On December 19, 1998 the new statute on public works projects came into force (no. 415 of 18/11/98, so called Law Merloni-ter). The statute completes the legislative regulatory framework for public tenders and introduces some new instruments aimed at broadening and streamlining the relative procedures, and significantly shortening the length of proceedings before the Regional Administrative Tribunals, in order that those courts can decide cases within a period of three months. Among the principal innovations, we call the reader's attention to the introduction of a new simplified procedure on public tenders upon invitation (licitazione privata) which allows public bodies entering into public procurement contracts to profit from the competition of a sufficient number of suitable candidates, on a rotating basis, possessing the subjective and objective prerequisites.

No less interesting is the provision, for the first time, of a real form of project financing, which offers more opportunity to those entrepreneurs who are best able to interpret the new planned role of promoters in the implementation of public projects, promoters to whom ample opportunities of subsequently becoming contractors are offered.

Equally innovative is the provision of a system of global guarantees of performance, also called performance bond, for works having a value more than 100 million Euro. Such performance bonds guarantee correct performance on the part of the contractor and replaces the security deposit in cash, thereby avoiding the tying up of large liquid sums for the long term, and incurring significantly lower costs than the ones arising from the procurement of personal guarantees or sureties. Upon the issuance of a performance bond, the guarantor, credit institute or insurance company undertakes to pay an amount of money in the event of a breach of contract or, if provided in the performance bond contract, to directly procure the performance undertaken.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances, by contacting a partner with Studio Legale Sutti.