The legal basis
Three layers of text frame subcontracting in Algeria. The civil code allows a contractor to subcontract all or part of the work unless the contract forbids it, while remaining fully responsible towards the owner for the subcontractor’s work. The public procurement regulation, the presidential decree 15-247 of 2015 and the law 23-12 of 2023 that is replacing its principles while implementing texts are issued, adds the conditions specific to public contracts: a ceiling, a prior approval and declarations. And the contract itself, through its special conditions, may restrict subcontracting further or require the subcontractors to be named in the bid.
The 40 percent ceiling and what cannot be subcontracted
Under the 2015 regulation, the part of a public contract that is subcontracted may not exceed 40 percent of its total amount. Current supplies contracts cannot be subcontracted at all. The bidder states in its offer the amount of the transferable share of the contract that corresponds to services subcontracted to companies under Algerian law, a point of particular interest to foreign bidders, since it connects subcontracting to the share of the contract that may be paid in foreign currency. The implementing decrees of the 2023 law may adjust these figures; the texts applicable to a given tender are those stated in its documents.
The approval workflow
The sequence usually followed on a public contract; private contracts are freer but often copy it.
Identification
The main contractor identifies the scope to subcontract and the Algerian company it intends to use, ideally already in the bid.
File
The subcontractor provides its commercial register extract, tax and social clearances, qualification certificate and a description of its means.
Request for approval
The main contractor submits the subcontractor and the draft subcontract to the contracting authority for prior approval.
Approval and contract
Once approved, the subcontract is signed with the mandatory mentions required by the regulation, and a copy is filed with the contracting authority.
Declaration on site
The subcontractor declares its presence to the contracting authority when it starts, and its staff are registered with social security.
Execution and payment
Work is measured in the main contractor’s attachements; the subcontractor is paid by the main contractor, or directly by the contracting authority when the contract provides for it.
Payment
In the general case the main contractor pays the subcontractor from the progress payments it receives, under the terms of the subcontract. The regulation also provides for direct payment of an approved subcontractor by the contracting authority when the contract allows it, a protection worth negotiating for a subcontractor whose scope is large. Either way, the cash flow of a subcontractor follows the rhythm of the main contract’s situations de travaux, with the delays that public accounting can involve; the subcontract should say what happens when the main contractor is paid late. Payments are made in dinars through Algerian banks.
What a main contractor checks before approving a subcontractor
The file is the first filter: a valid commercial register entry in the right activity, up-to-date tax and social certificates, and a qualification certificate in the field concerned. The second filter is capacity: does the subcontractor own, or have reliable access to, the machines the scope needs, and where are they? Can it mobilize to the site in the time available, and does it know the terrain? The third is organization: a site manager who can read the drawings, laboratory follow-up, safety practice, and someone who answers the phone. Main contractors who skip the second and third filters tend to discover them in the first month of works.
Scopes most often subcontracted
Typical packages on Algerian infrastructure projects and what the subcontractor must bring.
| Scope | What is expected | Typical means |
|---|---|---|
| Earthworks and platforms | Cut and fill to the drawings, compaction to density | Excavators, bulldozers, graders, rollers, water tankers |
| Road layers | Sub-base, base and sometimes asphalt to the specification | Graders, rollers, paver, bitumen distributor, laboratory follow-up |
| Aggregate supply and haulage | Fractions to the specification, at the delivery rate | Quarry and crushing plant, trucks and semi-trailers |
| Site start-up | Access tracks, platforms, first earthworks, water | Mobilized fleet, drilling rig |
| Water wells | Authorized borehole, completed and tested | Drilling rig, pumping test equipment |
| Equipment with operator | Machines available on site for the main contractor | Fleet, operators, maintenance support |
Frequently asked questions
What is the subcontracting limit in Algerian public contracts?
Under the 2015 public procurement regulation (decree 15-247), subcontracting may not exceed 40 percent of the total amount of a public contract, and current supplies contracts may not be subcontracted at all; the implementing texts of the 2023 law should be checked for the tender concerned.
Does a subcontractor need to be approved in Algeria?
Yes. On a public contract the subcontractor must be approved in advance by the contracting authority, a copy of the subcontract is filed with it, and the subcontractor declares its presence on site when it starts.
Can a foreign main contractor subcontract to an Algerian company?
Yes, and it is expected: bidders identify in their offer the share of the contract subcontracted to companies under Algerian law, foreign bidders in international tenders for designated projects must commit to a partnership with an Algerian-majority company under the 2023 law, and local subcontracting is the usual way to supply earthworks, haulage, aggregates and wells.
Who pays the subcontractor on an Algerian public contract?
In general the main contractor pays the subcontractor from its own progress payments under the terms of the subcontract, but the regulation also allows direct payment of an approved subcontractor by the contracting authority when the contract provides for it.
What documents does a subcontractor need in Algeria?
Typically a commercial register extract in the relevant activity, the tax identification number and an up-to-date tax statement, up-to-date social security certificates (CNAS and CASNOS), the qualification and classification certificate for its field, and a description of its equipment and staff.
How ETAHG can help
SARL ETAHG, an Algerian SARL established in 1997, works as a subcontractor on defined scopes such as earthworks, road layers, asphalt paving, site preparation, aggregate supply and water wells, using its own fleet based in Djelfa and its own quarry and crushing plant at Oued Sdeur near Aïn El Ibel. Its registration documents are available to main contractors preparing an approval file. See road construction, local partner for international contractors and project mobilization.