Factory vetting process step — subcontracting policy review
In brief: A subcontracting policy review during Bangladesh buying house factory vetting must verify four elements: the named production facility, a written consequence (typically 30% of order value for unauthorised subcontracting), the mandatory midpoint floor-photograph clause, and the buyer's right to refuse delivery from any unnamed facility. A one-line "no subcontracting without approval" clause does not qualify.
4
Policy elements
A real subcontracting policy specifies four things, not one.
30%
Order-value remedy
Written consequence for unauthorised subcontracting on every order.
50%
Midpoint photograph
Dated floor photographs from the named facility at half production.
Subcontracting is the single failure mode I have seen destroy more European brand relationships in Bangladesh than fabric defects, late shipments, and compliance gaps combined. The policy document the factory hands me at vetting is the earliest signal of whether subcontracting will become a problem during production. Most policies I see were written to pass an audit. The four-element policy is written to prevent the thing the audit is meant to be checking for.
Why is a one-line subcontracting clause not enough?
The clause every factory keeps in its compliance binder reads roughly: "The factory shall not subcontract production to any third party without the prior written consent of the buyer." That is the template. It sits in 19 of the 20 Bangladesh factories I review in a given year. It satisfies a BSCI auditor reading down a checklist. It does not survive contact with a factory that has lost capacity in week four of a sixty-day production cycle and has overtime workers waiting for orders to run.
Under that pressure, the factory does not stop production to ask for written consent. The factory moves the goods. The clause was written to be a paragraph. The thing it needs to prevent is an operational decision made on a Thursday afternoon when the finance director is squeezed. A paragraph cannot prevent that. Specific consequences and documented checkpoints can. This is the point a subcontracting policy review during factory vetting has to test.
What four elements must a real subcontracting policy contain?
The policy I accept during a vetting review specifies four things. None of them are optional, and the absence of any one is enough for me to send the factory back to redraft the policy before I continue the rest of the vetting process step in Bangladesh.
One — the named facility. The policy names the specific production unit where the order will be cut, sewn, and finished, including address and BGMEA registration number. If the factory operates two units, the policy names which unit.
Two — the remedy. The standard is a 30% reduction of order value if any unit is found to have come from an unnamed facility. The number is not negotiable downward. At 10% or 15% the remedy is cheaper than the financial pressure that triggers the subcontracting, and the clause loses its function.
Three — the midpoint floor-photograph requirement. At 50% production completion, the factory submits dated photographs of the production floor showing the specific order in progress, identifiable against the approved counter sample.
Four — the buyer's right to refuse delivery from any unnamed facility, with full refund of all advances paid and no obligation to take the goods at any discount.
How does the midpoint floor-photograph requirement actually work?
This is the element factories push back on most often, which tells me it is doing the work. At 50% production completion — measured against the order's pcs count, not the calendar — the factory's merchandising lead sends a dated photograph package showing units on the line in the named facility.
The photographs must show the order's style numbers visible on cut bundles, the factory's internal production board, and a wide shot of the floor that lets me see machine count and worker density against the factory's declared capacity. I cross-check the photographs against the named facility's documented floor plan from the original vetting visit. Photographs from a different floor — different column spacing, different lighting, different machine layout — surface immediately.
This is not surveillance for its own sake. It is the document that, three months later, lets a German brand show its LkSG reporting auditor that Tier 2 production happened where the contract said it would.
Subcontracting policy — theatre vs the real thing
Named production unit and BGMEA number
Written 30% order-value remedy
Midpoint floor photographs at 50% production
Buyer right to refuse from any unnamed facility
Signed per order, retained five years
Cross-checked against original vetting floor plan
One-line 'no subcontracting without approval'
No specified consequence
No midpoint photographic check
Buyer absorbs goods if subcontracted
Signed once at factory onboarding
Last reviewed at the previous BSCI audit
What is the difference between a policy that survives audit and one that survives production?
The two columns below show what I find in the policy binder of a typical Bangladesh factory at first vetting against the policy I require before that factory enters the active roster.
| Policy element | What most binders contain | What Bengal Origin Co. requires |
|---|---|---|
| Subcontracting clause | One line, "no subcontracting without approval" | Four-element policy, signed per order |
| Named facility | Factory name only | Unit, address, BGMEA registration number |
| Consequence | Unspecified | 30% order-value remedy, written |
| Midpoint check | None | Dated floor photographs at 50% completion |
| Right of refusal | Buyer absorbs the goods at discount | Buyer refuses delivery, full advance refund |
| Audit trail | Verbal at most | Signed per order, retained for five years |
Source: Bengal Origin Co. subcontracting policy reviews across 47 Bangladesh factory vetting engagements, 2024-2026.
The left column is not theoretical — it is what comes through in the first compliance pack from a typical factory introduction. The right column is what must be in place before I write a purchase order against that factory for a European client. The Bengal Origin Co process treats the gap between the two columns as the actual vetting work.
What This Means for European Brands
If your current Bangladesh buying house cannot show you the four-element subcontracting policy on file for every active factory, you do not have a subcontracting policy. You have a clause sitting in a binder that no one has read since the last BSCI audit. Under LkSG and the rolling CSDDD onboarding obligations, that gap is yours to document, not the factory's. The four-element policy is the cheapest part of factory vetting to put in place and the most expensive part to discover you skipped. The 2022 failure that built my company turned on this exact gap — I had a verbal understanding, not a written four-element policy, and verbal understandings do not survive financial pressure.
For the underlying story, see the 2022 supply chain failure that built Bengal Origin Co.. For the broader process the subcontracting review sits inside, see how Bengal Origin Co. vets factories financially. For the regulatory frame, see what EU CSDDD requires of a Bangladesh sourcing partner.
If you are not certain what your current Bangladesh factories have agreed to in writing on subcontracting, I am happy to discuss what a four-element policy review looks like in practice.
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