Decision n. 7709, 5 September 2022, Council of State, sect. IV, Italy
Article(s) in Directive 2014/24/EU: Art. 57.4.g
Topic: Exclusion grounds – early termination of a prior contract with another contracting authority – consensual termination
Member State: ITA
Court/rev. board: Council of State, sect. IV, 5 September 2022, n. 7709
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Art. 80, para. 5, lett. c-ter (Exclusion grounds), legislative decree 50/2016 Code of Public Contracts
The national provision regulates the grounds for exclusion of economic operators from procurement procedures, dividing them into automatically excluding causes and causes underlying an assessment by the Administration, as they are only potentially capable of excluding the competitor from the selection procedure. Its letter c) foresees a situation in which the economic operator has been condemned for grave professional misconduct such as to raise doubts as to its integrity or reliability. Following the legislative amendment through Legislative Decree n. 135 of 14 December 2018 converted by Law n. 12 of 11 February 2019, the contracting station may order the exclusion of a competing operator pursuant to Art. 80, para. 5, lett. c-ter), if it indicates a previous episode of non-compliance that has entailed such consequences, which it deems to be serious and sufficiently close in time, and from which it draws symptomatic reasons for the unreliability of the undertaking. The rule, thus, clearly identifies a cause for exclusion that constitutes a specification of the generic professional misconduct referred to in point c) and not only requires previous termination for breach, but also verification with additional burdens of motivation on the part of the contracting authority (time and seriousness).
The Council of State, in its previous judgment of 28 August 2020, n. 16, on the declaratory obligations at the time of participation in a tender procedure, clarified that it is “an obligation whose fulfillment is necessary for the competition in the tender to take place properly and whose non-fulfilment, on the other hand, justifies exclusion”, specifying that “the obligation should be provided for at the regulatory level or by the administration, through the special rules governing the tender”.
2. FACTS
In the present case, the contracting authority, in the context of a services tender, excluded a tenderer having found that he had not indicated in his tender the termination of a previous contract with another contracting authority for a similar service. The exclusion took place even though the termination in question had been formally qualified as consensual. The contracting authority had, however, found that this was, in fact, a consequence of the contractor’s failure to use electric vehicles, constituting a breach of contract. The effect was that such termination makes an instance of grave professional misconduct, therefore, capable to leading to exclusion from the tender procedure pursuant to letter c-ter) of para. 5 of Art. 80 of the Code of Public Contracts.
In the first instance, the Regional Administrative Tribunal had rejected the economic operator’s appeal on the grounds that national case law had repeatedly affirmed that the cause of exclusion in question was not automatic, but necessarily foresees a finding, by the procuring entity, that the termination resulted from significant and persistent deficiencies in the performance of a previous contract. In the present case, this motivational burden appeared to have been adequately met. Consequently, the mere fact that there has been a previous termination for non-performance or an order to pay damages is not, in itself, a cause for exclusion from the tender,
but becomes so if the contracting entity, as a result of its evaluations, considers that these events have affected the reliability of the bidder, considering the seriousness of the violation and the time elapsed since that. The appellate court thus pointed out that the question to be resolved results in the proper definition of the declaratory obligations required from the bidder in the procurement process. That is, whether such declaratory obligations include the consensual termination of a previous contract.
The Council of State rejected the appeal, pointing out that within the perimeter of declaratory obligations also falls a previous consensual termination with another contracting station if it depended on a conduct abstractly likely to cast doubt on the integrity and reliability of the economic operator in view of the awarding of the contract (Council of State, sect. IV, 5 September 2022, n. 7709).
3. JUDGMENT
With this judgment, the Council of State ruled on the consequences of a consensual termination on the subsequent procedures for the award of a public contract.
The Council, departing from its previous ruling n. 16, from 28 August 2020, considered that the normative provision cannot be understood with a formalistic reading, if the rationale of the rule is not to be deceived and the role of the contracting authority in carrying out its evaluation activity is not to be undermined. Consequently, it must be assumed that the provision must refer both to the hypothesis in which the termination of a previous contract is a consequence of a breach of contract by the contractor and to the hypothesis in which such termination is the effect of a free will of the parties not to continue with the performance of the contract. The further consequence is that the bidder in the budding process must also declare the intervening consensual termination of a previous procurement contract whenever the same has depended on the conduct likely to cast doubt on the integrity and reliability of the bidder itself. In conclusion, it appears necessary to adhere to a substantive reading of exclusionary causes that is not confined to mere nomen iuris. Therefore, consensual termination was deemed to also fall within the scope of declarative obligations.
