By Antonio Cuppone - Studio Legale Tonucci - Rome

According to Directive 92/50/EEC, tenders may be submitted even by groups of service providers. As a consequence, according to such Directive, the undertakings which do not meet the technical and economic requirements provided by the Public Administration, can join their different business capacities, in order to participate to the bidding procedures regarding the performance of public services.

The Italian Decree no. 157/1995, which has implemented Directive 92/50/EEC, provides that group of service providers must submit a joint tender, subscribed by all the providers. Such a tender shall indicate the (i) specific operating performances to be accomplished by each provider in the execution of the contract representing the subject matter of the bidding procedure (hereinafter the "Agreement") and (ii) the entity, amongst the members of the group of providers, to which the power of representation towards the Public Administration is granted (the so-called group leader), in case of awarding of the Agreement.

The group of service providers can be set up only once the Agreement has been awarded. The filing of a joint tender, implies that each provider becomes jointly responsible towards the Public Administration; however, the Public Administration could also, at its own discretion, reserve the right to sue exclusively the member of the group of providers who has not correctly fulfilled its part of the Agreement.

In any case, the above joint liability of the providers concerns only the contractual relations with the Public Administration, as, on the contrary, within the group, the providers can agree different terms of responsibility (eg. the providers may establish an exclusive liability of the undertaking which has not fulfilled its obligations or do not correctly execute its own part of the Agreement).

The representation power granted by each provider to the group leader is free of charge and irrevocable; therefore, its revocation for just cause does not produce effects towards the Public Administration.

The association agreement entered into amongst the members of the group of providers (hereinafter the "Contract"), does not create a new juridical entity, as each provider maintains its independence with respect to the business management, tax burdens, labour costs and welfare contributions. In other words, each undertaking accomplish exclusively its own part of the Agreement; as a consequence, the same undertaking shall invoice its activities directly to the Public Administration (however, it may be established that the invoices of each undertaking can be addressed to the Public Administration, only once the same invoices have been approved by the group leader).

Moreover, the Contract splits up among the providers, the warrants, cautions and insurance, required by the public service procedure; finally, said Contract could provide for the establishment of a Management Committee, to which the providers representatives are members and which could be intended to organise and co-ordinate the performance of Agreement.

The awarding of contract as well as the performance of service qualify each provider participating to the awarded group for further future bidding procedures, even if the same provider will participate to the latter alone.

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.