5 tips to ensure your subcontracting costs don’t come back to haunt you

Subcontracting is a sensitive cost category which requires extra attention in HE projects. In most cases these are high-budget costs, which makes them even more important – if they are challenged by auditors, their eligibility can pose a major risk to the project. We’ll guide you through this tricky minefield with five essential tips to help your subcontracting costs align with eligibility requirements:

1. Include relevant subcontracting costs in the project proposal

   A solid starting point is to incorporate estimated subcontracting costs in your grant proposal, along with a detailed description of the planned work to be implemented by the subcontractor. This information sets the stage for the eligibility of these costs, having been evaluated and accepted already at the proposal stage and ensuring clarity and alignment with grant requirements. While developing the work plan, keep in mind that there are some costs that cannot be subcontracted, such as coordination tasks or core tasks in some specific funding schemes.

2. Set the rules and follow them
   

   Even if it is not obligatory, you should consider developing your own procurement policy (if you don´t have one yet). Establish clear and transparent rules for your company when purchasing goods and services and carefully follow them during the project lifetime. With that in mind, let’s move on to the next point.

3. Ensure you meet the main principles: Best Value for Money and lack of conflicts of interest

   Compliance with the “best value for money” rule is one of the main requirements for cost eligibility. You should be able to confirm the best price-quality ratio for the purchase of subcontractor services made within the project.
   This does not mean that you are required to select the lowest price. In case of audit, you need to show that you analyzed the options carefully, that the procedure to select the subcontractor was clear, that the criteria defining quality were coherent with the purposes of the subcontracted task and that the price was market value.
   Moreover, you need to be able to demonstrate that there was no conflict of interest between you and the chosen subcontractor at the time of contracting the services, and prevent future conflict by including appropriate clauses in your legal arrangements with the company.

4. Do not Mess Up the Documentation

   Proper documentation is crucial, especially when it comes to subcontracting. Make sure to prepare a contract that includes the necessary clauses in line with Horizon Europe regulations. Along with the contract, ensure that all invoices are properly booked and that you keep thorough records, as these will be essential for financial audits and checks. An important part of the documentation will also be the documents that support your claims of best value for money, such as the procedure you follow to select the subcontractor. Keep in mind that the documentation related to subcontracting is likely to be closely examined by auditor(s) during or after project lifetime.

5. Keep Your Project Officer Updated

   Last but not least, if any changes to subcontracting costs are necessary for the successful implementation of the project, be transparent with your Project Officer. Inform him/her of any planned changes ahead of time and request an amendment to the Grant Agreement if necessary.

Following these tips should make your life easier and help reduce stress during audits. Wishing you the best of luck! If you feel you need support, don’t hesitate to reach out to us here: hello@getpolite.eu.