Subcontracting

Reference

Category

Subcontracting

Legislation/Policy

Not Applicable

Additional Information

Guidance

A subcontracting clause should be included when the Supplier either proposes to, or may propose to, use subcontractors to deliver the Goods and/or Services, particularly where the involvement of specific subcontractors is likely to be important to the successful performance of the Contract by the Supplier. 

The penultimate paragraph of the clause ensures the Customer is able to comply with the requirements of the Commonwealth Procurement Rules in relation to the potential public disclosure of subcontractors.

This clause provides the Commonwealth with the ability to manage some of the risks associated with the use of Subcontractors to deliver the Goods and/or Services by:

  • confirming that the Supplier remains wholly responsible for the performance of the Contract even if a subcontractor is used;
  • providing a mechanism for the Customer to approve or require the removal of subcontractors;
  • ensuring that any of the Supplier’s obligations under the contract which are relevant are replicated in subcontracts and secondary subcontracts; and
  • including payment terms of 30 days or less for subcontractors and secondary subcontractors.

The clause also provides that specified Subcontractors must be involved in the performance of the Contract.

Clauses

Subcontracting

Subcontracting any part of, or the entire Supplier’s obligations under the Contract, will not relieve the Supplier from any of its obligations under the Contract.

The Supplier must ensure that any Subcontractors specified in the Contract, perform that part of the Services specified.  Unless otherwise agreed by the Customer (in writing) the Supplier must not subcontract any part of its obligations under the Contract other than to Subcontractors named in the Contract. 

The Supplier must ensure that specified Subcontractors (if any) are not replaced without the prior written consent of the Customer.  The Customer’s written consent will not be unreasonably withheld.

At the Customer’s request, the Supplier, at no additional cost to the Customer, must promptly remove from involvement in the Contract any Subcontractor that the Customer reasonably considers should be removed.

The Supplier must make available to the Customer the details of all Subcontractors engaged to provide the Goods and/or Services under the Contract. The Supplier acknowledges that the Customer may be required to publicly disclose such information and warrants that it has received express permission from the Subcontractor to provide the information. 

The Supplier must ensure that any subcontract entered into by the Supplier for the purposes of fulfilling the Supplier’s obligations under the Contract imposes on the Subcontractor the obligations that the Supplier has under the Contract that are relevant to the subcontract  and contains payment terms of 30 days or less.  Each subcontract must also require the same obligations (where relevant) and the same payment terms to be included by the Subcontractor in any secondary subcontracts.


Notes

While use of this clause is optional, it is common for contracts to include a clause of this type. In particular, users should ensure that they are able to meet the requirements of the Commonwealth Procurement Rules paragraph 7.19 [Subcontractors] relating to public disclosure.

Standardisation of contractual text results in efficiencies for both Parties to a contract. Before deciding whether a particular clause is appropriate, procurement officials should carefully consider the context of their procurement. Capitalised terms (unless otherwise defined) are based on the definitions in the CCS Glossary.  Definitions of any relevant defined terms may need to be added.

Clause wording would generally need to be changed where the Customer wishes to propose different arrangements for approving or removing Subcontractors, or for substituting Subcontractors that have been approved to provide part of the Services.

There may also be situations where not all parts of the clause are relevant.

Otherwise, where this clause is included, the clause wording should be used without change. Terms that are capitalised may need to be changed to align with the Contract terminology.

Last updated: 31 July 2018