Subcontracting problems in public construction under the public procurement Act B.E. 2017: Legal analysis and policy recommendation

Abstract

This article examines legal problems concerning subcontracting under the public procurement and supplies administration Act B.E. 2560, using the crane collapse on Rama II Road as a case study. The research employs a doctrinal legal methodology and applies the frameworks of new institutional economics and public law theory to analyze the structure and enforceability of sections 95 and 109, along with the prevailing norms established in the rulings of the Supreme Administrative Court. The study finds that Thai law follows a “prohibit-and-punish” model: it mostly bans subcontracting, sets fines of at least 10 percent, and relies on a very flexible approval system. It also doesn't have a clear definition of “essential work”. These features have produced shadow subcontracting, ambiguous statutory interpretation, and dilution of liability across multi-tier contractor chains. A comparison with international regimes (FAR 52.219-14, Security of Payment schemes, FIDIC, Germany’s VOB, and Japanese law) shows that those systems accept the necessity of subcontracting but control it through quantitative ceilings, strict technical standards, secure payment mechanisms, and increased liability for the prime contractor. The article proposes five reforms; recast section 95 from a “prohibit-and-enforce” approach to a “regulate-and-monitor” model, tie approval to concrete safety measures, enact security-of-payment legislation, reform acceptance/inspection procedures by empowering project-management consultants, and. impose full, strengthened liability on the prime contractor. These reforms are designed to allow Thai procurement law to better address the complexities of business while maintaining public safety standards.