PUBLIC PROCUREMENT LAW IN ITALY – A BRIEF OVERVIEW

Sara Richetto
Lawyer, expert in public procurements and administrative law

Organisations

1.1 – The Organisations involved in public procurement

Art. 2 of the Italian Code for public procurements and concessions, Legislative Decree n. 50 of 2016 (and the further “corrective” Legislative Decree, n. 56 of 2017), established that the State has exclusive competence to regulate competition on the procurement markets. The Italian Regions can enact public procurement legislation only with “indirect and negligible effects”, and this also applies for under the threshold procurements. Therefore usually regional laws on public procurements only deal with internal procedural matters, like the organization of regional departments for public works, or the attribution of competences to regional officers, according to art. 117 of Italian Constitution.
The legislator has tried to enhance centralisation providing that:
– the contracting authorities may award public works contracts under 150.000 € and public supply and service contracts under € 40.000 directly or through State central purchasing body (CONSIP_MEPA);
– to manage award procedures for public contracts above those threshold, contracting authorities must have the specific qualification. The contracting authorities with that required qualification may award public supply and service contracts over € 40.000 and public works contracts over € 150.000 and under the EU threshold, using by themselves electronic means of communication set up by centralised purchasing bodies or, in case of non-availability of the sought products or services, managing the award procedure themselves;
– the contracting authorities without the required qualification must award public contracts over that threshold through a State central purchasing body (CONSIP) or others –normally regional- central purchasing bodies, or in group with others contracting authorities having the required qualification;
– anyway, the contracting authorities may award always public contracts by using central purchasing bodies.
1.2 – The issues that arise from the organisations
The principal issue is that the Code requires for its complete implementation the further publication of manys acts and, in particular, of a Decree of the President of the Council (Prime Minister) which establishes the requirements for the specific qualification of the contracting authorities; but this Decree has not been published so far, so that nowadays no contracting authorities has the required qualification and all contracting authorities can procure autonomously, independetly from the contract’s value, except for specific matters where the law requires awarding contracts through State central purchasing body (CONSIP).

Rules

2.1 – Rules and regulations governing public procurement in Italy

Italy has a long tradition in regulating public procurement and, in particular, public works contracts, which date back as far as to 1865.
Until the transposition of the 2004 European Directives, EU public procurement law has been poorly applied in Italy, because it was read as someting foreign. Only at the end of 90s, the national case law started to refer to EU law.
In 2006, for the first time in Italian legislation, D. Lgs (Legislative Decree) n. 163 of 2006, implementing Directives 2004/17/CE and 2004/18/CE, brought the rules on public procurements under a code, containing all provisions related to public procurements, including the special sectors and procurements under the threshold. Then, in 2010, the Italian Government appoved the Regulation implementing the public procurement code (D.P.R. n. 207 of 2010).
The Code of 2006 was changed many and many times, to satisfy different and conflicting goals such as, for instance, stimulating economic growth, minimising corruption risks, increasing the competition, etc.
The transposition procedure for the implementation of the Procurements package 2014, began with Law n. 11 of 28 January 2016, delegating the Government to approve one or more Delegated Decrees for the transposition of the Public Procurement package before 19 April 2016.
The Government approved the new Code for public procurements and concessions, covering also procurements and concessions under threshold, which was published on the Official Journal (“Gazzetta Ufficiale”) on 19 April 2016 and entered into force the same day (D Lgs n. 50/2016).
Having been put together in haste, unsurprisingly the new Code was soon and often changed, eg by:
– D.Lgs. n. 56 of 2017 and by D.L. n. 32 of 2019, which have modified and improved the Code in general;
– D.L. n. 76 of 2020 and n. 77 of 2021, with specific dispositions introduced because of the COVID emergency.

2.2 – The problems arising from rules and regulations

The Public Procurement Code approved with D. Lgs. 50/2016 cannot be considered as a complete document, since it requires the further approval and publication of many other implementing administrative acts in order to better regulate specific issues. Unlike what happened in 2006, when the old public procurement code was approved for the transposition of 2004 Directives, in 2016 the Italian Goverment decided not to approve an only administrative Regulation to implement the public procurement code, but chose a more flexible approach, with a high number of different implementing acts in order to adjust timing and accuracy to the different needs.
Due to the delay in the approval of the implementing regulation and to other technical difficulties, with Decree Law n. 32 of 18 april 2019 the Government provides again an only administrative Regulation to implement the public procurement code, which will replace the “Implementing regulations” issued until now and the others not yet issued. The problem is that the Regulation has not yet been approved still there isn’t a deadline within it has to be approved.

2.3 – Gold plating and wrongful transposition

The Italian Legislator prohibited the recourse to gold plating – intended as over-regulation – with Law 246/2005 (as modified by Law 183/2011), art. 14(24bis-ter and quarter), providing that the acts of transposition of EU directives cannot introduce or maintain higher levels of regulation than those strictly required by Directives, with the exception of “exceptional circumstances” (which are not better defined). The practical effects of art. 14.24 Law 246/2005 are however much limited because having been enacted through primary legislation it can be modified by subsequent ordinary laws.
The case law shows how difficult can be to draw a line between gold plating and wrongful implementation of EU Directived.
There are some cases in which the Italian Code introduces a higher level of regulation without being authorized by Act of delegation and can therefore –according to the Council of State-, be considered legitimate if they fall under the “exceptional circumstances” clause of art. 14(24quater) Law 246/06. They are:
– the CJEU case Edilux and SICEF v Assessorato Beni Culturali e Identità Siciliana, where the Court ruled in favour of Italian legislation asking for stricter documentation required to biding companies, in order to verify their compliance with national regulation against the mafia criminal offences;
– art. 105 of D Lgs 50/16, which forbids any subcontracting for a percentage higher than 30% of the total value of the contract. The Council of State classifies it as gold plating, and considers it to be admissible for reasons of transparency, labour protection and fight against criminality. However the ECJ (on 29 Semptember 2019, C-63/2018) stated that a restriction on the use of subcontracting such as that at issue cannot be regarded as compatible with Directive 2014/24 and that such a prohibition is not necessary in order to combat organised crime in the context of the contract in question because the same objective could be achieved by less restrictive measures;
– art. 146 of D Lgs 50/16, which forbids the reliance on the capacity of other entities for public procurements in the field of cultural heritage. This case too is justified by the Government under the “exceptional circumstances” clause of art. 14(24quater) Law 246/05 for the specificity of cultural heritage sector under art. 36 TFEU.
Even if the Council of State justified those cases as supported by the “exceptional circumstances” according to art. 14(24quater) Law 246/05, they seem rather to amount to wrongful implementation of the Directives.
Others cases of non-justified gold plating were highlighted by scholars. For example:
– in the case of negotiated procedure without prior publications, it is required to negotiate with a minimum number of five economic operators;
– art. 36 of D Lgs 50/16 deals with under the threshold procurements and states that for work procurements whose value is between 1.000.000,00 Euro and the threshold, the full directive applies.
The Italian Code is full of gold plating examples; despite that, case law on gold plating is very sparse.
Administrative Courts mainly reject the arguments based on gold plating, or simply ignore them deciding on other grounds.
One of the most important case is one judgment of the Constitutional Court, on the interpretation of art. 192 of the Code (n. 100 of 03/06/2020), according to which the contracting authority awarding service to an in-house company has to specify in the justification the reason not to have made recourse to the market. The Court stated the the object of such a prohibition consists on preserving competition and minimising Member State discretion in the transposition; this over regulation aims to improve competition.
The Consitutional Court recognizes to the legislator margins of discretion in the transposition, because the Government has to considered the regulatory framework expecially if the law delegating the Government concerns an entire matter such as public contracts.

The discretion exercised by Italy in the transposition regarding the options left open by the Directive

About the choices made by the Italian legislators regarding the main options given by the Directive, it can be obseved that:
– the centralization of procurement has been strongly pursued by Italy, with a large use of Article 37(1) of Directive 2014/24/EU which is expected to lead to a drastic reduction in the number of CAs and a strong concentration of contracting activity in CPBs;
– the regulation of subcontracting, which at the beginning was implemented with some relevant deviation from the European model, then was changed conforming to the European model after the infringment procedure brought by the Commission against Italy and two judgments by the Court of Justice in preliminary reference procedures (C-63/18, Vitali, and C-402/18, Tedeschi);
– art. 105 concerning subcontract provides direct payments to subcontractors in some cases in order to facilitate the involvement of SMEs and, in any case at the request of subcontractor and where the nature of the contract so allows;
– Art. 95 of the Code provides that many contracts shall be awarded only with the criterion of “most economically advantageous tender” according to the best price-quality ratio (contracts referred to social services, school catering services, and services for which manpower accounts for at least 50% of the cost);
– Concerning the measures to ensure that in the performance of public contracts economics operators comply with applicable obligations in the field of environmental, social and labour law, art 95(6) states that the most economically advantageous tender according to the best price-quality ratio is evalueted on objective criteria, such as the quality, which includes for examples certifications on employees’ safety, social and environmental charateristics, etc;
– The new Code regulates also service concessions and mixed procurement;
– It regulates conflicts of interests;
– The Code states the separation between the execution of the contract and the design
– Italy has a very pointed legislation forbidding gold plating and, on top of that, Law 11/16, delegating the Government for the transposition of public procurement directives, has explicitly forbidden gold plating. As already remarked, teh actual implementation of the provision is limited.
Despite of that, there are specific issues in the implementation of directives in Italian legislation regarding first of all the flexible approach of the Code, with a high number of different implementing acts, the power given to the national Autority on public procurements (ANAC) and the great number of contracting authorities. The European Commission has triggered an infringment procedure against Italy in relation to the implementation of the Public Procurement Directives with aa letter dated 24 January 2019, focusing on violations regarding: the methods of calculation of the estimated value of procurement, exclusion criteria, sub-procurement and reliance on capacities of other entities, abnormally low tenders.
Decree 32 of 2019, which was also adopted with the aim to answer the infringement procedure against Italy, did not solved many questions, making worse the Italian position.

Conclusion

After five years from the transposition of the EU Directives, the implementation cannot be considered complete yet and it would be until the Regulation provided by Decree n. 32/2019 will be approved. Many important parts of Decree 50/16 are not (completely) applicable and the old Decree 163/2006 (or the Regulation DPR 207 of 2010) is still applicable: among them, great part of the new regulation about centralization of procurements, control over the performance of contracts, especially works contracts, and so on.
We have thus to wait until the implementing Regulation is approved in order to give a general assessment of the new Italian regulation on public procurement and concessions.