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How to subcontract - what you need to consider

This is a list of questions and considerations for organisations considering entering in to subcontracts. Subcontractors deliver some of the work of a contract which has been given to another organisation. 

The prompts we list here are designed to help you assess the quality and risks of these potential relationships. 


Considering being a subcontractor?

The prime contractor often relies on other organisations to deliver services/goods who are known subcontractors. 

  • Find out as much as you can about the potential partners by speaking to them and others they have worked with
  • Use these basic questions to review tender opportunities
  • Once you have all the information you need, use a reliable process for working out the risks and rewards of the subcontract
  • Involve your trustees when making the final decision and explain the reasoning behind it

Do your research

  • What do you know about the prime contractor? Do they have experience of successfully delivering previous contracts?
  • What systems and capital will need to be in place for them to lead the contract?
  • Are the delivery targets achievable and relevant to users' needs?

How much do you know about the prime contractor?

  • What is driving the prime contractor to lead this contract?
  • Do you have an established relationship with the prime contractor?
  • Are you seeking a relationship with them beyond this contract?
  • Are there significant differences in culture between the organisations?
  • How accessible and communicative is the prime contractor?

Spot potential organisational issues

  • What is the performance management process in the supply chain?
  • Has the prime contractor stated their commitment to Compact principles?
  • What issues can arise from the balance of power between the prime contractor and the subcontractor(s)?

Spot potential supply chain issues

  • Will there be competition within the supply chain for the type of work you do? How will tihs be managed and what are the implications?
  • What factors will affect the flow of referrals through the supply chain? What will determine how many referrals you get and can you influence these factors?
  • Will you have any guarantees of a specified financial volume of work and the number of referrals?
  • If sufficient referrals don't reach you, will there be cash flow problems? Will there be regular opportunities to discuss this? How flexible is the contract termination procedure/performance management objectives?
  • What 'tier' will you be in the supply chain e.g. directly below the prime contractor or another subcontractor?

Make it official

  • Make sure that all organisations involved sign a contract
  • The contract should cover the payment schedule and terms, performance management, dispute resolution and termination details at the bare minimum
  • Find out the rights that exist for both parties and what happens if either party wants to vary/break the contract
  • Ask about your intellectual property and what protection you have over things like resources, communications and branding both during and after the contract
  • Are there any gagging clauses or restrictions that could hamper the successful delivery of the contract?

Look at organisational capacity and communications

  • Is there any offer of helping to build capacity? What would trigger this?
  • Will the prime contractor provide emergency funding or access to capital, if required?
  • Will there be an established communication process between the prime contractor and subcontractors?
  • Do you have evidence of your organisation's effectiveness, reach and any 'unique selling points'?

What systems need to be in place?

  • Will any new business sytems be required such as IT systems?
  • Will support be offered to develop and maintain systems?
  • Will the systems be compatible with your current systems e.g. databases or can they be adapted?
  • Are there are any conflicts with your current systems and policies such as data sharing, confidentiality and so on?

Consider the relationship with the commissioners

  • Will you have the opportunity to show the commissioner any emerging or changing needs?
  • Will the prime contractor acknowledge your contributions to commissioners?
  • Will you have any contact with the commissioners?
  • Will the commissioner have any involvement in dispute resolution?

Further information

NCVO has advice on how to respond to tenders and the risks involved



Page last edited May 24, 2017 History

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