hiring third parties on its own behalf.
Bidders are allowed to qualify for tenders by presenting certificates from the companies they subcontract, provided they undertake to sign a contract exclusively with that company.
To make it easier to understand, let's use an example. Take the construction of an airport passenger terminal, for example.
There is equipment and systems required to perform this type of service that, due to their specialty, are unlikely to be performed by the company that won the bid, such as elevators, baggage conveyor belts, fire detection systems, etc.
In this case, subcontracting is even more recommended than allowing consortia, even if they are cumulative.
This is because these equipment and systems represent a very small portion of the object, and it is not necessary for the companies that will execute them to appear in the contractual relationship with the Administration.
However, there are some rules that allow subcontracting of part of the object. In fact, it is necessary that the notices that allow subcontracting have clear and objective rules, establishing the following:
The motivation and presence of public interest;
The need for prior authorization from the administration;
The specification of the reasons for the service to be subcontracted and the desired deadline;
The specification of the maximum percentage that may be subcontracted, with the maximum limit of up to 30% of the object usually used.
Subcontracting vs. Consortium
Subcontracting vs. Consortium
A consortium is when two or more companies join together with the aim of participating in a common activity or sharing resources to achieve a common goal.
In the context of bidding, subcontracting is different from consortium because the subcontractor is not part of the contract signed with the public administration.
In these cases, compliance with contractual obligations is the exclusive responsibility of the company that won the bid.
Furthermore, in the case of tenders, the subcontracting of the entire uk business email database contract or of a predominant portion of the contract is not permitted, under penalty of non-compliance with the bidding principle.
In other words, in the consortium, the administration would be responsible for all contracts with other companies involved in the delivery of the object in addition to the winner of the bid.
Furthermore, the other company could also bear a larger part of the project, which is not the objective of the tenders.
In the case of subcontracting, no, since the company that wins the bid is responsible for executing the entire contract with the subcontractor and only part of the work can be done by the subcontractor.
Subcontracting vs. Outsourcing
Two other concepts that are often confused are subcontracting and outsourcing. Contrary to what many people think, there is a difference between the two.
While subcontracting is the hiring of outsourced professionals by service intermediary companies, outsourcing involves businesses specialized in offering labor that maintain their own teams qualified to carry out tasks.
Outsourcing, on the other hand, concerns processes that can be organized by the company's own internal team.
Conditions for subcontracting to occur
As we have seen, public procurement allows subcontracting in some cases. However, there are some rules that must be observed.
What does the law say?
What does the law say?
Today, all tenders in Brazil are governed by Law No. 14,133/21 , also known as the New Tender Law or the Law on Tenders and Administrative Contracts.
The law deals with the rules for subcontracting in bidding processes in its Article 121, which also establishes some rules. Check it out:
Art. 122. In the execution of the contract and without prejudice to contractual and legal responsibilities, the contractor may subcontract parts of the work, service or supply up to the limit authorized, in each case, by the Administration.
§ 1º The contractor shall present to the Administration documentation that proves the technical capacity of the subcontractor, which shall be evaluated and attached to the corresponding process records.
§ 2 Regulations or bidding notices may prohibit, restrict or establish conditions for subcontracting.
§ 3 The subcontracting of a natural or legal person shall be prohibited if the person or the directors of the latter maintain a technical, commercial, economic, financial, labor or civil relationship with a director of the contracting body or entity or with a public agent who performs a function in the bidding process or acts in the supervision or management of the contract, or if they are their spouse, partner or relative in a direct line, collateral line, or by affinity, up to the third degree, and this prohibition must be expressly stated in the bidding notice.
In other words, according to Brazilian legislation, companies contracted by the public administration may subcontract a company to carry out part of the work, provided that the following conditions are met:
The company that wins the bid must present proof of the subcontractor's technical capacity, which will be assessed and included in the case file;
The company that wins the bid cannot subcontract any individual or legal entity with whom it has a technical, commercial, economic, financial, labor or civil relationship with the public administration staff responsible for carrying out the contest and supervising the contracts.
Furthermore, it is worth remembering that the administration can prohibit, restrict and establish rules for subcontracting.
Advantages of subcontracting for the public sector
Now that you know what subcontracting is and what it is for, check out its advantages for the public sector:
There is no legal relationship between the subcontractor and the Public Administration
The main advantage of subcontracting for the public sector is that payment to subcontractors is not the responsibility of the administration.