There is no limit established to subcontracting costs in Horizon Europe. The General Model Grant Agreement (GMGA) does not fix any limit. However, it is generally recommended to keep subcontracting costs below 15% of the total project costs.
Subcontracting may only cover a limited part of the specific action and beneficiaries must award the subcontracts adhering to “best value for money” rule. Importantly, no core project deliverable/milestone or outcome can be assigned to a subcontractor. A beneficiary that subcontracts will be wholly responsible for the delivery and behavior of the subcontracting party.
For subcontracting, it is important to take into account these rules:
- Ensure best value for money (or lowest price) and avoid conflict of interests
- Subcontracting between beneficiaries is not allowed. Subcontracting to affiliated entities is generally not allowed either.
- Estimated costs and tasks must be identified in the budget and in Annex 1.
- Simplified approval procedure allowed (i.e. beneficiary flags the subcontracting at reporting stage). However, beneficiary bears the risk of rejection.
- The beneficiaries are responsible for the proper implementation of the subcontracted actions tasks by the subcontractors (proper quality, timely delivery, etc.)
GMGA Article 6.2 Specific eligibility conditions for each budget category – B. Subcontracting costs
Subcontracting costs for the action (including related duties, taxes and charges, such as non-deductible or non-refundable value added tax (VAT)) are eligible, if they are calculated on the basis of the costs actually incurred, fulfil the general eligibility conditions and are awarded using the beneficiary’s usual purchasing practices — provided these ensure subcontracts with best value for money (or if appropriate the lowest price) and that there is no conflict of interests (see Article 12).
Beneficiaries that are ‘contracting authorities/entities’ within the meaning of the EU Directives on public procurement must also comply with the applicable national law on public procurement.
The beneficiaries must ensure that the subcontracted work is performed in the eligible countries or target countries set out in the call conditions — unless otherwise approved by the granting authority.
Subcontracting may cover only a limited part of the action.
The tasks to be subcontracted and the estimated cost for each subcontract must be set out in Annex 1 and the total estimated costs of subcontracting per beneficiary must be set out in Annex 2 (or may be approved ex post in the periodic report, if the use of subcontracting does not entail changes to the Agreement which would call into question the decision awarding the grant or breach the principle of equal treatment of applicants; ‘simplified approval procedure’).