The main source of law for public procurement in Italy is Legislative Decree No 50 of 18 April 2016 ("Public Contracts Code" or PCC).
The PCC transposed the EU Directive 2014/23/EU on concessions, Directive 2014/24/EU on public procurement, Directive 2014/25/EU on tender procedures of entities operating in the water, energy, transport and postal services (so-called “special sectors”) and therefore constitutes the legal framework for the awarding of public contracts and concessions concluded by contracting authorities and other awarding entities. The PCC has been subject to several amendments in order to implement European legislative acts, such as:
In the last year, the following key developments are worth mentioning:
In addition, the Code expressly mentions some implementing acts issued by various authorities, including:
The regulatory framework currently in force is still ongoing, as the health emergency caused by the COVID-19 pandemic has strongly influenced the public procurement sector, leading to major derogations from the regulations laid down in the PCC to simplify and speed up the tender procedures, in most cases through the introduction of a provisional regime valid until 30 June 2023.
Under Legislative Decree No 50/2016, there are two types of entities subject to the public procurement regulation: (i) entities operating as awarding authorities or contracting authorities, and (ii) subjects that operate as economic operators.
With reference to the first type, Article 3, paragraph 1 of Legislative Decree No 50/2016 provides for the application of the PCC to:
Concerning economic operators, Article 3(1)(p) of PCC specifies that a bid may be submitted by "a natural or legal person, a public body, a grouping of such persons or bodies, including any temporary association of companies, a body without legal personality, including the European Economic Interest Grouping (EEIG) as described by Legislative Decree No 240 of 23 July 1991, which offers on the market the execution of works, the supply of products or the provision of services".
Specifically, Article 45 includes:
(a) individual entrepreneurs, including artisans, and companies, including co-operatives;
(b) consortia of production and work co-operatives;
(c) stable consortia, including those constituted as consortia of individual entrepreneurs, including artisans, of commercial companies and production and work co-operatives;
(d) temporary groups of competitors formed of the parties referred to in a), b) and c) above;
(e) ordinary consortia of competitors formed by the entities referred to in a), b) and c) above, including in the form of companies;
(f) aggregations between companies that are members of network contracts;
(g) entities that have entered into a European Economic Interest Grouping (EEIG) contract.
Pursuant to Article 3, paragraph 1, letter dd of Legislative Decree 50/2016, procurement law applies to
Both categories also operate for the so-called "special sectors" – ie, the sectors of public contracts relating to gas, heat, electricity, water, transport, postal services, land use, as governed by Part II of the Public Contracts Code.
Article 35 of the PCC has incorporated, for the purposes of its application, the following EU thresholds:
In regard to special sectors, the EU minimum value thresholds are:
However, contracting authorities may proceed with the award of contracts for works, services and supplies below the aforementioned minimum value thresholds, by following the procedure set out in Article 36 of PCC.
It should be noted that the Simplification Decree has temporarily modified the regulation of the direct awarding procedure, allowing direct awarding for works below EUR150,000 and for services and supplies, including engineering and architectural services and design activities, below EUR139,000. In such cases, the contracting authority may proceed with the direct award, even without consulting several economic operators, albeit always in compliance with the principles set out in Article 30 of the Public Contracts Code.
Based on the Government Procurement Agreement (GPA) – signed in Marrakech on 15 April 1994 – governments, including the EU, are obliged to grant other members products, services and their supplier’s treatment no less favourable than that granted to national products, services and suppliers. Furthermore, it is not allowed to discriminate between products, services and suppliers of other parties to the GPA.
To this extent, Article 45 of the Public Contracts Code provides that economic operators established in other member states of the EU, and which have been constituted in accordance with the legislation in force in their respective countries, are also admitted to public contract award procedures.
The Administrative Regional Court (TAR) of Piedmont recently expressed on the consequences of Brexit concerning the admission of British economic operators to the procedures for the award of public contracts and concessions with a value below the EU thresholds (TAR of Piedmont, Section III, 3 December 2021, No 1110). The Court stated that the access of such companies to the procurement market excluded from the framework of EU law is not prohibited but only "not guaranteed" and that, therefore, it is necessary to verify on a case-by-case basis whether the contracting authority has exercised this option.
The main obligations under the public procurement regulation arise from the fundamental principles of the EU Treaty and EU directives: the principles of freedom of movement of goods, freedom of establishment and freedom to provide services, as well as the principles deriving therefrom, such as equal treatment, non-discrimination, mutual recognition, proportionality, transparency, environmental protection and energy efficiency.
These principles are laid down in Article 30 of the Public Contracts Code, according to which “the award and execution of works, services and supplies contracts and concessions within the meaning of this Code shall ensure the quality of the performances and shall be carried out with respect to the principles of cost-effectiveness, efficacy, timeliness and correctness. In awarding contracts and concessions, the contracting authorities shall also respect the principles of competition, non-discrimination, transparency, proportionality, as well as publicity, according to the modalities indicated in this Code. The principle of cost-effectiveness may be derogated, within the limits in which it is expressly allowed for in current legislation and in this Code, by criteria, provided in the call for competition, inspired to social exigencies, as well as to the safeguard of health, environment, cultural heritage and the promotion of sustainable development, also under an energy standpoint”.
According to the national legislation, contracting authorities may not restrict competition in any way in order to favour or disadvantage certain economic operators and, therefore, the criteria for participation in contracts must be such that they do not exclude micro, small and medium-sized enterprises. On the other hand, to pursue the public interest, only candidates satisfying the moral, financial and technical requirements that provide adequate guarantees of proper performance should participate in the tender procedures.
Public contract regulations set forth two different systems of publicity. The first entails the duties of legal publicity (MIT Decree 2 December 2016 and Articles 70, 71, 78 and 98 of the Public Contracts Code). The second relates to the concept of transparency, as an instrument to allow citizens to supervise administrative activities and the proper use of public resources, also in order to prevent corruption (Article 29 PCC, Article 5 Legislative Decree 33/2013, so-called “civic access”).
The PCC and the MIMS Decree 2 December 2016, having regard to (i) the value of the contract and/or the concession (ie, whether it is below or above the thresholds set out in Article 35 of the PCC) and (ii) the type of contract (ie, whether it is a supply, services or works contract), mandate for prior advertisement of notices on:
The information included in the notices is:
Contracting authorities may conduct preliminary market consultations for all types of contracts, regardless of their value (see Articles 66 and 67 of the PCC and ANAC Guidelines No 14 of 6 March 2019), provided that they are carried out before launching a tender procedure, as a support aid for:
To this extent, awarding authorities may acquire advice, information or technical documentation from experts, market participants and independent authorities.
Such contribution is provided free of charge, without any right to reimbursement of fees or expenses.
Consultations are initiated by means of a "consultation notice", which must indicate:
Preliminary market consultations are particularly relevant when the assignment is of a "novel" nature (ie, innovative or unusual).
The procedure must be conducted in a way to guarantee the protection of fair participation, the “par condicio” (equal treatment) of the economic operator and transparency. Therefore:
Procedures that May Be Used for the Award of a Contract
Public competitive procedures are divided into general procedures and negotiated procedures.
Open procedure (Article 60 PCC)
It is called by the publication of: (i) a tender notice, together with the tender regulation, (ii) instructions to tenderer and (iii) a performance specifications document (lex specialis), followed by the submission of tender (the administrative documentation, the technical and economic bid of each participant). Upon checking the eligibility requirements of the candidates, the awarding authority proceeds to complete the comparative assessment in order to draw up a ranking list and then arrange for the award.
Restricted procedure (Article 61 PCC)
It is called by the publication of a tender notice, but the economic operators are simply invited to provide a request for tender participation; only after the assessment of the information related to admission requirements provided by the bidders does the award authority formally invite the candidates to submit a bid offer. Contracting authorities may limit the number of suitable candidates to be invited to participate in the procedure, but must indicate the relevant criteria in the tender notice.
The main feature of these procedures is the presence of a discussion between public administrations and private operators.
Competitive procedure with negotiation (Article 62 PCC)
Following the publication of the tender notice, the operators first send a request for tender participation and, subsequently, an initial bid. The latter will be negotiated with the public administration which, however, is required to:
At the end of the negotiation, the awarding authority provides the bidders a time limit to submit their final, unmodifiable bids.
Competitive dialogue procedure (Article 64 PCC)
Unlike the competitive procedure with negotiation, in this procedure the awarding authority has only to specify the need that it wants to satisfy. Therefore, a broader comparison is established which must lead to the identification of the optimal tailor-made solutions to be submitted to the administration and, subsequently, to the participants in order to request them to submit their final bids. The competitive dialogue procedure is used for particularly complex and/or innovative procurements.
The awarding authorities have the right to provide for reward mechanisms and payments in favour of the competitors who are not chosen as the winner of the contract award, in consideration of the remarkable effort required by this procedure.
Innovation partnership (Article 65 PCC)
This specific procedure allows the administration to identify a solution that is still unavailable on the market: to this extent, in the tender notice it is sufficient to formulate the correct admission requirements of the competitors, without specifying the subject matter.
Later, the contracting authority can choose whether to activate the partnership with one or more operators. This selection is essentially based on the evaluation of the potential supplier capabilities in the research and development field.
Following the negotiation phase, the bid(s) shall be scrutinised.
The contract award criterion is the most economically advantageous tender.
Negotiated procedure without prior publication of the tender notice (Article 63 of PCC)
Upon the occurrence of the cases laid down by Article 63 of the PPC, the public procurer may invite (without previously publishing the tender notice) economic operators, in a minimum number of five, to submit a bid. In this case, the contracting authority proceeds to verify the requisites of the competing economic operators and, subsequently, to the comparative evaluation of the bid offers submitted, to arrange the award in favour of the best one.
Negotiated procedure with a prior call for competition (Article 124 of PCC)
This procedure is conducted exclusively within special sectors (ie, water, transport, postal services, fuel, thermal energy, electricity and geographical area exploitation) and possesses similar features of the restricted procedure.
Modalities of Selecting Tender Procedures
The Public Contracts Code imposes various criteria to be assessed by public administrations in order to select the type of procedure feasible for the award of a public contract, the most important one is the value of the contract. The award of contracts whose amount is below the EU threshold is governed by Article 36 of the PCC.
A distinction is to be made between general procedures and negotiated procedures.
Open procedures and restricted procedures are the two standard ways of selecting the contracting operator, both are feasible to the public administration for all types of assignment, since no eligibility assumptions have been provided.
However, if the contracting authority selects the restricted procedure, a specific motivation is deemed as necessary.
Competitive Procedures with Negotiation and Competitive Dialogue
The negotiated procedure can only be conducted on the grounds of the "eligibility assumptions" governed by the PCC and, in particular, both for the competitive procedure with negotiation and for the competitive dialogue, the contracting authority is requested to provide proper justification in relation to: (i) the demand of technical requirements and/or (ii) following an unsuccessful attempt to carry out an open or restricted procedure.
Regarding the use of innovation partnership, public administrations must reach a decision based on:
Negotiated Procedure without Prior Publication of a Contract Notice
This refers to a procedure with novel characteristics, therefore it is necessary that procuring entities relying on this procedure shall assess particularly stringent criteria and, consequently, it is required to justify the occurrence of the conditions specifically spelled out by Article 63 of the PCC, such as:
As a general rule, procurement regulations do not impose to contracting authorities specific time limits for the publication of procurement documents.
Nevertheless, with reference to each tender procedure the time limits for submitting applications and bids are (i) essential; (ii) binding and (iii) shall be expressly indicated in the lex specialis. The failure to comply with such time limits leads to the inadmissibility of the proposed bid.
Article 79 of the PCC states that public authorities must fix the deadlines for the receipt of the requests to participate and bids, considering (i) the complexity of the contract, and (ii) the time required to prepare bids, without prejudice to the minimum time limits set out by Articles 60–65 of the PCC.
These deadlines may be extended in case of:
The PCC also establishes the operating procedures to be followed in the event of a malfunction of the digital e-procurement platform affecting the correct bid submission, if necessary, also providing for the suspension of the time limits for submitting the bid until restoration of the normal functioning of the digital e-procurement platform (paragraph 5 bis, Article 79 of the PCC). In case of suspension and/or extension, the public authorities are obliged to:
Article 79 of Legislative Decree No 50/2016 defines the terms and time limits that contracting authorities must take into account within the public procurement process, being necessary to consider the particular complexity of each individual single contract and the time needed to submit the bids.
In other words, the public administration has to consider two different aspects when it sets deadlines:
The ordinary minimum time limits for the submission of the bids in open (“procedure aperte”) and restricted procedures (“procedure ristrette”) are those provided by Articles 60 and 61 respectively of Legislative Decree 50/2016, namely:
In both cases, the contracting authority may reduce the above-mentioned time limits. For open procedures, the minimum time limit to submit a bid may be reduced to 15 days and, for restricted procedures, it may be reduced to ten days. In both cases, however, the following two conditions must be satisfied:
Criteria that an Economic Operator Must Meet in Order to Be Eligible for Participation in a Procurement Process
In order to bid to a public tender procedure, economic operators are requested to possess certain prerequisites set out by the law.
Article 94 of PCC set forth that, before proceeding with the evaluation and selection of the bid, it is necessary to verify the compliance of each bid with:
General or Subjective Requirements
In particular, Article 80 of the PCC specifies the grounds for exclusion for moral reasons, by:
Special or Objective Requirements
Articles 83 and 84 of the PCC set the minimum bar of technical/professional and economic/financial requirements for the bidder entering into a tender process: the main purpose of such requirements is to select those contractors/suppliers whose capabilities, qualifications and experience would minimise the risk of non-performance under the proposed contract.
It is worth noting that paragraph 8 of Article 83 of the PCC provides that the public authorities, in addition to the general and special requirements, cannot introduce further grounds for exclusion other than those expressly required by the PCC.
Pursuant to Article 91 of Legislative Decree No 50/2016, for restricted procedures, competitive procedures with negotiation (“procedure competitive con negoziazione”), competitive dialogue procedures (“dialoghi competitivi”) and innovation partnership procedures (“partenariato per l’innovazione”), the contracting authority may limit the number of candidates who meet the selection criteria and who may be invited to submit a bid, negotiate or participate in the dialogue, if the difficulty or complexity of the works, supply or services requires it – this, as long as it is ensured a minimum number of qualified candidates, as follows:
In the tender notice or invitations to confirm interest, the contracting authorities indicate the minimum number of candidates they intend to invite and, where they deem it appropriate for justified reasons of good performance, the maximum number of the candidates themselves.
The contracting authority could evaluate a bid/tender according to two different criteria: (i) the most economically advantageous tender (MEAT) and (ii) the lowest price criterion. Furthermore, for each criterion, the public administration could also provide other sub-criteria or sub-scores.
MEAT is the most widely used criterion in the tender procedures for selecting the winner of the contract award procedure.
Article 95 of the PCC allows the contracting authority to award the tender according to a complex comparison between the technical data and the economic/quantitative data of the bid. Specifically, the most economically advantageous bid based on the best price/quality ratio is evaluated according to objective criteria such as qualitative, environmental and social aspects, related to the subject matter of the contract as set out in the procurement documents.
Tenders awarded only by the MEAT criterion are:
On the other hand, with the lowest price criterion – regulated by Article 95 of Legislative Decree No 50/2016 – the contracting authority compares bids in relation to the greater price reduction in relation to the auction base, exclusively in the context of services and supplies with standardised characteristics or whose conditions are defined by the market, with the exception of labour-intensive services.
Disclosure of Tender Evaluation Methodologies
Awarding authorities are obliged to determine both contract tender evaluation methodology (Article 95 PCC – ie, MEAT or lowest price) and the selection of the bid criteria (ANAC guidelines No 2 on the most economically advantageous tender, approved with Resolution No 1005 of 21 September 2016).
For the tender evaluation criteria, please refer to 2.9 Evaluation Criteria.
Selection of the Bidders
The regulation of the call of the tender, in the event in which the tender evaluation is the MEAT, must include the criteria used by the awarding authority to evaluate the bids (ie, “selection of the bidder’s criteria”).
In particular, it is possible to distinguish between (i) constrained criteria, so-called "on-off", attributing a certain pre-determined, fixed score in case of a peculiar feature of the performance; (ii) discretional, namely the Selection Board proceeds with a comparative evaluation of bids – in this case, the regulation of the call of the tender shall assess a score range (not overly broad), within which the Selection Board shall assign the score to each of the candidates, having regard to the “justification criteria” that compose the score range itself.
For each selection of the bidder criteria, the regulation of the call of the tender could contemplate sub-criteria or sub-weights or sub-scores.
An example of selection of the bidder’s criterion is the life-cycle costing, calculating all costs incurred by the authority throughout the life-cycle of the product/services.
Pursuant to Article 76, paragraph 5, letter b) of Legislative Decree No 50/2016, the contracting authorities must notify the exclusion provision to excluded bidders and to other candidates immediately, and in any case no later than five days from the date of the exclusion.
Similarly, pursuant to paragraph 2, letter a-bis of the same article, if a written request is received from the bidder and the interested candidate, the contracting authority must inform each excluded candidate immediately (and in any case within 15 days from the request) about the reasons that led to rejecting the application.
The above-mentioned communications are sent by certified email system or by similar systems used in other member states.
Pursuant to Article 76, paragraph 5 of Legislative Decree No 50/2016, contracting authorities must notify immediately – and, in any case, within five days – the provision of the award to:
The above-mentioned communication is sent by a certified email system (or any similar system used in the other member states) and indicates the expiration date for the contract subscription.
The award provision must indicate – pursuant to Article 3 Law No 241/1990 – “the factual presuppositions and legal reasons that have determined the administration's decision, in relation to the results of the preliminary investigation. If the reasons for the decision result from another act of the administration referred to by the decision itself, together with the communication of the latter, the act to which it refers must also be indicated and made available, in accordance with this law. In each document notified to the recipient, the deadline and the authority to which it is possible to appeal must be indicated”.
Legislative Decree No 50/2016 provides for two different types of “standstill period” – the “substantial” standstill and the “procedural” standstill.
Article 32, paragraph 2 of Legislative Decree No 50/2016 provides that "the contract cannot, in any case, be stipulated before thirty-five days since the dispatch of the last of the notifications of the contract award decision". The regulation refers to the substantial standstill: here the term of 35 days has been co-ordinated with the procedural term (30 days) for challenging the contract award decision, and so to prevent the contract from being entered into during the pending judgment.
This mechanism includes the procedural standstill, which provides for an automatic suspensive effect of 20 days from the appeal that also includes a request for precautionary measures. In this sense, Article 32, paragraph 11, of Legislative Decree No 50/2016 provides that "if an appeal is lodged against the contract award decision with a request for precautionary measures, the contract cannot be stipulated from the time of notification of the precautionary request to the Contracting Authority and for the following twenty days, provided that within this term at least the precautionary measure of first instance takes place or the publication of the device of the sentence of first instance in case of a decision on the merits at the precautionary hearing, or until the pronouncement of said measures if subsequent".
As a general rule, the awarding authority has the power to review the decisions it has issued. This power of administrative self-protection is justified by the need for the public administration to conduct a thorough investigation, to allow inspections and functional checks aimed at making the final decision to maintain or remove the act from the system.
In the context of tender procedure, this power can affect the final contract award decision (so-called "external self-protection", since it affects an act that is prodromal and temporally previous to the contract itself) and is most frequently expressed in the institutes of revocation (revoca– regulated by Article 21-quinques of Law No 241/1990) and self-annulment (annullamento d’ufficio, ruled by Article 21-nonies of Law No 241/1990).
On the other hand, "internal self-protection" relates to all the powers of unilateral intervention of the public administration in the contract, which can also lead to the termination of the contract itself: for example, revocation (regulated by Article 108 of Legislative Decree No 50/2016) and termination for convenience (recesso unilaterale, regulated by Article 109 of Legislative Decree No 50/2016).
Pursuant to Article 120, paragraph 5 of the Code of Administrative Procedure (Legislative Decree No 104/2010), these measures may be challenged before the Administrative Court within 30 days from knowledge of the act.
Breach of Procurement Legislation
In the event that the public administration adopts an act in violation of the public procurement regulations, the aggrieved economic operator can (i) bring a claim for administrative self-annulment against the contracting authority that adopted the administrative act, and/or (ii) challenge the provision deemed unlawful (eg, award to a supplier not possessing the requisites specified by the tender regulations or tender notice lacking the essential elements) by proposing a judicial appeal to the courts.
Application for Administrative Self-Protection
The prejudiced economic operator is entitled to submit a request to the administration, explaining the grounds, aimed at reviewing the choices and evaluations made in the tender. In this case, the contracting authority will be required to evaluate the application and, in the light of the self-assessment carried out, will determine whether to confirm the act/decision adopted or, alternatively, to annul it in self-defence (that is, to cancel it from the “legal knowledge”).
The economic operator can challenge the competent TAR, alleging breach of the procurement rules. The proceeding must be started within 30 days of knowing that grounds for starting the proceeding had arisen. The disputing party is also entitled to apply for interim measures in order to preserve its rights and interests.
The economic operator assuming an infringement of public tender regulations may apply for review and, at the same time, request from the court the application of interim precautionary measures, with the aim of correcting the alleged infringement or preventing further damage to the eligible entity’s interest. Such measures may consist in the suspension of the decision under review or, alternatively, the scheduling of a hearing upon the merits of the proceeding, as described by Article 55 of the Code of Administrative Procedure.
The application is aimed at imposing interim measures that could be either (i) “monocratic”, issued – without hearing attorneys – until the collegial hearing discussing the interim measures, or (ii) “collegial”.
Monocratic interim measures are disposed by the TA.R President with a presidential decree (that may be adopted just a few hours after the filing of the application), “in case of extreme gravity and urgency” – such as not to allow a delay until the date the council next meets in chambers. Collegial interim measures postulate the hearing of the defendant, and the discussion takes place orally. The TAR for interim relief, if it considers the grounds favourable, fixes with a collegial order the date of the hearing on the merits, usually a few weeks after the filing of the application, authorising the production of written statements.
Requisites for the Adoption of Interim Measures
The conditions for the issuance of interim measures by the court are:
Such requirements are strictly evaluated in case of monocratic measures, given the absence of any discussion and the extremely short duration of the phase.
The right to challenge the public administration’s decisions stems from the Code of Administrative Procedure (Legislative Decree 104/2010) which states that the review procedures can be activated by any concerned entity having concrete and current interest.
In particular, within public procedure matter, it may result in:
If the entity is ranked in a position other than second, is required to justify not only the unlawful attribution of the score of the successful bidder, but also with reference to the evaluation of the bids of the competitor who preceded them in ranking.
Pursuant to Article 120 paragraph 1 of Legislative Decree No 104/2010, “the acts of awarding procedures relating to public works, services or supplies” are subject to the public procurements process, that is a judgment carried out before the Administrative Court and that concerns the overall activity of the public administration aimed at the conclusion of contracts.
In order to challenge the above-mentioned public procedure acts, the appeal must be brought within the term of 30 days:
The administrative legal enforcement of public contracts is quicker in comparison to civil and criminal procedures, as Legislative Decree No 104/2010 set forth very short time limits for reviews in respect of the ordinary procedure (ie, the time limit to challenge the award decisions is 30 days from their communication).
It is worth mentioning that if the economic operator requests the application of interim and precautionary measures (“misure cautelari”), the courts must schedule a hearing following the tenth day since the notification and five days from the depositing of the application. (It is estimated that interim measure reviews have an average length of 30 days).
Within such procedure, the courts not only rule on interim measures but, in the event they detect the manifest foundation of the application, are entitled to rule in relation to the whole proceeding with a simplified judgment. The grounds of the judgment may consist of a brief reference to the point of fact or law deemed conclusive or, if appropriate, to a conforming precedent.
In particular, the estimation of the length of proceedings relating to a procurement claim should consider the complexity of the matter dealt with, which typically depends on the number of parties involved in the proceeding, and/or on the complexity of the procedure, as well as on the workload of the courts seized of the case.
Nevertheless, according to “Relazione sulla amministrazione della Giustizia nell’anno 2021” published on the site of the Ministry of Justice, the average length for the definition of a new judgment in the field of public contracts is 104 days, while an appeal to the Administrative Supreme Court is decided, on average, in 163 days. Consequently, the time to complete a case relating to public contracts including two instances could be approximately 12 months.
Number of Procurement Claims Considered by the Review Bodies per Year
Before considering the number of public procurement claims reviewed every year, it might be useful to highlight that, in Italy, disputes can be settled by the courts of “ordinary jurisdiction” or by the courts of “administrative jurisdiction”. The first courts can take cognisance of every controversy of a civil nature involving the relationship between individuals (such as contract law or corporate law), whereas the second type of courts resolve disputes in which a private entity interacts with a public power.
The following data concerns exclusively the administrative judgments and are provided on the Giustizia Amministrativa website, the official web portal of the administrative jurisdictions in Italy.
It may also be appropriate to distinguish between claims to TAR and appeals to the Administrative Supreme Court.
Both challenge the legitimacy of a decision adopted by the public administration: TAR as first instance court, Council of State as second instance court.
As concerns the procurement claims to TAR, it is esteemed that they amount on average to about 7% of the whole administrative disputes and, consequently, to around 4,000 claims per year.
Referring to the appeals, they account for 7–8% of overall administrative appeals; the total amount of cases that can be attributed to public procurement appeals is therefore approximately 1,000 per year.
Costs to Challenge an Award Authority's Decision
The typical costs to challenge an award authority’s decision essentially refer to two different kinds of fees: (i) the court registration fee and (ii) the attorney’s fee.
The Court Registration Fee
The court registration fee is a tax that, according to Article 9 of Presidential Decree No 115/2002, any applicant must pay – for any instance and for any type of dispute – for the registration of new litigation.
It is determined on a fixed basis, according to Article 13 of Presidential Decree No 115/2002.
For public procurement matters, the court registration fee varies in proportion to the value of the tender as indicated in the tender notice. Therefore, concerning proceedings before the court of first instance:
In case of appeal before the court of second instance, the court registration fee is increased by 50%.
The legal assistance of an attorney is mandatory in case of challenge of an award authority’s decision: the calculation of this fee has to be conducted according to the parameters identified by Ministerial Decree No 55/2014, which provides, considering the value of the dispute, (i) a minimum fee, (ii) a medium fee, and (iii) a maximum fee.
In order to determine the value of the dispute, it is necessary to refer to the “effective profit” that, according to the case law consists of an amount not lower than 10% of the tender value; please see Administrative Supreme Court Advice No 183/2022.
However, sometimes, the effective profit could be specifically indicated within the procurement documents.
The attorney’s fee can be increased in relation to particularly complex dispute cases.
During contract execution, amendments are allowed within the limits of Article 106 of Legislative Decree No 50/2016 and are subject to authorisation from the Official Responsible for the Procedure (Responsabile Unico del Procedimento, RU.P) in accordance with internal rules of the contracting authority.
Specifically, contracts may be edited (both from a subjective and objective point of view) without a new awarding procedure in the following cases:
Pursuant to Article 36 of the PCC, the contracting authorities shall award contracts for works, services and supplies below the thresholds set out in Article 35 in accordance with the following procedures.
For assignments of less than EUR40,000, by direct awarding even without prior consultation of two or more economic operators or for works in direct administration. In this case, the public administration is not obliged to publish the contract award decision.
For assignments of an amount equal to or greater than EUR40,000 and less than EUR150,000 for works, or the thresholds referred to in Article 35 for supplies and services, by direct awarding after assessing three estimates, if any, for works, and, for services and supplies, of at least five economic operators identified on the basis of market surveys or through lists of economic operators, in compliance with a criterion of rotation of invitations. The works can also be carried out by direct administration, except for the purchase and hire of vehicles, for which the procedure referred to in the previous sentence is applied. In this case, the public administration must publish the contract award decision, also indicating in the provision itself the candidates invited to submit a bid.
The norms regarding the direct contract awarding procedure have been temporarily amended by the Simplification Decree, as well as by the Simplification-bis Decree. The temporary regulations apply to all cases in which the contracting determination, or other equivalent internal act of initiation of the procedure, has been adopted by the deadline of 30 June 2023.
In particular, Contracting Authorities may proceed with the direct awarding of works, services and supplies, as well as engineering and architectural services, including the design activity, for amounts below the EU thresholds referred to in Article 35 of Legislative Decree 50/2016 as follows.
Direct awarding for works below EUR150,000 and for services and supplies, including engineering and architectural services and design activity, below EUR139,000. In such cases, the contracting authority may proceed with direct awarding, even without consulting several economic operators, subject to compliance with the principles set out in Article 30 of the Public Contracts Code.
Negotiated procedure without notice pursuant to Article 63 of Legislative Decree 50/2016 after consulting at least five economic operators identified on the basis of market surveys, or through lists of economic operators, taking into account not only the principle of rotation of invitations but also a different territorial dislocation of companies, in the case of the award of services and supplies for an amount equal to or greater than EUR139,000 and up to the thresholds referred to in Article 35 of the Public Contracts Code.
We highlight three significant court decisions that affected public procurement matters in 2021.
Administrative Supreme Court, Plenary Assembly, 25 January 2021, No 2
This ruling of the Plenary Assembly is interesting since it states the possibility of “subjective change of temporary groups of tenderers (art. 45, paragraph 2, letter d) of the PCC, editor’s note), in case of loss of eligibility requirements provided by art. 80 PCC of the principal or one of the agents, it is allowed not only during the execution phase but also within the tender validity period, so interpreting art. 48, paragraphs 17, 18 and 19-ter of the PCC”.
Administrative Supreme Court, Section VI, 24 February 2022, No 1308
This decision is particularly interesting as it clarifies the scope of application of two peculiar tools, specifically regulated by public procurement regulations, namely: (i) regularisation power, and (ii) Reliance on the capacities of other entities.
Regularisation power (Soccorso Istruttorio) is the power, granted to a tenderer, to integrate incomplete or irregular tender documents previously provided to the contracting authority.
At the end of a complex process of normative review, it is now possible to use the regularisation power, not only to “regulate”, but also “to integrate” the missing tender documents.
The current Article 83, paragraph 9, of the PPC, is clear when it extends the applicability of regularisation power to all “the formal lacks of the application” and, particularly, to the cases of ”total lack and any other essential irregularity of the elements of the bid and the European Single Procurement Document”.
The situations in which this provision does not apply are to the lacks and the irregularities that concern “the economic and technical bid”, and to "the lack of documents that do not allow the individuation of the content or the responsible party of it”.
Reliance on the capacities of other entities (Avvalimento) is a tool regulated by the PCC, conferring to a tenderer the possibility, to the pre-qualification stage, to utilise the requirements possessed by a third company.
“The necessity of executive involvement of the auxiliary does not apply indistinctly to all requirements that refer to the experience of the economic operator, but only to those concerning the holding of educational and professional qualifications of the service provider and the enterprise’s manager (art. 89, paragraph one is an exception to the general rule of art. 83, paragraph 8 PCC). This interpretation, other than literal, is coherent with the underlying function of the contract of availing, which relies not on the association to execute the contract, but, instead, on the borrowing of other’s resources to allow the award-winner to perform in its own the contract.”
Lombardy TAR, Milan, Section IV, 30 November 2021
The so-called “necessary or qualifying” subcontract, positively envisaged only for works contracts, also applies to service contracts, and even if it is not expressly provided for by the lex specialis of the tender.
The uniformity of the contractual object does not preclude that, for certain performances or activities included in the scope of the contract, the tenderer may be qualified through the recourse of the “necessary subcontract”, also considering the general scope of this institution and its purpose of promoting competition.
The RRNP provides for an overall reform of the regulatory framework on public procurement in compliance with the following targets:
The norms on public procurement in Italian legislation are constantly evolving. After the COVID-19 pandemic, the need to adopt specific measures to speed up and simplify tender procedures became crucial to contain the negative impact of the emergency period and to support the economic operators that were most affected by the health and economic crisis.
As a result, Legislative Decree 18 April 2016 No 50 (“Public Contracts Code”) has been significantly amended by numerous norms, both with permanent and provisional validity (until 30 June 2023).
Specifically, the main legislative changes concerned central aspects of public procurement, including below-threshold procurement, exclusion grounds and subcontracting.
In light of the foregoing, the purpose of this analysis is to examine the most recent trends in Italian public procurement, in relation to instances of digitisation, green transition and reaction to the COVID-19 pandemic; special attention will be devoted to the impact of the National Recovery and Resilience Plan (“Piano Nazionale di Ripresa e Resilienza”, PNRR) and of the Complementary National Plan (“Piano Nazionale Complementare”, PNC) – as part of the Next Generation EU package – on the public procurement market.
Several legislative changes have recently impacted public procurement regulation, significantly deviating from the "ordinary" regulatory framework. The following changes deserve a special mention.
Law No 108 of 29 July 2021, converting Decree Law No 77 of 31 May 2021 ("Decreto Semplificazioni bis"): the changes introduced in the field of public procurement are well-articulated and complex, because they have an impact not only on the ordinary regulatory framework for public contracts (ie, the Public Contracts Code) but also on the emergency derogatory rules adopted in response to the health crisis. It should be noted that the Decreto Semplificazioni bis has extended several periods of suspension and exemption already contained in the Public Contracts Code until 2023.
Law No 238 of 23 December 2021 ("Legge Europea"): along with the European Delegation Law, the Legge Europea is the main instrument for adapting to the EU legislation, pursuant to Law No 234 of 24 December 2012. In particular, the Legge Europea (in force since 1 February 2022) contains norms of direct implementation, aimed at ensuring the adaptation of the national system to the European system, with particular regard to cases of incorrect transposition of European legislation.
Law No 233 of 29 December 2021, converting Decree Law No 152 of 6 November 2021, containing urgent provisions for the implementation of the PNRR and the prevention of mafia infiltrations. The PNRR establishes regulatory measures for public contracts that are divided into two macro-phases ("urgent measures" and "full-scale measures").
The already-mentioned Decreto Semplificazioni bis falls within the "urgent measures" category, as it reinforces and implements the actions already taken under the first Decreto Semplificazioni (Decree Law No 76 of 16 July 2020). The PNRR also envisions a major review of the current regulation of the Public Contracts Code as part of the "full-scale measures".
Public Procurement, PNRR and PNC
Green public procurement
In light of the renewed impetus for investments in sustainability generated by the National Recovery and Resilience Plan, the combination of public procurement and environmental protection has become an indispensable driver for the determination and implementation of all EU policies and actions.
These issues have been defined through the development of the concept of green public procurement (GPP), which refers to an approach that allows contracting authorities to consider minimum environmental criteria ("Criteri Ambientali Minimi", CAM) at every stage of the procurement process, favouring optimal resource allocation and the promotion of a market for products and services with a lower environmental impact.
These concepts, already summarised in Law No 221 of 28 December 2015 (“Collegato ambientale”), were fully implemented by the Public Contracts Code, whereby protection of the environment and energy efficiency became one of the principles for the award and execution of public contracts.
The implementation of the new Public Contracts Code represented a significant shift from a public procurement system that was only partially influenced by environmental concerns to a new system that is strongly influenced by ecological and social concerns. Article 34 of the Public Contracts Code, in particular, mandates the use of approved and future minimum environmental criteria in tenders (both above and below the EU threshold) for the supply of goods and services, as well as the awarding of works.
Although Italy is regarded as one of the most GPP-conscious countries – precisely because, unlike other European countries, it has introduced a real obligation to use such criteria – the difficulties involved in the practical integration of environmental variables into public procurement cannot be overlooked, in light of a lack of awareness and information on the subject and of deeply-rooted procedural models.
To address these shortcomings, the PNRR intends to further promote the adoption of minimum environmental criteria (for example, for cultural events or energy services), while also anticipating the development of a specific action plan by the Ministry of Ecological Transition to assist contracting authorities in applying the minimum environmental criteria established by law to tender procedures.
Gender and generational equality in public contracts
To pursue the objectives of generational and gender equality, and to promote the employment inclusion of disabled persons, Article 47 of the Decreto Semplificazioni bis provides for the fulfilment of specific obligations, including recruitment commitments, as well as the possible assignment of an additional score to the bidder or candidate who meets certain requirements, in the context of tender procedures relating to public investments financed, in whole or in part, with the resources provided by the PNRR and PNC.
The Presidency of the Council of Ministers, Department for Equal Opportunities, has recently approved the Guidelines (Decree of 7 December 2021) to promote equal gender and generational opportunities, as well as the employment of persons with disabilities, in public contracts financed with PNRR and PNC resources, pursuant to Article 47 paragraph 8 of the Decreto Semplificazioni bis.
A significant portion of the PNRR’s resources is devoted to digital transition, which is being developed along two lines: ultra-wideband and the digitisation of public administration.
The Recovery Procurement Platform, which digitises and strengthens contracting authorities' administrative capacity, is one of the new features of the National Recovery and Resilience Plan in the field of public procurement. The reform aims to modernise the national public procurement system and is comprised of three distinct actions:
Finally, in the context of Mission 1C1 – Digitisation, Innovation and Security in PA, the need to innovate the regulatory system to accelerate ICT procurement and encourage administration interoperability has been recognised. The goal is to simplify and accelerate ICT service procurement procedures for public administrations through three actions, namely:
PNRR contracts and simplification
Further simplifications have been permitted in the context of the procedures for awarding public contracts related to the PNRR and the PNC, all with the aim of reducing the time required to identify the contractor.
To begin with, the possibility of resorting to the negotiated procedure without prior publication of the tender notice ("procedura negoziata senza previa pubblicazione di un bando di gara", Articles 63 and 125 of the Public Contracts Code) has been recognised when, for reasons of extreme urgency, the application of the terms, even if shortened, could jeopardise the achievement of the objectives or the observance of the PNRR implementation times. The aforementioned procedure ensures compliance with the Plan's strict implementation schedule and, as a result, avoids the loss of the funds underlying it.
The possibility of entrusting the design and execution of the works based on the project of technical and economic feasibility ("progetto di fattibilità tecnica ed economica") – referred to in Article 23, paragraph 3 of the Public Contracts Code – is considered for the same contracts.
Finally, it should be noted that for the execution phase of public contracts implementing the PNRR and PNC, as well as programmes co-financed with structural funds, the substitutive powers provided for by Decree Law 76/2020 have been extended in the event of inertia in the stipulation of the contract, delivery of the works, or formation of the technical advisory committee, within a period of less than half of that originally provided for.
The Reform of the Public Contracts Code
The core of the reform: the Direct Contract Award
The Simplification Decree established new thresholds, departing from Public Contracts Code Articles 36, paragraph 2, and 157.
In particular, the new threshold for public works contracts is EUR150,000, while the amount for supply contracts and for engineering and architectural services is EUR139,000 (as per the latest amendment to the Decreto Semplificazioni bis).
The novelties introduced by the Decreto Semplificazioni bis concern not only the updating of the thresholds, but also the creation of a new and faster tender procedure.
The Ministry of Infrastructure and Sustainable Mobility (MIMS) expressly clarified that the new direct award procedures – introduced to relaunch investments and accelerating public tenders – do not exclude the possibility of resorting to ordinary procedures, in compliance with the principles set out in Article 30 of the Public Contracts Code (MIMS Opinion No 735 of 24 September 2020).
In addition, according to the recent opinion issued by the MIMS (MIMS Opinion No 753 of 17 November 2021), the direct awarding of works, services and supplies can be decided by the contracting authorities without any particular justification, nor carrying out market surveys, since the purpose is to identify the contractor as quickly as possible to carry out works or services of low value, with simple and smooth-running procedures.
These regulations modifying the thresholds were designed specifically for the emergency period associated with the COVID-19 pandemic, but in the final period, they reaffirm the mandatory nature ("in any event in compliance", Article 1, paragraph 2, Simplification Decree) of the rotation principle provided for by the ordinary norms governing the awarding of contracts below the thresholds (see Regional Administrative Court of Liguria, Genoa, 6 December 2021, No 1052).
In particular, under Italian law, the principle of rotation governs the alternation of tenderers participating in a selection procedure under the EU thresholds, imposing a restrictive limit on the re-invitation of outgoing contractors to the new tender procedure in order to encourage the participation of the largest number of economic operators, including micro, small and medium-sized companies.
It is worth noting that, to comply with the principle of rotation, the different territorial distribution of the companies invited to participate in the tender procedures must be considered. The purpose of such principle is to ensure the distribution of opportunities for economic operators to be awarded a public contract by introducing a territoriality criterion; on this point, see the Guidelines on the application of the provisions of Decree Law 76/2020 adopted by the Conference of Regions and Autonomous Provinces on 17 December 2020.
Grounds for exclusion from the tender procedure
The legislative changes introduced in Article 80 of the Public Contracts Code, first by the Decreti Semplificazioni and then by EU law, must also be mentioned.
In fact, legislative novelties have had a significant impact on Article 80 of the Public Contracts Code (which is not surprising given that it is probably the most reworked and amended provision in the entire regulation of public procurement), to eliminate the possibility that an economic operator may be excluded from a tender procedure when the cause of exclusion does not concern the operator itself, but one of its subcontractors.
Furthermore, the fifth sentence of Article 80, paragraph 4 of the Public Contracts Code, which governs cases of exclusion of economic operators due to non-payment of duties, taxes, or social security contributions, has been revised.
The aforementioned legislative change was necessitated by the provisions of Directives No 2014/23/EU and No 2014/24/EU, which provide that, in addition to the hypothesis of compulsory exclusion for tax irregularities that have been definitively established, there is also an option of exclusion in all cases in which the contracting authority was, in any case, aware of the economic operator's tax irregularity situation.
In regard to the definition of "serious violations that have not been definitively ascertained" ("gravi violazioni non definitivamente accertate"), which is not included in the EU Directives, reference is made to the criteria that will be established by a specific Decree of the Minister of Economy and Finance, in agreement with the MIMS, and subject to the opinion of the Department for European Policies, to be issued within 60 days from the date of entry into force of the measure and which shall be related to the value of the contract, for an amount of no less than EUR35,000.
Subcontracting: how Italy aligned itself with EU legislation
Subcontracting is regarded as a critical tool for facilitating the participation of small and medium-sized enterprises in public procurement and allowing businesses to better manage their contracts, reducing costs and risks. Following the European Commission's infringement procedure No 2018/2273 of 24 January 2019, the Italian normative on subcontracting has been subjected to several amendments.
In response to the EU's requests, the national legislator intervened on the subject of subcontracting limits, striking a balance between the EU rules aimed at allowing small and medium-sized businesses access to the market and national opposition. Article 49 of the Decreto Semplificazioni bis provided a temporary exemption from Article 105 of the Public Contract Code, which increased the overall restriction on subcontracting to 50% of total contracts for public works, services, and supplies until 31 October 2021 (40%, according to the latest version of the "Sblocca Cantieri" Decree).
Under the revision to Article 105 of the Public Contract Code, all general and planned constraints for subcontracting, including those for so-called "super-specialised works", were eliminated as of 10 November 2021.
In addition to subcontracting liberalisation, some counter-limits have been added to protect the most vulnerable parties and prevent circumvention by economic operators, such as the obligation to guarantee the same quality and performance standards as those set out in the contract and to afford workers an economic and regulatory treatment that is no less favourable than that provided by the main contractor.
Following that, EU law returned to the subject of subcontracting by enacting several incisive regulations on the matter. These are essentially the subcontracting amendments:
The conversion into law of the Decreto Semplificazioni bis, the adoption by the Council of Ministers of a draft text aimed at rewriting the Public Contracts Code and, lastly, the EU law, suggest new and challenging scenarios that call on the government and its structures, first and foremost, to provide the necessary actions, and on contracting authorities and economic operators to face another season of changing rules and obligations.
All of this takes place within a regulatory framework that is geared towards ensuring that decision-making processes are certain in their conclusion and effective in their outcomes, with an increase in the use of digital tools.
The Decreto Semplificazioni bis was, without a doubt, the most significant initiative that concluded the game of simplifications to be made on the regulation of public contracts to facilitate the activation phase of the resources made available by the EU through the Next Generation EU instrument, from which the PNRR derives.
From this vantage point, it is clear that the best thing would have been to begin the country's transformations with a new and adequate Public Contracts Code, but this was not possible due to the difficulty of combining the need for an immediate institutional response with a completely new set of rules, in a timeframe incompatible with the EU charters' requirement of committing resources by 2023 and spending them by 2026.
In the context of the emergency, the legislator has thus continued to move, gradually resolving the single issues that have emerged and provided solutions that have, for the most part, followed an overall logic – for example, on direct awarding of contracts and formation of the technical advisory committee, the activation of substitute powers, capable of usefully governing any stalemate in the project approval process.
It must now be asked whether the choices made in this manner are doomed to end with the emergency, or whether, on the contrary, the relative assumptions, aimed at overcoming an approach seen by many as an impediment to ensuring the country's stable development, can be considered acquired.
The question should be asked about what should be the new organic framework of the regulation on public contracts, seeking to override a context that appears particularly fragmented today, since it is divided between the Code under Legislative Decree No 50/2016, for the part still applicable, and the three decrees (Sblocca cantieri 2019, Semplificazioni 2020 and Semplificazioni 2021) which have, on several occasions, derogated from it.
To that end, the attention that the entire system is paying to the implementation of the process that will lead us to the December 2026 targets – which is considered critical to give substance and make lasting the renewal of a system with a view to innovation and the country's development – is extremely encouraging.