The Government Procurement Review: Italy
The main public procurement legislation applicable in Italy is laid down by the Public Contracts Code (the PCC),2 as amended by Legislative Decree No. 56/2017 (the Corrective Decree), Law Decree No. 50/2017 and recently by Law Decree No. 32/2019 (the Sblocca Cantieri Decree) as converted, with amendments into Law No. 55/2019, published in the Italian Official Gazette No. 140 of 17 June 2019 (the Sblocca Cantieri Law).
The PCC came into force on 19 April 2016, implementing both the 2014 Public Contracts Directive and the 2014 Concession Contracts Directive, as well as the 2014 Utilities Contracts Directive, and replacing the previous Public Contracts Code.3
The relevant legal framework is completed by a number of secondary sources, which include ministerial decrees and guidelines issued by the National Anti-Corruption Authority (ANAC), aimed at providing detailed rules on specific matters.
The European Union (on behalf of its Member States, including Italy) is party to the World Trade Organization's Agreement on Government Procurement (GPA), which has been approved at the EU level by Council Decision 94/800/EC.
The national bodies responsible for setting up the public procurement policy are Parliament (legislative power), the government (executive power) and the ANAC, whose power has been consistently widened by the PCC.
The main principles underpinning public procurement policy in Italy are closely aligned to those that inspire the 2014 Procurement Directives: transparency and equal treatment of economic operators, effectiveness, impartiality, proportionality, environmental protection and energy efficiency.
In the context described above, it is worth highlighting that during the past few weeks, Italy has been facing a serious health emergency due to the spread of the coronavirus, affecting human health and causing major disruptions in markets, economy and businesses. The Italian government declared the 'state of emergency' and immediately adopted a number of urgent and extraordinary measures aimed at limiting the spread of covid-19 and mitigating its effects.
Moreover, on 17 March 2020, Law Decree No. 18 (the Cura-Italia Law Decree) has been issued and published in the Italian Official Gazette. The Cura-Italia Law Decree entered into force on 17 March 2020 and is aimed at providing for a consolidated package of structural measures to support the health system while helping Italian families and the economy. Specific measures have also been introduced in the public procurement sector with the aims of simplifying and accelerating public procurements in specific fields deemed essential during the emergency phase (health supplies and services, IT services and supplies, connectivity services, refurbishment works of prisons, contracts to support the foreign markets, etc.) and supporting the economic operators mostly affected by this health crisis.
The Cura-Italia Law Decree shall be converted into law by the Italian Parliament within 60 days following its publication. It cannot be excluded, therefore, that during the conversion process further amendments will be approved by the Parliament. In addition, given the unpredictable development of events during the covid-19 outbreak, it is further expected that further actions and measures will be adopted in the coming weeks which could potentially supersede in whole or in part the provisions of the Cura-Italia Law Decree.
Year in review
In the past years, pivotal developments in public procurement legislation have been made: the PCC came into force implementing the 2014 Procurement Directives and a number of ANAC guidelines and ministerial decrees have been adopted.
ANAC guidelines already in force provide specific regulations about:
- architectural and engineering services tenders;4
- the 'most economically advantageous' tender criterion;5
- the role of the tender procedure manager;6
- below threshold contract tenders;7
- selection criteria of members of the tender committee;8
- exclusion of candidates due to material professional misconducts;9
- in-house providing;10
- negotiated procedures without prior publication of the contract notice in case of non-fungible public supply and service contracts;11
- monitoring of contracting authorities on the activities of the economic operator in public-private partnership contracts;12
- awarding of the private security service;13
- indications for verifying compliance with the limit referred to in Article 177 of the PCC by public or private entities holding works, services or supply concessions already in existence at the date of entry into force of the PCC and not awarded through the project finance formula or public tendering procedures in accordance with European Union law;14
- awarding of legal services;15
- the regulation of social clauses;16
- preliminary market consultation guidelines;17 and
- recognition and management of conflicts of interest in procedures for the award of public procurement contracts.18
Moreover, to date the following decrees have been adopted:
- Decree of the President of the Council of the Ministers, dated 10 August 2016, published in the Italian Official Gazette No. 203 of 31 August 2016 concerning the composition of the Control Centre (Cabina di Regia);
- Decree of the Ministry of Justice, dated 17 June 2016, published in the Italian Official Gazette No. 174 of 27 July 2016 concerning the approval of the schedules of the consideration based on quality for the design performances;
- Decree of the Ministry of Infrastructure and Transport No. 248, dated 10 November 2016, published in the Italian Official Gazette No. 3 of 4 January 2017 relating to specialist work categories;
- Decree of the Ministry of Infrastructure and Transport No. 263, dated 2 December 2016, published in the Italian Official Gazette No. 36 of 13 February 2017 regarding the requirements for the operators in architectural and engineering services;
- Decree of the Ministry of Infrastructure and Transport, dated 2 December 2016, published in the Italian Official Gazette No. 20 of 25 January 2017 concerning the publication of the calls for tenders in the information technology sector;
- Decrees of Ministry of Environment concerning the minimum environmental criteria in the tenders, dated 11 January 2017, published in the Italian Official Gazette No. 23 of 28 January 2017 and subsequent amendments; and dated 27 September 2017, published in the Italian Official Gazette No. 244 of 18 October 2017;
- Decree of the Ministry of Interior, dated 21 March 2017, published in the Italian Official Gazette No. 81 of 6 April 2017 concerning the monitoring of relevant infrastructures and criminal infiltrations;
- Decree of the Ministry of Economic Development No. 122, dated 7 June 2017, published in the Italian Official Gazette No. 186 of 10 August 2017 concerning meal ticket services;
- Decree of the Ministry of National Heritage and Culture No. 154, dated 22 August 2017, published in the Italian Official Gazette No. 252 of 27 October 2017 concerning the public works regarding cultural heritage;
- Decree of the Ministry of Foreign Affairs No. 192, dated 2 November 2017, published in the Italian Official Gazette No. 296 of 20 December 2017, concerning foreign tender procedures;
- Decree of Ministry of Infrastructure and Transport No. 567, dated 7 December 2017, published in the Italian Official Gazette No. 12 of 16 January 2018, concerning the use of funds for major infrastructure projects awarded through a general contract;
- Decree of the Ministry of Infrastructure and Transport No. 14, dated 16 January 2018, published in the Italian Official Gazette No. 57 of 9 March 2018 concerning the planning of works, services and supplies of the Public Administration;
- Decree of the Ministry of Infrastructure and Transport No. 560, dated 1 December 2017, published on 16 January 2018, concerning the Building Information Modelling (BIM) platform for tenders and concessions of works;
- Decree of the President of the Council of the Ministers No. 76, dated 10 May 2018, published in the Italian Official Gazette No. 145 of 25 June 2018, concerning methods of execution, types and thresholds of the works subject to public debate;
- Decree of Ministry of Infrastructure and Transport, dated 12 February 2018, published in the Italian Official Gazette No. 88 of 16 April 2018, concerning the determination of the registration fee for registration in the register of members of the awarding committees and the related fees;
- Decree of Ministry of Infrastructure and Transport No. 31, dated 19 January 2018, published in the Italian Official Gazette No. 83 of 10 April 2018, concerning the standard contract forms for surety guarantees provided for in Articles 103, Paragraphs 9 and 104 of the PCC;
- Decree of Ministry of Infrastructure and Transport No. 49, dated 7 March 2018, published in the Italian Official Gazette No. 111 of 15 May 2018, concerning the guidelines on the methods of performing the functions of the Director of Works and the Director of Execution of the contract;
- Decree of Ministry of Infrastructure and Transport, dated 31 January 2018, published in the Italian Official Gazette No. 88 of 16 April 2018, concerning the determination of the limits of the remuneration of the Arbitration Board (Collegio Arbitrale);
- Decrees concerning the minimum environmental criteria in different sector such as public lighting (supply, design and services) public green areas, planning of works, services and supplies of the Public Administration; and
- Decree of the Ministry of Foreign Affairs No. 192, dated 2 November 2017, published in the Italian Official Gazette No. 296 of 20 December 2017, concerning the general directives governing the procedures for selecting the contractor and performing the contract abroad, pursuant to Article 1 Paragraph 7 of the PCC.
Additional ANAC guidelines, as well as a number of ministerial decrees, have not yet been issued.
Please note that pursuant to Article 216 Paragraph 27 octies of the Sblocca Cantieri Decree as amended by the Sblocca Cantieri Law, a number of ANAC guidelines (e.g., ANAC Guidelines No. 3 and 4) and ministerial decrees will be replaced by a new regulation implementing the PCC (the Single Regulation), which has not yet been issued. The Ministerial Committee in charge of drafting the text of the Single Regulation has recently stated that the release of the final text should take place within the next few weeks (although such release could be delayed by the covid-19 emergency).
Once issued, the Single Regulation shall replace a considerable number of ANAC guidelines and ministerial decrees already adopted to implement the PCC (that, until the adoption of the Single Regulation, shall remain in force to the extent that they are consistent with the PCC and the issues raised in the course of some EU infringement proceedings commenced against Italy) and shall contain, in particular, provisions concerning, among others:
- appointment, role and tasks of the figure in charge of the tender procedure (the RUP);
- design of works, services and supplies, and verification of the designs;
- qualification system and requirements of the work contractors and general contractors;
- procedures for the awarding and implementation of works, services and supply contracts below the EU thresholds;
- work direction;
- performance of works, services and supply contracts, accounting measures, suspension and liquidated damages;
- testing and verification of conformity;
- award of architecture and engineering services; and
- works relating to cultural heritage.
Pending the entry into force of the Single Regulation, the Ministry of Infrastructure and Transport and ANAC are authorised to amend the relevant decrees and guidelines, respectively, for the purposes of closing off the above-mentioned infringement proceedings. Finally, following the entry into force of the Single Regulation, the ANAC Guidelines that concern aspects that will be regulated by or will be not consistent with provisions of the Single Regulation shall become ineffective.
Case law developments have spanned a wide range of issues, such as enforcement of the bid bond in favour of the contracting authority, should the bidder fail to sign the contract;19 contract award annulment;20 bidders' ability to rectify documentation filed with the contracting authority;21 and qualification requirements based on social security contributions.22
Scope of procurement regulation
i Regulated authorities
The PCC is applicable to public entities encompassing the central government, any regional or local authority, and any association formed by such entities.
Additionally, the PCC's scope also includes the following entities:
- bodies governed by public law, that is, bodies in compliance with the following characteristics: they are established for the specific purpose of meeting needs in the general interest (not having an industrial or commercial character); they have legal personality; and they are financed, for the most part, by central government, regional or local authorities, or by other bodies governed by public law; or are subject to management supervision by those authorities or bodies; or have an administrative, managerial or supervisory board and at least half of the members are appointed by the central government, regional or local authorities, or by other bodies governed by public law;
- public undertakings over which a public entity exercises a dominant influence by virtue of its ownership thereof, its financial participation therein or the rules governing it;
- private entities acting on the basis of 'special or exclusive' rights, granted by a competent authority, in any of the utilities sectors provided for by Articles 115 to 121 of the PCC;
- works and services concessionaries; and
- private entities that hold building permits when such entities directly undertake the obligation to execute town planning works in lieu of payment of the relevant contribution.
ii Regulated contracts
The PCC applies to public works, supplies and services contracts, in the ordinary sectors and in the utilities sectors. The utilities sectors include: gas and heat; electricity; water; transport services; ports and airports; postal services; and extraction of oil and gas and exploration for, or extraction of, coal or other solid fuels.
Public contracts in the defence and security sectors are awarded pursuant to the PCC and specific rules set forth by Legislative Decree No. 208/2011, implementing Directive No. 2009/81/EU.
The PCC also provides for an organic regulation of public-private partnership (PPP) contracts, including concession contracts.
PPPs are defined as contracts for pecuniary interest, concluded in writing, by means of which one or more contracting authorities entrust one or more economic operators with a set of activities including the execution, transformation, maintenance and operation of a work or service, the consideration for which consists in the availability or in the right to exploit the works or services or in the performance of a service connected to such works by undertaking the risk. The PPP contracts include, inter alia, work and service concessions, the project financing procedures, the availability contract and financial leasing.
Moreover, the definition of PPP expressly recalls the application of the Eurostat decisions under the public accounting aspects. As a general rule, the private sector partner has to be competitively tendered.
Concession contracts are defined as agreements for pecuniary interest concluded in writing by means of which one or more contracting entities entrust one or more economic operators with the execution of works or the provision and the management of services the consideration for which consists either solely in the right to exploit the works or services that are the subject of the contract or in that right together with payment.
The award of a concession, as well as any other PPP contract, shall involve the allocation to the concessionaire of an operating risk in exploiting the works or services, encompassing demand or supply risk or both. The concessionaire or private partner in a PPP contract shall be deemed to assume operating risk where, under normal operating conditions, it is not guaranteed to recoup the investments made or the costs incurred in operating the works or the services that are the subject matter of the contract. The part of the risk transferred to the concessionaire or private partner in a PPP contract shall involve real exposure to the vagaries of the market, such that any potential estimated loss incurred by the concessionaire or private partner in a PPP contract shall not be merely nominal or negligible. Specific rules are provided in this respect by the PCC in relation to highway concessionaires for which the traffic risk is expressly included in the operational risk.
As far as PPP and concession contracts are concerned, the PCC also provides for a set of specific rules with regard to bidding process, duration of the contract, public contribution, early termination, and revision of the financial and economic plan. In this respect, it is worth mentioning that recently Article 35 of Law Decee No. 162/2019, as converted, with amendments, into Law No. 8/2020, introduced certain restrictive provisions concerning early termination of highway and motorway concessions that partially derogate from the PCC's provision.
The PPP regime has been strengthened further by the Corrective Decree. Among the main changes introduced by this, it is worth highlighting:
- the obligation of the contractor to prove the availability of financing and, accordingly, provision of a duration to be initially set depending on the amortisation period of the investment;
- the obligation of the contracting authority to provide for the termination of the PPP contract in the tender if the facilities agreement is not entered into within a fair term, namely within 18 months of the execution of the contract;
- an increase from 30 to 49 per cent of the public contribution payable to the contractor to ensure the economic and financial balancing of the PPP contract; and
- recognition of hedging costs among the indemnities due to the contractor in any case of early termination of the PPP contract due to default of the contracting authorities or revocation for public reasons and the provision of specific indemnities due to the contractor in case of withdrawal caused by the lack of an agreement on the rebalancing of the financial plan.
Moreover, the Corrective Decree has strengthened the power and role of the ANAC in the PPP and concessions sector. Particularly, the ANAC is entitled to adopt guidelines on the monitoring of PPP contracts conducted by the contracting authorities to ensure the correct allocation of the operational risk on the PPP contractor over the duration of the contracts. These guidelines are currently under discussion and expected imminently.
Article 211, Paragraphs 1 bis, 1 ter and 1 quater of the PCC (as recently introduced by Article 52 ter of Law Decree No. 50/2017 converted, with amendments, by Law No. 96 of 24 June 2017) enabled the ANAC to appeal any call for tender, acts and measures relating to significant contracts (e.g., PPP contracts) before the administrative courts if it considers that they violate the rules on public contracts relating to works, services and supplies. A specific ANAC regulation to govern in detail such powers has been recently adopted by ANAC.
Specific financial thresholds for determining individual contract coverage are set forth by the PCC. The PCC applies to both above-threshold and below-threshold contracts, although such contracts are treated differently in terms of the procurement procedures to be applied.
In this respect, it is worth highlighting that the Sblocca Cantieri Law has amended Article 36 of the PCC, providing specific rules for the award of contracts below the EU threshold. In particular, without prejudice to the possibility of launching ordinary tender procedures, work, service and supply contracts may be awarded according to the following modalities:
- direct awarding in relation to contracts not exceeding €40,000;
- direct awarding:
- prior to assessment of three estimates (if any) in relation to work contracts having a value between €40,000 and €149,999; or
- prior to assessment of five estimates (if any) in relation to service and supply contracts having a value between €40,000 and the EU thresholds for supplies and services set for by Article 35 of the PCC;
- negotiated procedure prior to consultation of at least 10 economic operators (if any) in relation to work contracts having a value between €150,000 and €349,999;
- negotiated procedure prior to consultation of at least 15 economic operators (if any) in relation to work contracts having a value between €350,000 and €999.999; and
- open procedure in relation to work contracts having a value equal to or higher than €1 million up to the EU thresholds for works.23
Moreover, regarding below-threshold contracts, the Corrective Decree extended the scope of the principles applicable to such contracts, providing for the application of the provisions concerning the conflict of interest and environmental sustainability criteria, as well as the faculty of the contracting authorities to insert social clauses in the calls for tender.
As far as above-threshold contracts are concerned, contracting authorities may award public contracts by a negotiated procedure without prior publication under specific conditions laid down by the PCC, such as:
- failed procurement;
- works, supplies or services that can be supplied only by a particular economic operator;
- extreme urgency;
- supply contracts where the products involved are manufactured purely for the purpose of research, study or development;
- additional deliveries by the former supplier, intended as a partial replacement or extension of existing supplies where a change of supplier would oblige the contracting authority to acquire supplies having different technical characteristics that would result in technical difficulties in operation and maintenance;
- supplies quoted and purchased on a commodity market;
- purchase of supplies or services on particularly advantageous terms, from either a supplier that is definitively winding up its business activities, or the liquidator in an insolvency procedure; and
- new works or services consisting in the repetition of similar works or services entrusted to the economic operator to which the same contracting authorities awarded an original contract.24
As a general rule, variations to contracts are subject to authorisation of the contracting entity and must not alter the nature of the agreement. In particular, public contracts may be modified or transferred to a different supplier (as a consequence of a merger, demerger or transfer of a going concern) without competitively tendering the varied or transferred contract under specific conditions set forth by the PCC.
Certain contracts are excluded from the scope of the PCC due to their object. Examples include: concession contracts in water supply sector; certain financial or legal services; certain public transportation services, etc. Although the award of such contracts is not subject to the procedural rules laid down by the PCC, general principles governing public procurement (such as transparency, equal treatment, etc.) apply.
Without prejudice to the above, it must be underlined that due to the covid-19 pandemic, specific measures have been introduced by the Cura-Italia Law Decree in relation to the regulated contracts by the PCC, in order to support contractors affected by the crisis during the performance phase of the contracts. Among such measures, the following are worth mentioning:
- the compliance of the contractor with the covid-19 outbreak containment measures introduced by the government shall be always assessed pursuant to Articles 1218 and 1223 of Italian Civil Code in order to exclude liabilities of, liquidated damages to, breaches of the contractors in case of delayed performances, or failure to perform the contracts; and
- in order to ensure immediate cash flows, contractors are entitled to benefit from an advanced payment of 20 per cent of the contract amount pursuant to Article 35 of the PCC also in case of urgent delivery aimed at acceleration to the commencement of works, services and supplies.
Special contractual forms
i Framework agreements and central purchasing
A framework agreement means a contract that is awarded in accordance with the procedures laid down by the PCC and concluded between one or more contracting authorities and one or more economic operators, aimed at establishing the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged.25
The term of a framework agreement shall not exceed four years in the ordinary sectors and eight years in the special sectors, apart from exceptional cases duly justified, in particular by the subject of the framework agreement.
Where a framework agreement is concluded with a single economic operator, contracts based on that agreement shall be awarded within the limits of the terms laid down in the framework agreement. For the award of those contracts, contracting authorities may consult the economic operator that is party to the framework agreement in writing, requesting it to supplement its tender if necessary.
Where a framework agreement is concluded with more than one economic operator, contracts based on that agreement shall be awarded either with or without reopening competition among the economic operators parties to the framework agreement, depending on the conditions provided for by the PCC and on the basis of a reasoned decision of the contracting authority.
Contracting authorities may use a dynamic purchasing system for commonly used purchases.26 Such procedure entails a completely electronic process, which follows the rules of a restricted procedure and is open throughout the period of its validity to any economic operator that satisfies the selection criteria.
Contracting authorities can launch autonomous tender procedures only under the condition that they are qualified to do so by the ANAC, in accordance with specific rules set forth by a governmental decree, which is still under discussion and expected to be adopted in the coming months.27 According to recent case law,28 until the Decree is approved, each local contracting authority is entitled to launch and manage any tender procedure.
Non-qualified contracting authorities shall necessarily purchase works, supplies or services from or through a central purchasing body (which can be used by qualified contracting authorities as well).
The role of central purchasing bodies has been strongly enhanced by recent legislation in the context of a national spending review programme. The main operating functions of central purchasing bodies are: to award supplies and services contracts as well as certain types of works contracts; to enter into framework agreements that can be used by qualified awarding authorities to award public tenders; and to manage dynamic purchasing systems and electronic markets.
The main central purchasing body is Consip SpA, a joint-stock company entirely held by the Ministry of Finance. Moreover, each region has its own central purchasing body, operating at a local level. Please note that the PCC provides for the use of a central purchasing body for those municipalities that are not provincial capitals,29 but the Sblocca Cantieri Law has suspended such provision until 31 December 2020.
ii Joint ventures
As a general principle, contracting authorities should always award public contracts pursuant to public procurement procedures, regardless of whether the counterparty is a private or public entity.
However, the PCC has introduced specific rules for in-house providing, pursuant to which the award of a public contract shall fall outside the scope of public procurement rules where all of the following conditions are met: (1) the contracting authority exercises over the legal person concerned a control which is similar to that which it exercises over its own departments; (2) more than 80 per cent of the activities of the controlled legal person are carried out in the performance of tasks entrusted to it by the controlling contracting authority; and (3) there is no direct private capital participation in the controlled legal person with the exception of non-controlling and non-blocking forms of private capital participation required by national legislative provisions, which do not exert a decisive influence on the controlled legal person.
Pursuant to Article 192 of the PCC, a special register of the contracting authorities operating through in-house awards is held by the ANAC.
Further, in the utilities sectors, the PCC does not apply to contracts awarded by: a joint venture (JV) set up by public entities or public undertakings to an entity that is affiliated with a member of the JV; or a JV's member to the JV itself.
The bidding process
As a general rule, contracting authorities comply with the general principle of transparency, according to which all their acts concerning public tenders must be formally published.30
Specific rules are laid down by the PCC with regard to publication of: contract notices, both at the EU level and at the national level, as well as on the buyer profile; prior information notices; and contract award notices on the results of the procurement procedure.
Contracting authorities may use the following tender procedures:
- open procedures, where any interested economic operator may submit a tender in response to a call for competition;31
- restricted procedures, where any economic operator may submit a request to participate in response to a call for competition, and only those economic operators invited to do so by the contracting authority following its assessment of the information provided may submit a tender;32
- competitive procedures with negotiation, where any economic operator may submit a request to participate in response to a call for competition. However, only those economic operators invited by the contracting authority following its assessment of the information provided may submit an initial tender, which shall be the basis for the subsequent negotiations. Afterwards, contracting authorities shall negotiate with tenderers the initial and all subsequent tenders submitted by them. The contracting authority then assesses the final tenders on the basis of the award criteria and awards the contract;33
- negotiated procedure without prior publication, which can be used by awarding authorities under specific circumstances set forth by the PCC;34
- competitive dialogues. In accordance with such procedural scheme, contracting authorities shall set out their needs and requirements in the contract notice and may also define them in a descriptive document. Any economic operator may submit a request to participate in response to a contract notice, but only those economic operators invited by the contracting authority following the assessment of the information provided may participate in the dialogue. Contracting authorities then open a dialogue with the selected participants aimed at identifying and defining the means best suited to satisfying their needs. Having declared that the dialogue is concluded and having so informed the remaining participants, contracting authorities ask each of them to submit their final tenders on the basis of the solution or solutions presented and specified during the dialogue;35 and
- innovation partnership, introduced by the PCC implementing the 2014 Public Contracts Directive.36
Awarding authorities may also use electronic procurement or electronic auctions.
Following the Cura-Italia Law Decree, specific procedures derogating from the PCC and, specifically, from the requirements of the negotiated procedures described in Section III.ii, above) and mandatory checks on the operators, have been introduced to allow urgent supplies, services and works in fields deemed essential during the covid-19 emergency. In particular, until 31 December 2020, public authorities are authorised:
- to acquire IT services and supplies, preferably based on the cloud SaaS (software as a service), as well as connectivity services through negotiated procedures by selecting the best offeror among four economic operators, of which at least an innovative start-up or an innovative small and medium-sized enterprise. Also, simplification has been introduced with regard to the checks on the awardee and timing for the signature of the contracts. Indeed, contracts shall be immediately entered into between the parties (in derogation from the standstill period provided under Article 32 of the PCC) prior to a mere self-certification of the awardee attesting the absence of disqualification causes and the full compliance with general, financial and technical requirements provided by the tender and the anti-mafia legislation; and
- to direct award public refurbishment works of prison buildings damaged during the covid-19 emergency for extreme urgency reasons, by derogating to the threshold of €200,000 set by Article 163 of the PCC, provided that the works amount does not exceed the EU thresholds.
Moreover, in order to ease contracts in the health or school sectors and support the business of Italian enterprises in the international context during the emergency state, without any time limitation:
- public authorities are authorised to award supplies, services and works contracts related to interventions provided by a specific fund named 'Fondo per la Promozione Integrata' (e.g., extraordinary campaigns to support exports and internationalisation of the sectors most strongly affected by the economic crisis, promotion initiatives of the country system on foreign markets, etc.), through negotiated procedures without prior publication of a call for tenders by selecting five operators on the market (if any) and regardless of the occurrence of the legal requirements that would justify the recourse to such procedure;
- entities of the National Health Service are authorised to direct award health supplies and services financed through donations of individuals and legal entities pursuant to Article 793 of the Italian Civil Code, provided that the EU thresholds provided under Article 35 of the PCC are not exceeded and the awarding complies with the donation reasons (Article 99 Paragraph 3 of the Cura-Italia Law Decree); and
- school entities are authorised to acquire digital platforms and devices for distance learning derogating from the PCC whenever it is not possible to recourse to framework agreements of purchase central bodies for contracts exceeding the EU thresholds or to the MEPA portal for contracts below the EU thresholds.
Before the Cura-Italia Law Decree, Article 34 of Law Decree No. 9/2020 also provided that until the end of the state of emergency, the Civil Protection Department and other entities identified by a specific order are entitled to acquire any personal protective equipment and other medical devices in derogation of the PCC.
iii Amending bids
As a general principle, no material changes regarding either the conditions of the tendered contracts or the requirements for eligibility to bid are allowed.
When the evaluation criteria is the most economically advantageous tender, contracting authorities may authorise or require tenderers to submit variants, indicating such faculty in the contract notice. However, variants shall be linked to the subject matter of the contract, and only variants meeting the minimum requirements laid down by the contracting authorities shall be taken into consideration.
i Qualification to bid
In order to participate in tender procedures, bidders must comply with the following three main sets of requirements, pertaining to:
- general moral requisites, aimed at excluding from tenders entities falling into the following categories:
- those who have been convicted of certain types of crimes with an unappealable judgment (such as participation in a criminal organisation, corruption, bribery, fraud, terrorism, etc.);
- those who have failed to pay social security contributions or taxes;
- those who are facing bankruptcy proceedings (or entering a proceeding for the declaration of bankruptcy);
- those who have been found guilty of material professional misconduct;
- those who have made some misrepresentations;
- those who have conflicts of interests in the tender, and
- those who are subject to the sanctions disqualifying them from exercising certain activities provided by Legislative Decree No. 231/2001, etc.;37
- economic and financial capacity; and
- technical and professional capacity.
Economic operators may be excluded from the tender only in the event the above-mentioned requirements are not met, or should the bid not be compliant with mandatory requirements set forth by the procurement documents.
With regard to the moral requisites under (a), the Corrective Decree introduced changes concerning the general moral requirements provided by Article 80 of the PCC, widening the individuals obliged to personally declare the absence of the exclusion's causes from the tender, including the institori and general attorneys.
Moreover, the Sblocca Cantieri Law has increased the list of the grounds causing the exclusion of the tenderers, introducing the material defaults vis-à-vis subcontractors ascertained with a final judgment. Also, the Sblocca Cantieri Law has outlined the duration of the exclusion from the tender where the final judgment does not provide for a fixed duration of the ancillary penalties applied to the competitor. In particular, save for specific exceptions, such duration shall be: (1) permanent in the case of entities convicted of certain types of crimes providing for a permanent prohibition to contract with public administrations, as an ancillary penalty; (2) seven years in the case of entities convicted of certain types of crimes providing for a temporary prohibition to contract with public administrations, as an ancillary penalty; and (3) five years in cases other than those provided under (1) and (2).
In the cases in points (2) and (3), the duration of the exclusion shall be equal to the duration of the main penalty applied to the competitor if the latter is lower than the ancillary penalty.
Moreover, the Sblocca Cantieri Law clarifies that in the cases provided under Article 80, Paragraph 5 of the Code (i.e., the bullet points under (a) above, the duration of the exclusion from the tender shall be three years starting from the exclusion measure adopted by the contracting authority (or from the final judgment in the case of judicial challenges).
In specific cases, should a competitor make good any damage caused and adopt measures to prevent other crimes, it may be readmitted to the procedure.
In addition, the contracting authorities have been granted new powers in order to demonstrate, for the purposes of the exclusion, that the company was guilty of serious misconduct putting in doubt its integrity and reliability.
In the case of missing or incomplete documentation filed by the operator participating in the tender procedure, the latter is entitled to regularise its position within 10 days from the relevant notice received from the contracting authority.
The requirements described under (b) and (c) must be drawn up by the awarding authorities as well as related and proportionate to the subject matter of the contract.
ii Conflicts of interest
The PCC provides for a wide concept of conflicts of interest, which covers any situation where staff members of the contracting authority who are involved in the conduct of the procurement procedure have, directly or indirectly, a financial, economic or other personal interest that might be perceived to compromise their impartiality and independence in the context of the procurement procedure.
Contracting authorities take appropriate measures to effectively prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures so as to avoid any distortion of competition and to ensure equal treatment of all economic operators.38
Personnel of contracting authorities that have a conflict of interest must give specific notice thereof to the contracting authority and must abstain from the procurement procedure.
iii Foreign suppliers
Pursuant to Article 45 of the PCC, Italian contracting entities shall allow economic operators established in EU Member States to participate in national procurement procedures.
Insofar as they are covered by the GPA and by the other international agreements by which the EU is bound, contracting authorities shall accord to the economic operators of the signatories to those agreements treatment no less favourable than the treatment accorded to the works, supplies, services and economic operators established in Italy.39
i Evaluating tenders
As a general rule, contracting authorities may award public contracts either on the basis of the most economically advantageous tender criterion, which takes into account both the economical and technical aspects (e.g., quality, price, technical merit, aesthetic, functional and environmental characteristic), using a cost-effectiveness approach or on the basis of the lowest price criterion. Quality criteria may include: organisation, qualification and experience of staff assigned to performing the contract; after-sales service and technical assistance; and environmental or social aspects.
Following the amendments introduced by the Sblocca Cantieri Law, the freedom of the contracting authorities to choose the awarding tender criterion varies depending on whether the tender procedure is above or below the EU threshold.
As to the tender procedures above the EU threshold, the awarding criterion shall be the most economically advantageous tender.
Particularly, the following contracts shall be awarded exclusively with the most economically advantageous tender criterion:
- service contracts relating to social services and catering services in hospitals, care facilities and schools, highly intensive manpower services, save for amounts below the threshold of €40,000;
- service contracts for the award of engineering, architectural and other technical and intellectual services for an amount equal to or higher than €40,000; and
- service and supply contracts characterised by significant technological content or which are innovative in nature having an amount equal to or higher than €40,000.40
Otherwise, services and supply contracts with standard features or whose terms are defined by the market, except for highly intensive manpower services, may be awarded with the lowest price criterion, but in such case, the contracting authority shall give evidence of the grounds of such choice in the tender documentation.41
As to the tender procedures below the EU threshold, the Sblocca Cantieri Law provides that, save for the cases under (a), (b) and (c) above where the choice of the most economically advantageous tender criterion is mandatory, the contracting authorities will be free to choose between the most economically advantageous tender criterion and the lowest price criterion.42
ii National interest and public policy considerations
Specific regulations are laid down with regard to strategic infrastructures of national interest, aimed at: ensuring correct planning and priority in their execution; providing them with financial support through specific national funds; and providing the awarded contract with greater stability.
As far as public policy considerations are concerned, public contracts must be awarded in accordance with the principles of environmental protection and energy efficiency,43 and may also consider social criteria.
Unless justified by the subject matter of the contract, technical specifications laying down the characteristics required for a work, service or supply shall not refer to a specific make or source, or a particular process that characterises the products or services provided by a specific economic operator, or to trademarks, patents, types or a specific origin or production with the effect of favouring or eliminating certain undertakings or certain products.44 Such reference shall be permitted only on an exceptional basis.
Where a contracting authority uses the option of referring to technical specifications, it shall not reject a tender on the grounds that the works, supplies or services tendered for do not comply with the technical specifications to which it has referred, once the tenderer proves in its tender by any appropriate means that the solutions proposed satisfy in an equivalent manner the requirements defined by the technical specifications.
On request from the tenderer concerned, the contracting authority shall as quickly as possible, and in any event within 15 days of receipt of a written request, inform:
- any unsuccessful tenderer of the reasons for the rejection of its tender;
- any tenderer that has made an admissible tender of the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer or the parties to the framework agreement; and
- any tenderer that has made an admissible tender of the progress of negotiations and dialogue with tenderers.45
Contracting authorities withhold information regarding the contract award, the conclusion of framework agreements or admittance to a dynamic purchasing system, where the release of such information would impede law enforcement or would otherwise be contrary to the public interest, would prejudice the legitimate commercial interests of a particular economic operator, whether public or private, or might prejudice fair competition between economic operators.46
Further, regardless of a specific request, contracting authorities shall as quickly as possible, and in any event within five days from the adoption of the measure, inform:
- the awardee and other recipients identified by the PCC of the contract award, as well as the signing date of the contract;
- excluded bidders of their disqualification;
- any candidate of the decision not to award a contract or not to conclude a framework agreement;47 and, following the amendments introduced by the Sblocca Cantieri Law; and
- any candidates of the measures aimed at excluding from or admitting in the tender procedure following the requirements checks provided under Article 80 of the PPC.48
Once the contract is awarded, each bidder having a qualified interest can ask to have access to the bidding documents of the awardee as well as other undisclosed procurement documents. However, contracting authorities shall not grant access to information with regard to:
- information concerning technical or trade secrets of the bidder, unless access to this information is necessary for filing a legal action;
- legal opinions obtained for the solution of potential or ongoing disputes concerning public contracts; and
- technical solutions or software used by the contracting authority for electronic auctions, where covered by industrial property rights.49
As far as the standstill period is concerned, the PCC provides that the contract cannot be signed before 35 days from the last notice of the contract award by the contracting authority.50
Should the contract award be challenged and interim measures (such as suspension of the effects) be requested, the contract cannot be signed before the issuance of the precautionary decision by the administrative court.51
Litigation costs in the field of public procurement may depend on various circumstances. In particular, bringing a legal action before the administrative courts involves the payment of a tax ranging from €300 to €6,000.52
Time frames may also vary depending on a number of factors, such as the complexity of the case and the workload of the court seized of the case. However, specific rules are set forth by the Administrative Trial Code (ATC)53 to accelerate the duration of judicial proceedings in the field of public procurement.
In the Italian legal framework, enforcement of public procurement rules is granted not only through judicial review, but also by means of alternative dispute resolution (ADR), encompassing the following procedures:
- friendly settlement agreements, which can be used by contracting authorities in the event the amount of the exceptions raised and quantified by the contractor is equal to or higher than 5 per cent and up to 15 per cent of the contract value;
- civil settlements;
- the arbitration panel of the ANAC; and
- pre-litigation advice to be issued by the ANAC with regard to disputes arising during the tender procedures.
The Corrective Decree introduced some changes to the ADRs, in particular:
- the removal of the technical advisory board, which could be entrusted by the parties with the task of submitting a non-binding solution to disputes; and
- in the case of friendly settlement agreements, the enterprise refusing the proposal of friendly settlement will only be entitled to challenge it before a court within the peremptory term of 60 days.
Finally, some amendments have been introduced in relation to the provisional regime, providing that the arbitration procedures shall be applied to contracts whose call for tender or invitations to the tender have been published before the entrance into force of the PCC.
As far as judicial reviews are concerned, a distinction must be drawn between actions regarding the awarding procedure, which are subject to the jurisdiction of administrative courts, and actions concerning the performance of the contract once it has been awarded, which are subject to the jurisdiction of civil courts.
Judicial claims are regulated by the ATC. As a general principle, any interested party is entitled to challenge measures adopted by the contracting authority within 30 days of the communication (or acknowledgment) of the measure itself. Should the contract notice not be published, the 30-day period starts from the day following the publication of the contract awarding notice. If no such notice is issued, challenge must be filed within six months of the day following the contract signing.
The appeal may be filed with the competent regional court of first instance, whose decisions may be challenged before the administrative court of second instance (the Council of State).
ii Grounds for challenge
Appeals before administrative courts may be grounded on the breach of the procurement rules set forth by the law and the procurement documents as well as on the infringement of the general principles governing the exercise of administrative power (such as lack of competence, lack of a preliminary investigation and failure to state sufficient reasons, illogical and contradictory motivation).
Generally, claimants are entitled, inter alia, to challenge administrative measures issued by contracting authorities (such as calls for tender, admission or exclusion of a candidate) and ask for interim measures aimed at suspending the effectiveness of the challenged measure. Administrative courts may also award damages, including the loss of chances.
Should the court set aside the contract award, the former is bound to declare the contract ineffective, in whole or in part, only in cases of material violations set forth by the ATC.54
However, in spite of such serious violations, the contract remains effective if overriding reasons relating to a general interest require that its effects are maintained.
On the other hand, the administrative court identifies the following alternative sanctions to be applied alternatively or cumulatively:
- a fine to be paid to the contracting authority, whose amount range from 0.5 to 5 per cent of the value of the contract;55 and
- a shortening of the contract duration, where possible, ranging from 10 to 50 per cent of the remaining duration at the date of the court decision.
Apart from the above-mentioned cases, the court that overturns the contract award determines whether or not to declare the contract ineffective.
Further procedural provisions are set forth with regard to disputes concerning strategic infrastructures. Apart from cases in which the court is bound to set aside the contract, the suspension or annulment of the contract award does not imply the ineffectiveness of the contract already signed, and the applicant is only entitled to claim for damages.
iv Extraordinary measures
Due to the covid-19 emergency, Article 84 of the Cura-Italia Law Decree provides for several exceptions to the provisions of the ATC generally aimed at suspending the judicial activities, an exception being made for those that are urgent that cannot be postponed.
Among others, we highlight that Article 84 provides for the postponement of all hearings scheduled between 8 March 2020 and 15 April 2020. In addition, from 15 April until 30 June 2020, disputes will be decided by the Court without the oral discussion.
Moreover, to avoid human gatherings, the President of the High Administrative Court and of each regional administrative court may adopt all measures needed to meet health and hygiene requirements set forth by Law Decree No. 6, dated 23 February 2020.
As anticipated above, the PPC has been further amended by the Sblocca Cantieri Law.
Among the main changes to the PCC (not mentioned before), the following are worth noting:
- the percentage of works, services or supply that may be subcontracted to third parties has been increased from 30 per cent to 40 per cent of the contract amount until 31 December 2020;56 also, the previous obligation to indicate at least three subcontractors in the tender and the checks on the general requirements of subcontractors have been suspended until 31 December 2020;57
- the prohibition on jointly awarding the design and construction of works (i.e., 'integrated contract') provided under Article 59, Paragraph 1 of the PCC has been suspended until 31 December 2020;58 and
- for the purposes of the SOA qualification of the requirements of economic and technical capacity, the period of documentable activity has been extended to 15 years preceding the signing date of the contract.59
Forthcoming developments in the field of public procurement are expected to be brought by the Single Regulation which is supposed to be issued in the coming weeks (even though the final release could be delayed due to the covid-19 emergency). Moreover, from the first comments of the government committee in charge of the Single Regulation, certain legal issues provided by the PCC (subcontracts, awarding criteria, testing, qualifications of the contracting authorities, etc.) have not been touched on in detail by the Single Regulation and, therefore, they will need to be further amended.
Among the expected amendments, the main one will regard the subcontracts. Indeed, both the European Commission and the Court of Justice, with the recent Decision No. 63 of 26 September 2019, have stated that the limit thresholds to subcontract provided by the PCC are contrary to EU law. Therefore, it is likely that Article 105 of the PCC will be amended to comply with the decision taken at EU level and to provide the contracting authorities with a clear guide in this sector. From the recent warning notice to the Italian Parliament (No. 8 of 13 November 2019), ANAC asked for a legislative initiative and proposed to (1) generally admit subcontracts requesting to the contracting authorities to strictly motivate any limitation to the subcontracts in relation to the tender context and specific sectors so as to ensure competition and (2) maintain a prohibition to subcontract only the entire contract or its relevant part.
In addition to the above, in order to revitalise the public procurement sector strongly affected by the emergency situation, it is likely that further measures affecting public procurement will be adopted both during the covid-19 pandemic and following the end of the health crisis, taking into account that simplification and acceleration of the tender procedures, specifically in relation to public infrastructure and PPP contracts, will be key measures to relaunch the Italian economy and get out of the crisis.
1 Filippo Pacciani is a partner and Ada Esposito is a counsel at Legance – Avvocati Associati.
2 Legislative Decree No. 50/2016.
3 Legislative Decree No. 163/2006.
4 ANAC Guidelines No. 1, adopted by Resolution No. 973 of 14 September 2016, then updated, following the Corrective Decree, by Resolution No. 138 of 21 February 2018, published in the Italian Official Gazette No. 69 of 23 March 2018 and by Resolution No. 417 of 15 May 2019, published in the Italian Official Gazette No. 137 of 13 June 2019.
5 ANAC Guidelines No. 2, adopted by Resolution No. 1005 of 21 September 2016, published in the Italian Official Gazette No. 238 of 11 October 2016.
6 ANAC Guidelines No. 3, adopted by Resolution No. 1096 of 26 October 2016, published in the Italian Official Gazette No. 1096 of 26 October 2016 and then updated by Resolution No. 1007 of 11 October 2017, published in the Official Gazette No. 260 of 7 November 2017.
7 ANAC Guidelines No. 4, adopted by Resolution No. 1097 of 26 October 2016, then updated, following the Corrective Decree, by Resolution No. 206 of 1 March 2018, published in the Italian Official Gazette No. 69 of 23 March 2018 and then by the Resolution No. 636 of 10 July 2019, published in the Italian Official Gazette No. 183 of 6 August 2019.
8 ANAC Guidelines No. 5, adopted by Resolution No. 1190 of 16 November 2016, then updated following the Corrective Decree by Resolution No. 4 of 10 January 2018, published in the Italian Official Gazette No. 28 of 3 February 2018.
9 ANAC Guidelines No. 6, adopted by Resolution No. 1293 of 16 November 2016, published in the Italian Official Gazette, General Series No. 2 of 3 January 2017 and then updated by Resolution No. 1008 of 11 October 2017, published in the Italian Official Gazette No. 260 of 7 November 2017.
10 ANAC Guidelines No. 7, adopted by Resolution No. 235 of 15 February 2017, published in the Italian Official Gazette, General Series No. 61 of 14 March 2017and then updated by Resolution No. 951 of 20 September 2017, published in the Italian Official Gazette No. 236 of 9 October 2017.
11 ANAC Guidelines No. 8, adopted by Resolution No. 950 of 13 September 3017, published in the Italian Official Gazette No. 248 of 23 October 2017.
12 ANAC Guidelines No. 9, adopted by Resolution No. 318 of 28 March 2018, published in the Italian Official Gazette No. 92 of 20 April 2018.
13 ANAC Guidelines No. 10 adopted by Resolution No. 462 of 23 May 2018, published in the Italian Official Gazette No. 138 of 16 June 2018.
14 ANAC Guidelines No. 11 adopted by Resolution No. 614 of 4 July 2018, published in the Italian Official Gazette No. 178 of 2 August 2018, updated by Resolution No. 570 of 26 June 2019 published in the Italian Official Gazette No. 182 of 5 July 2019.
15 ANAC Guidelines No. 12 adopted by Resolution No. 907 of 24 October 2018, published in the Italian Official Gazette No. 264 of 13 November 2018.
16 ANAC Guidelines No. 13 adopted by Resolution No. 114 of 13 February 2019, published in the Italian Official Gazette No. 50 of 28 February 2019.
17 ANAC Guidelines No. 14 adopted by Resolution No. 161 of 6 March 2019, published in the Italian Official Gazette No. 73 of 27 March 2019.
18 ANAC Guidelines No. 15 adopted by Resolution No. 494 of 5 June 2019. Published in the Italian Official Gazette No. 182 of 5 August 2019.
19 Council of State, Section III, Decision No. 3765/2016. Council of State, Section VI, Decision No. 4349/2017.
20 Council of State, Section III, Decision No. 5026/2016. Council of State, Section V, Decision No. 2181/2018.
21 Council of State, Section V, Decision No. 3667/2016. Council of State, Section V, Decision No. 4789/2017.
22 Council of State, Plenary Meeting No. 5/2016 and No. 10/2016. Council of State, Section V, Decision No. 2529/2017 and No. 673/2018.
23 Article 36 of the PCC as amended by the Sblocca Cantieri Law.
24 Article 63 of the PCC.
25 Article 54 of the PCC.
26 Article 55 of the PCC.
27 Article 38 of the PCC.
28 Administrative Court of Lombardy – Brescia, Section I, Decision No. 266/2019 (upheld on appeal by Council of State, Section III, Decision No. 1584/2020).
29 Article 37, Paragraph 4 of the PCC.
30 Article 29 of the PCC.
31 Article 60 of the PCC.
32 Article 61 of the PCC.
33 Article 62 of the PCC.
34 Article 63 of the PCC.
35 Article 64 of the PCC.
36 Article 65 of the PCC.
37 Article 80, Paragraph 5 of the PCC.
38 Article 42 of the PCC.
39 Article 49 of the PCC.
40 Article 95, Paragraph 3 of the PCC.
41 Article 95, Paragraph 4 of the PCC.
42 Article 36, Paragraph 9 bis of the PCC.
43 Articles 4 and 30 of the PCC.
44 Article 68 of the PCC.
45 Article 76, Paragraphs 1 and 2 of the PCC.
46 Article 76, Paragraph 4 of the PCC.
47 Article 76, Paragraph 5 of the PCC.
48 Article 76, Paragraph 2 bis of the PCC.
49 Article 53 of the PCC.
50 However, exceptions to the standstill rule are set forth by Article 32 of the PCC.
51 Article 32, Paragraph 11 of the PCC.
52 Article 13 Paragraph 6 bis of the Decree of the President of the Republic No. 115/2002.
53 Legislative Decree No. 104/2010.
54 Article 121 of the ATC.
55 Pursuant to Article 123, Paragraph 1, lett. a) of the ATC, the contract value is intended as the award price.
56 Article 1, Paragraph 18, first period, of the Sblocca Cantieri Law, that amended Article 105, Paragraph 2 of the PCC.
57 Article 1, Paragraph 18, second period, of the Sblocca Cantieri Law, that amended Article 105, Paragraph 6 of the PCC.
58 Article 1, Paragraph 1, lett. b), of the Sblocca Cantieri Law, that amended Article 59, Paragraph 1 of the PCC.
59 Article 1, Paragraph 20, lett. q), of the Sblocca Cantieri Law, that amended Article 84, Paragraph 4 lett. b) of the PCC.