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20 April 202313 minute read

The New Italian Public Contracts Code

The Italian Council of Ministers approved the new Public Contracts Code it on 28 March. The Legislative Decree No. 36 of 31 March, 2023 (the new Code) was published in the Italian Official Gazette No. 77 of 31 March, 2023.

The new Code, with its annexes, came into force on 1 April, 2023. It will come into effect on 1 July, 2023. But Articles 215 to 219 for Technical Advisory Committees are effective as of 31 March, 2023.

To not hinder bidding procedures, Article 225 provides a detailed and articulated transitional regulation. According to the regulation, many rules of the new Code will come into effect as of January 2024 (eg most of the provisions on digitization of the contract lifecycle).

On the effective date (1 July, 2023), the provisions of the 2016 Code will still apply to "ongoing proceedings." For strategic infrastructure governed by Legislative Decree No. 163/2006, some of the rules of the 2006 Code will continue to apply. Finally, additional exemptions are provided for PNRR and PNC procurements.

So, Italy has fulfilled its commitment to Europe. The reform of public contracts, shaped by strict alignment with European law, is an important goal set by the PNRR.

The new Code drafted by the Council of State is self-executing: i.e. it does not have to be implemented, like previous codes, by adopting subsequent acts of secondary and soft law. The explanatory report to the new Code helps read the articles and is an innovation.

Here we look at some of the most significant new innovations.


Principles as interpretation criteria (Art. 4)

The first major innovation, and not only from a systematic point of view, is the introduction of some general principles. The first articles (Articles 1 to 11 of Title I) of the new Code are dedicated to them.

But only the first three principles – those of "result", "trust" and "market access", entirely new in the field of public contracting – are true criteria for interpreting and applying the new Code's provisions (Art. 4).

These principles have an immediately preceptive value and are subject to the review of the administrative judge. They are the guiding and qualifying structure of the new Code, thus realizing a step change from the past.

Principle of the result (Art. 1)

The new Code identifies – for the first time in a clear and concrete way – that the overriding public interest awarding authorities must always strive for is the "result of awarding the contract and executing it as promptly as possible and with the best possible relationship between quality and price".

Competition is a means of achieving the "best possible result in awarding and executing contracts". This principle emphasizes public officials’ broad exercise of discretion, which is necessary for them to be able to achieve their substantive objectives in applying the result principle, and which also becomes the "overriding criterion" for assessing their own liability.

Principle of trust (Art. 2)

The principle of trust is "mutual confidence in the lawful, transparent and correct action of the public administration, its officials and economic operators". This principle aims to protect public officials by delimiting their gross negligence to counter the "fear of signature". This is an obstacle to exercising their discretion and prevents them from making "evaluations and choices for the acquisition and performance of services according to the principle of result".

Market access principle and the other principles (Articles 3-11)

The market access principle stipulates that awarding authorities have to promote market access for economic operators in accordance with the principles of competition, impartiality, non-discrimination, publicity and transparency, and proportionality. Of the three principles, it’s the least innovative.

Here are the other principles provided for and regulated in Title I:

  • "Principles of good faith and protection of trust" (Art. 5)
  • "Principles of solidarity and horizontal subsidiarity, Relations with Third Sector entities" (Art. 6)
  • "Principle of administrative self-organization" (Art. 7)
  • "Principle of contractual autonomy. Prohibition of gratuitous intellectual work" (Art. 8)
  • "Principle of preservation of contractual balance" (Art. 9)
  • "Principles of taxability of causes of exclusion and maximum participation" (Art. 10)
  • "Principle of application of national sector collective agreements. Contribution defaults and late payments" (Art. 11)


Tender Phase

Sub-threshold procurement (Articles 48-55)

In the new Code, the provisions in the emergency legislation in Decree Law No. 76/2020 have been confirmed. But with some exceptions (eg for contracts of certain cross-border interest). The thresholds for applying direct awarding and the negotiated procedure without prior publication of a tender notice have been adopted. Specifically, it provides for:

  • the direct awarding, even without consultation of several economic operators, for works of less than EUR150,000 and for supplies and services, including engineering and architectural services and design activities, of less than EUR140,000;
  • the negotiated procedure without notice, after consultation of:
    • at least five operators, where existing, for works amounting to EUR150,000 or more and less than EUR1 million;
    • at least ten operators, where existing, for works amounting to EUR1 million or more and up to the EU thresholds;
    • at least five operators, where existing, for supplies and services, including engineering and architectural services and design work, amounting to or exceeding EUR140,000 and up to the EU thresholds.

The principle of rotation has been strengthened by identifying cases in which the awarding of a contract to the outgoing operator is prohibited, with exceptions specified. An exception to the rotation principle is expressly allowed for direct awards of less than EUR5,000.

The deferral terms of standstill (procedural and substantive) do not apply to awarding contracts with amounts below the EU thresholds, and the contract is concluded within 30 days of the award.

Design and integrated procurement (Articles 41 e 44)

The design and project levels have been redefined, merging and reducing the three design levels provided for by the 2016 Code into two levels. The two levels are the technical and economic feasibility project, and the executive project. Reducing to two levels should decrease the length of the approval processes and, more generally, simplify and accelerate procedures.

For ordinary and extraordinary maintenance, the omission of the first level of design is allowed, if the executive project contains all the elements provided for in the omitted level.

Marking a clear turnaround regarding the centrality of the design and project compared to the previous discipline, the use of integrated procurement has been liberalized. So awarding authorities can proceed with the joint awarding of the executive project and execution of works based on an approved technical-economic feasibility project. It will only be necessary to provide evidence of the technical reasons for using integrated procurement.

The only exception to integrated procurement refers to contracts for ordinary maintenance works, with respect to which this option cannot be exercised.

Exclusion causes (Articles 94, 95, 96, 97, 98) procedure for remedying deficiencies, the so-called "soccorso istruttorio" (Art. 101)

Provision is made for the reorganization of exclusion clauses that are mandatory and supplement the tender documents by right. Any clauses that provide additional grounds for exclusion are null and void and are deemed not to have been included (Art. 10). Automatic causes of exclusion (Art. 94) are distinguished from non-automatic causes of exclusion (Art. 95). Subsequent articles (96, 97, 98) provide procedural discipline leading to exclusion, causes of exclusion for RTIs, and professional misconduct (the grave illecito professionale). An entire article is dedicated to this.

With reference to the automatic causes of exclusion, the relevance of the plea-bargaining sentence has been eliminated. The relevant individuals no longer include the "person who ceased their office" and the "majority shareholder" in the case of companies with four or fewer shareholders. Instead, the de facto director and the sole shareholder legal person and the latter's directors become relevant.

The discipline of the soccorso istruttorio has been extended and detailed. And until the day of opening of bids, the economic operator can rectify material errors in the technical bid and the economic bid that they became aware after the submission of the bid. This is on the condition that the rectification does not involve submitting a new bid or substantial change and that anonymity is guaranteed.

Temporary Grouping of Undertakings, the RTI (Articles 68 e 97), premium availment (Art. 104) and waterfall subcontracting (Art. 119)

On the subject of RTI, the distinction between horizontal and vertical temporary groupings has been eliminated with Article 68 (on RTI general rules). A collective mandate will be enough to submit a bid, without any further requirements, with the participants assuming joint and several liability.

As for the subjective changes of RTIs, in addition to the confirmation of the withdrawal in Article 68, paragraph 17, the modification of RTIs during the tender process has been updated. This allows both the expulsion of the participant affected by causes of exclusion and their replacement subject to the strengthened burden of timely notification of the intervening cause of exclusion to the awarding authority. Expulsion or replacement is permitted if the bid submitted is not substantially modified.

There are also significant changes for availment. With the availment contract, it will be possible both to obtain the mere loan of the requirements to participate in the tender and to obtain additional resources to be brought to bear in the technical bid (premium availment). The "under penalty of exclusion" provisions of the previous code have also been eliminated. The only incompatibility is that under which, for premium availment, the auxiliary company cannot participate in the same procedure.

The regulations on subcontracting have been brought into line with the innovations established by Decree Law No. 77/2021. The abolition of quantity limits and the indication of the trio of subcontractors have been brought into full effect.

The most important innovation is the subcontracting of subcontracting (waterfall subcontracting). This has been liberalized, bringing it in line with European regulations and case law by providing discretionary evaluation criteria by the awarding authority. It will be exercised on a case-by-case basis. Any limitations by the awarding authority must be justified.

Guarantees (Articles 106 e 107)

The amount of the guarantee for participation in the tender is set at 2%. But awarding authorities can adjust and proportion the amount by increasing it (up to 4%) or reducing it (up to 1%) depending on the nature and risks associated with the contract. For procedures below the threshold, the awarding authority does not require provisional guarantees, except in certain cases where there are special needs (Art. 53).

Companies can request, with reference to works contracts and before concluding the contract, the replacement of the guarantee or surety bond (final guarantee) with withholdings (guarantee withholdings) on the work progress reports.

Anomaly of bids (Art. 110)

The new Code adopts the choice of a non-predetermined anomaly threshold, leaving it up to awarding authorities to identify this threshold on a case-by-case basis. Whatever criterion the awarding authority chooses, the rule applies that the exclusion of the economic operator can take place only and exclusively in compliance with the adversarial procedure, in accordance with the provisions of European law. The Procurement Responsible (the RUP) may involve the Selection Committee in the anomaly checks (Art. 93).

Contract Execution

Contract preservation measures: Price review and preservation of contract balance (Articles 9 and 60)

The new Code implements remarks the Italian Supreme Court made in 2020 (Thematic Report 8 July, 2020, No. 56), at the peak of the COVID-19 pandemic. The court emphasized the need for a (legal) remedy that would enable the parties to activate a renegotiation of the unbalanced contract affected by contingencies, preserving its execution and not simply allowing the termination of the contractual agreement.

Regardless of contractual renegotiation clauses, the party disadvantaged by extraordinary and unforeseeable events, and whose risk was not voluntarily assumed, may now seek restoration of the contractual balance.

To preserve the existing contractual relationship, the rule of price review has been amended. The mandatory inclusion of revision clauses has been brought into full effect: an obligation already introduced, on a transitional basis for tender procedures initiated by 31 December, 2023, by Article 29 of Decree Law No. 4/2022.

Article 60 specifies that the price review is triggered when special conditions of an objective nature occur and operates to the extent of 80% of the cost change. The conditions should result in an increase or decrease in the cost of the work, service or supply to an extent greater than 5% of the total amount.

Price changes are recorded based on ISTAT-approved synthetic indexes of construction costs for works and to consumer price indexes, industry and service producer price indexes and hourly contractual wage indexes for service and supply contracts.


An overview of the main changes (Book IV)

The new Code significantly innovates, and simplifies, the subject of PPP both with reference to the systematic approach and to some specific provisions, as well as being a "comprehensive and self-inclusive" discipline. Part I of Book IV contains the general provisions on PPPs, which apply to all forms of partnership contracts.

The PPP is an economic transaction where certain essential components are necessary. These components include:

  • a long-term contractual relationship between the grantor and the concessionaire;
  • the contribution "in a significant way" of private capital to cover the financial needs of the project; and
  • the operational risk allocated to the concessionaire while the grantor is responsible for defining the objectives and verifying their implementation).

The principle of atypicality of partnership contractual forms has been confirmed. And the discipline of concession (contained in Articles 176 to 195) constitutes the "default" discipline of all typical and atypical partnership figures.

An innovation has been introduced with reference to public contributions/grants. To qualify the contract as a PPP, there’s no longer any quantitative limit to the contribution (in the 2016 Code, equal to 49% of the total investment cost, including any financial charges), but only a qualitative limit linked to the condition that the operational risk must always be borne by the concessionaire. If the public contribution exceeds the percentage indicated in the Eurostat decisions, it will affect the purposes of off-budget accounting of the initiative.

Title IV of Book IV is dedicated to project finance, which in the structure of the new Code is reserved only for the event of operations proposed by the private party. The relationship between concession and project finance (no longer two different types of contracts like in the 2016 Code) has been clarified. It relates to the mode of financing, in "corporate financing" or "project financing".

The result is the introduction of some provisions dedicated only to project finance. For example it’s now mandatory to establish SPVs (it’s still optional outside project finance).

Significant innovations relate to institutional investors. They can submit project finance proposals on their own, even if they don’t meet the qualification requirements. Only later in the bidding phase will they be able to choose whether to associate or consortium with other operators who meet the requirements of the tender. Or, instead, they can continue independently. And they will outsource the services covered by the concession contract to companies that meet the necessary requirements, subject to the obligation to communicate their names by the deadline for submission of the bid.