Decision n. 9426, 31st October 2022, Council of State, sec. IV, Italy
Article(s) in Directive 2014/24/EU: Art. 72
Topic: Adjustment of the consideration for a service contract in the absence of an express price revision clause
Member State: IT
Court/rev. board: Council of State
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Art. 106(1) Legislative Decree no. 50 of 2016
2. FACTS
A municipality had launched an open procedure for the assignment of integrated urban hygiene services in its territory for the duration of five years. The tender was held with the participation of only two companies: Sangalli and the temporary grouping of companies (r.t.i.) Aprica Spa-G.Eco s.r.l.-Ecosviluppo soc. coop. (the Aprica r.t.i.). The initial award to the second company was challenged before the Regional Administrative Tribunal, which annulled the award. The contract was then awarded to Sangalli. Prior to the conclusion of the contract, the company Sangalli asked the contracting authority “for a meeting in order to settle, in an amicable manner, the issue of the increase of disposal costs”. Subsequently, the company and the municipality engaged in a discussion on the issues raised by the successful tenderer, which ended with the rejection of the company’s request and the issuance of the order revoking the award. The first instance judge affirmed that the party’s argument to base its claim on Article 106(1)(c) of the Public Contracts Code, regulating a case different from that of price revision, not corresponding with the one actually occurring in the administrative case under examination concerning “only the adjustment of the contract price to alleged increases in service costs” was unfounded. It went on by stating that, even if one were to consider that the specific case fell within the scope of that provision, the increase in costs could not, in any event, be described as “unforeseeable” for the purposes of the application of the rule relied on, since no evidence of such unforeseeability has been adduced and, indeed, it was apparent from the preparatory documents for the contract that the contracting authority reasonably expected that event to occur[1].
[1] Article 46(1) of the special tender specifications excluded “any revision of the unit costs relating to the disposal and treatment of waste to be borne by the successful tenderer”.
3. JUDGMENT
The Council of State, referring to the wording of Article 46 of the special tender specifications, ruled that that lex specialis contained a clear and not unreasonable manifestation of the contracting authority’s intention to exclude the possibility for the latter to adjust the covenants of the contract to be entered into in respect of the consideration, in the event of contingencies affecting the same, except within the strict limits indicated by the aforementioned provision. The Assembly considered the claim unfounded.
The main takeaways of the judgment are that when the contractor requests to adjust the consideration for the services to be rendered and in the absence of an express price revision clause, letter a), and not letter c), of Art. 106 of the Public Contracts Code applies, which, at para. 1, sets out the cases in which contracts in ordinary and special sectors may be amended without a new award procedure.
This is because:
- Letter c) makes textual and express reference to those “changes in the subject matter of the contract” which are related to “variations in the course of work”, specifically concerning the subject matter of the contract on the side of the work to be performed;
- Letter a), on the other hand, in contemplating “changes in prices and standard costs”, regulates the economic aspects of the contract; in particular, it anchors to a strict provision of price revision clauses the changes in the subject matter of the contract, on the side of the consideration, which the contractor derives from the performance of the contract.
The letter c) includes those changes that concern the subject matter of the contract on the side of the works to be carried out. Changes in the subject matter of the contract as to the consideration that the contractor is to receive from the performance of the contract must instead be subsumed within the scope of the case in paragraph (a), which governs the economic aspects of the contract with textual reference to “changes in prices and standard costs”.
The Court also added that, in general terms, the amendments provided for by Art. 106(1) refer to “contracts” from which it may be inferred that the contract must have already been entered into force for it to be amended. In this case, the applicant company instead requested the amendment of the agreements before proceeding to the conclusion of the contract.
Moreover, the case law of the Court of Justice of the EU itself (judgments of 19 April 2018, C-152/17, 7 September 2016, C-549-14) shows that European law is substantially neutral with respect to any maintenance remedies that national legal systems may have in place to deal with contingencies affecting the economic aspects of the contract, without prejudice to solutions that surreptitiously alter the play of competition through direct awards without competition.
MAIN LEGAL ISSUE: There is no right for the EO to an increase of the price if no specific clause was included in the original contract, even in case of unpredictable event. CJEU C-152/17 (Consorzio Italian Management) and C-549/14 (Finn Frogne) are mentioned. Moreover, no modification of the contract can be made before the contract is executed, even if after adjudication (but on this issue Italian case law is divided: TAR Piemonte, dec. 22.3.23, n. 180 and Council of State, dec. 11.04.2022, n. 2709, both admit modification of the contract between adjudication and execution).
