Subcontracting in the H2020 SME Instrument – How does it work?

Unlike other research and innovation programs, the H2020 SME Instrument allows a significant part of the project work to be subcontracted under certain terms and conditions.

Even when subcontracting, however, your own resources still need to be enough to cover the project activities.

Even if the subcontractors are unknown at time of proposal preparation, it is of utmost importance to carefully evaluate the merit of subcontracting and ensure there are sufficient details in the proposal to justify it.

Details regarding subcontracted activities must be as precise as possible in order to avoid possible conflicts during the Grant preparation and reporting. Failure to meet all directives related to subcontracting can lead the EC to reject these costs.

Main features of subcontracting in the H2020 SME Instrument:

  • Subcontractors are directly involved in the implementation of project tasks
  • The use of subcontractors must be indicated in Annex 1 (Description of Action)
  • Subcontractor costs are not taken into account in the application of the flat rate for indirect costs
  • There must be a contract in place between the beneficiary and the subcontractor
  • Subcontracting is a business interaction; the subcontractor charges a price which usually includes a profit
  • Subcontracts are awarded on the basis of best value for money (or lowest price) and the absence of conflicts of interest
  • A competitive selection procedure must be implemented

Things to watch out for:

  • Subcontracting between project beneficiaries and affiliated companies is not allowed
  • Coordination tasks cannot be subcontracted

Would you like to know more about subcontracting in H2020 SME Instrument projects? Contact for more information and guidance.