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What is 'Subcontracting'. Subcontracting is the practice of assigning part of the obligations and tasks under a contract to another party known as a subcontractor. Subcontracting is especially prevalent in areas where complex projects are the norm, such as construction and information technology.
In some cases, an owner may ask a general contractor to provide or the general contractor may choose to provide Subcontractor Default Insurance or Subguard in place of or, in addition to, a payment bond or a performance bond. Subguard protects a general contractor from a subcontractor default.