The Defence and Security Public Contracts Regulations 2011

Sub-contracting

37.—(1) Subject to paragraph (3), the successful economic operator is free to select its sub-contractors for all sub-contracts and, in particular, must not be required to discriminate against potential sub-contractors on grounds of nationality.

(2) The contracting authority may require the economic operator—

(a) to indicate in its tender—

(i) any part of the contract it intends to sub-contract;

(ii) the details of any proposed sub-contractor; and

(iii) the subject matter of the proposed sub-contracts; and

(b) to indicate any change occurring with respect to proposed sub-contracting before or during the execution of the contract.

(3) The contracting authority may oblige the successful economic operator to apply the provisions set out in Part 7 to all or certain sub-contracts which the successful economic operator intends to award to third parties.

(4) The contracting authority may reject the sub-contractors selected by—

(a) the economic operator at the stage of the award procedure of the main contract, or

(b) the successful economic operator during the performance of the main contract,

but such a rejection may only be based on criteria applied for the selection of the economic operators for the main contract.

(5) Where a contracting authority rejects a sub-contractor in accordance with paragraph (4), it must produce a written justification to the economic operator or the successful economic operator setting out why it considers that the sub-contractor does not meet the criteria but may withhold any information where any of the grounds referred to in regulation 33(11)(a) to (d) would apply to the disclosure of such information.

(6) Where the contracting authority requires an economic operator to fulfil requirements in accordance with paragraph (2) or (3) or may reject a sub-contractor in accordance with paragraph (4), it must set out the requirements or indicate the possibility of rejection in the contract notice.

(7) For the purposes of paragraph (3), the following are not to be considered to be third parties—

(a) related undertakings;

(b) groups of undertakings which have formed to obtain the contract, and undertakings related to them.

(8) For the purposes of paragraph (7), “related undertaking” means any undertaking over which the successful economic operator can exert a dominant influence, whether directly or indirectly, or any undertaking which can exert a dominant influence on the successful economic operator or which, as the successful economic operator, is subject to the dominant influence of another undertaking as a result of ownership, financial participation or the rules which govern it; and a dominant influence is to be presumed when, directly or indirectly in relation to another undertaking, the dominant undertaking—

(a) holds a majority of the other undertaking’s subscribed capital;

(b) controls a majority of the votes attached to the shares issued by the other undertaking; or

(c) is entitled to appoint more than half of the other undertaking’s administrative, management or supervisory bodies.

(9) The economic operator must include a list of undertakings to which paragraph (7) applies in the tender and must update the list following any change of relationship between the undertakings.