What is a General Contractor?
A general contractor (Generalunternehmer) is a company that enters into a contract with the contracting authority to deliver the complete scope of a project, assuming full responsibility for all aspects of performance. While the general contractor performs some portions of the work with its own resources, it typically engages subcontractors for specialized tasks, coordinating and managing their contributions to deliver the overall project as a single point of accountability.
In German public procurement, the concept of the general contractor is particularly prevalent in construction and large-scale IT projects. The contracting authority benefits from having a single contractual partner responsible for the entire scope of work, simplifying contract management, reducing coordination effort, and providing clear lines of accountability. The general contractor, in turn, assumes the risk of coordinating multiple subcontractors and ensuring that the overall project meets the agreed specifications, timelines, and quality standards.
However, German procurement law also includes provisions designed to protect small and medium-sized enterprises from being excluded from public contracts through excessive general contractor structures. The principle of lot division (Losaufteilung) under Section 97 (4) GWB requires contracting authorities to consider dividing contracts into lots by trade or region, enabling smaller specialized companies to bid directly rather than being forced into subcontractor roles. Contracting authorities must justify any decision not to divide a contract into lots.
Why It Matters for Bidders
Companies considering a general contractor role must carefully assess whether they have the organizational capacity, financial strength, and risk management capabilities to assume overall project responsibility. The general contractor bears liability for the entire project, including the performance of its subcontractors. This requires robust subcontractor management processes, clear contractual arrangements, and sufficient financial reserves to absorb potential cost overruns or delays.
For smaller companies, understanding the general contractor model helps them position themselves effectively as subcontractors or as members of bidding consortia. Companies that specialize in particular trades should monitor both lot-based tenders where they can bid directly and general contractor tenders where they can offer their services as subcontractors.
Legal Framework
The general contractor model is governed by general contract law under the German Civil Code (BGB). The lot division requirement in Section 97 (4) GWB and Section 30 VgV provides a counterbalance by promoting access for SMEs. Subcontractor provisions in Section 36 VgV require bidders to disclose subcontractors upon request. EU Directive 2014/24/EU Article 46 addresses subcontracting requirements.