European Union: The New "Procurement Code"

Last Updated: 30 March 2016
Article by Ilaria Gobbato and Federico Sutti

This past Thursday, March 3 - running the proxy law 28 January 2016, no. 11 - The Council of Ministers has preliminarily approved the legislative decree for the realization of the European directives no. 2014/23/EU, 2014/24/EU and 2014/25/EU.

The text - which should be subject to final approval by the Government by 18 April 2016, once carried out the necessary steps to the State Council, to the Conference of Regions and to the Boards of the House and Senate - will determine, if approved and once entered into force, the abrogation of the current Procurement Code (i.e. d.lgs. no. 163/2006) and the related Regulation (i.e. d.P.R. no. 207/2010, which, to be precise, will remain in force with respect to certain sections pending the approval of the new guidelines which will replace the aforementioned Regulation).

In a general perspective, among the most significant changes introduced by the new legislative decree, it should be noted, in addition to the central role of the ANAC (to which is given a general power of control and supervision in matters of custody and execution of public contracts, in addition to database management and the editing of the replacement guidelines of the Regulation1), to the establishment of a control room (so called "cabina di regia") at the Presidency of the Council of Ministers with the task to carry out a survey on the state of implementation of the new procurement code, examine proposals for amendment legislation and promote a national telematic procedures purchasing plan.

In addition to this, there are forecasts relating to the qualification of contracting entities (articles 37 and 38 of the Legislative Decree, in fact, govern the case of aggregation and centralized purchasing, as well as the establishment, at the ANAC, of a list of qualified contracting entities to which central purchasing bodies can be part of2, where public authorities can register themselves "in relation to the type and complexity of the contract and the amount of bands") and creation of a compulsory national register of committee members3 of public procurement and concession contracts (see on this point articles 77 and 78 of the Legislative Decree that still allow, notwithstanding the aforementioned obligation, the possibility for contracting authorities to appoint internal commissioners in case of award of contracts with amount below the thresholds referred to in article 35 or which are not particularly complex). As well as in terms of reputational rating - by setting up at the ANAC a "system of penalties and incentives to companies connected to reputational criteria assessed on the basis of objective and measurable parameters as well as on  definitive findings concerning the respect of the times and costs in the contracts entrusted to them" (the reference is art. 83, paragraph 10 of the Legislative Decree4) and social clauses and rewards criteria (see art. 50 of the Legislative Decree that allows the provision of social clauses in tenders and to promote employment stability of the staff employed and the safeguarding of professionalism).

Speaking of the specific methods to complete the public procedures, some of the main changes introduced by Legislative Decree are listed here:

  • The possibility of awarding the contracts below threshold in the following ways:
  • a) for loans with an amount of less than €40,000, by direct assignment adequately motivated or for works by direct administration;

    b) for loans with an amount equal or greater than €40,000 and less than €150,000 for the works or below the EU threshold in the case of facilities and services, by negotiated procedure with prior consultation, if any, of at least three economic operators identified on the basis of market surveys or through lists of economic operators in accordance with invitations rotation criterion;

    c) for works with an amount equal or greater than €150,000 and less than €1,000,000, by negotiated procedure with prior consultation of at least five economic operators, if any, in accordance with invitations rotation criterion, identified on the basis of market surveys or through lists of economic operators;

    d) for works with an amount equal or greater than €1 million by recourse to the ordinary procedures.

  • The obligation for contracting authorities to subdivide contracts into functional lots to facilitate the access of micro, small and medium enterprises. The failure of the division of the contracts into lots must be duly motivated in the announcement or in the invitation letter.
  • The definition of the award criteria (see Art. 95). In particular, the Legislative Decree states that contracts are awarded "solely on the basis on the method of the most economically advantageous bid identified on the basis of the best quality / price ratio: a) contracts related to social services and hospital, welfare and education catering, as well  to high labor-intensity services, as defined by article 50, co. 2; b) the contacts relating to custody of engineering and architectural services, exceeding the amount of Euros 40,000."

The lowest price criterion instead "can be used:

  • a) for public works with an amount of less or equal to €1,000,000, given that compliance with the quality requirements is guaranteed by the requirement that the tender procedure takes place on the basis of the planning;

    b) for services and supplies with standard characteristics or conditions which are defined by the market;

    c) for services and the supplies with an amount below the threshold provided in article 35, characterized by high repeatability, except for those with high technological content or which have an innovative character."

  • The Building information modeling (BIM). The article 23, co. 13 of the Legislative Decree provides that "contracting authorities may require for the new works as well as for restoration works, retraining or variants, primarily for complex works, the use of specific electronic methods and instruments referred to in paragraph 1, letter h . ... The use of electronic methods and tools can be obtained only by contracting authorities with properly trained staff and appropriate monitoring systems."
  • The European single Procurement Document (DGUE) or - pursuant to art. 85 of Legislative Decree - a "self-declaration updated as preliminary documentary evidence in place of certificates issued by public authorities or third parties where it is confirmed that the economic operator meets the following conditions:"
  • a) He is not in one of the situations referred to in Article 80 (with regard to the causes for exclusion);

    b) He meets the selection criteria defined in accordance with Article 83 (in terms of professional competence requirements, economic and financial standing and technical and professional capability);

    c) He meets the objective criteria established under Article 91.

  • The possibility of auxiliary substitution that does not meet the requirements of the call for bids. Article 89, co. 2 of the Legislative Decree provides that, in case of pooling (so called "avvalimento"), the "contracting entity verifies ... if the subjects which capability the economic operator intends to rely on meet the selection criteria or if there are reasons for exclusion under article 80. It requires the trader to replace those who do not meet a relevant criterion of selection or for whom there are mandatory reasons for exclusion."
  • The requirements for the so called "soccorso istruttorio." The lack, incompleteness and any other essential irregularities of the elements and of the DGUE (excluding those pertaining to the technical and economic offer) forces the competitor who has given due to the payment in favor of the Contracting Authority of the penalty established in the tender notice in no less than one per thousand and not more than one per cent of the value of the tender notice and in any case not more than €5,000.
  • The regulations about subcontracting (see art. 105): institute approved, prior the authorization of the Contracting Authority, provided that:
  • a) This right is expressly provided for in the contract notice also limited to individual performance and, for works, both indicated the category or categories for which subcontracting is permitted (all services and operations, whatever their category, are subcontracting);

    b) At the time of the offer the works or parts of works or services and supplies or parts of services and supplies which will be subcontracted or granted in piecework must be indicated;

    c) The competitor demonstrates to subcontractors the absence of the reasons for exclusion pursuant to article 89.

Furthermore, pursuant to art. 105, co. 6, it is obligatory to indicate the trio of subcontractors if the contracts of works, services or supplies are with an amount higher than the threshold set out in article 35 and for which a particular specialization is not needed. In that case, the notice or announcement with which the contract is announced provide this obligation. In the announcement, or in the notice, the contracting authority may provide additional cases in which it is obligatory to indicate the triad also below the EU thresholds.

  • The direct payment of the subcontractor, of the pieceworker, of the service provider and the supplier of goods or works. Pursuant to article 105, co. 13 of the Legislative Decree, the contracting authority is obliged to direct payment of the aforementioned parties in the following cases: a) the subcontractor or the pieceworker is a micro-enterprise or small business; b) in case of non-fulfillment by the contractor or at the request of the subcontractor and if the nature of the contract allows that.

Finally, and without completeness with respect to the whole discipline expected by Legislative Decree, it should be mentioned:

  • The duty, pursuant to art. 22, co. 2 of the Legislative Decree, to apply to public debate for large infrastructure projects having significant impact on the environment, on cities and on regional planning.
  • The requirements for works in-house provided by Article 177 of the Legislative Decree, in accordance with which the public and private entities, holders of concessions for works or for existing public services or for new ones, are obliged to entrust a share of works equal to 80 percent of contracts for works, services and supplies related to concessions for an amount exceeding €150,000 through a public procedure, stipulating that the remaining part can be performed by in-house companies for public entities or by companies directly or indirectly controlled or connected to private persons, or through operators identified by public procedure also of simplified type. The concessions already in place will have to adapt to the nine provisions within 24 months from the date of entry into force of the new code.
  • The innovation partnerships. Contracting authorities and entities may resort to innovation partnerships in cases where the need to develop products, services or innovative works and then buy supplies, services or works resulting from these cannot, on the basis of a reasoned determination, be satisfied using solutions already available on the market, provided that the supplies, services or works resulting therefrom, correspond to the levels of performance and maximum costs agreed between the contracting authorities and the participants (see article 65 of the Legislative Decree).
  • The transposition - with reference to concession contracts – of the concept of operational risk "referred to the possibility that, under normal operational conditions, changes in the costs and revenues, which are object of the concession, affect the balance of economic and financial plan." Operational risk to be transferred over the concessionaire is, in other words, the risk of managing the works or services on the demand side or on the supply side or both. It must be considered (you can read it in its definition in article 3, paragraph 1, letter Zz), that the concessionaire assumes the operating risk in the event that, under normal operational conditions, it is not guaranteed the restoration of the investments made and of the costs incurred for the management of works or services object of the concession. The part of the risk transferred to the concessionaire must involve a real exposure to market fluctuations such that each estimated potential loss suffered by the concessionaire is not purely nominal or negligible.

Footnotes

1 It should be noted, in particular, Article 213, co. 2, of Legislative Decree – pursuant  to which, "the ANAC, through guidelines, tender-type, contract-type, standard contracts and other tools of flexible regulation, however described, ensures the promotion of efficiency, of the quality of the contracting authorities' activities, to which also provides support by facilitating the exchange of information and the uniformity of administrative procedures and encouraging the development of the best practices. It transmits to the Rooms immediately after their adoption, the acts referred to in the previous sentence considered the most relevant in terms of impact of the regulation, because of  the number of potentially affected workers, amenability to criminal cases, abnormal situations or at least symptomatic of illegal conduct on the part of contracting entities"- and, in terms of flexible regulation, the next co. 17, according to which "to ensure the immediate consultation and divided by subject of flexible regulatory instruments adopted by the ANAC, however denominated, ANAC publishes these measures in such a way as to make immediately available to contracting entities and economic operators the rules applicable to each case." Not only. ANAC is also responsible to issue a binding opinion under the phase of court definition of dispute (see art. 211).

2 And to which the Ministry of Infrastructure and Transport are enrolled in law, including inter-regional education agencies for public works, Consip S.p.A. as well as those regional aggregators of art. 9 of d.l. no. 66/2014 and metropolitan cities.

3 Register ad hoc is set up for those who, in the context of public contracts of works awarded by the formula of the general contractor, can respectively play the role of project supervisor, project manager and tester (see Article 102, par. 8 of the Legislative Decree).

4 By which "The determination by the ANAC of administrative sanctions in cases of failure or delay mandatory reporting of extortion and corrupt demands by businesses holders of public contracts, including subcontractors companies and suppliers of materials, works and services is part of the said system management area."

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