Splitting of a Contract is the division of the subject matter of a procurement into several parts. In itself this is legitimate, and for large contracts the law even encourages it, so that smaller firms can also take part. What is prohibited is artificial splitting – that is, dividing related performance solely so that the individual parts fall under a lower financial threshold and avoid a stricter procedure. What matters is the estimated value of the contract, which is determined for all performance of the same or comparable nature that is functionally and time-related, typically for the whole period of project implementation. So if a project envisages five separate computer purchases over two years, the value is added together, not assessed item by item. Artificial splitting is among the most common audit findings, and its consequence is a financial correction amounting to a percentage of the value of the contract concerned, and in serious cases the disallowance of the entire expenditure.
See also: Low-value contract, Above-threshold contract, Financial correction.
