Nightview of Vittorio Emanuele II gallery and the cathedral in Piazza Duomo, Milan, Italy

In brief

To face the extraordinary emergency situation caused by the COVID-19 pandemic, the head of the Civil Protection Department issued Ordinances No. 630 of 3 February 2020 and No. 639 of 25 February 2020, introducing a discipline that overall derogates from the ordinary procurement discipline pursuant to the Italian Public Procurement Code (Leg. Decree No. 50/2016).

Subsequently, Law Decree No. 18/2020 of 23 March 2020 (“Cura Italia Decree”), converted into Law No. 27/2020 of 24 April 2020, setting out measures to strengthen the National Health Service and provide economic support for households, workers and firms in connection with the COVID-19 emergency, has introduced further extraordinary measures in the area of public procurement.

Contents

1.An overall derogation from the ordinary public procurement discipline
2.Measures to contain the negative effects on the internationalization of the country system
3.Other options available to contracting authorities
4.General remarks

An overall derogation from the ordinary public procurement discipline

The ordinances of the head of the Civil Protection Department mentioned above allow all the public and private subjects coordinated by the Civil Protection Department to resort to the negotiated procedure without prior publication of a contract notice pursuant to Article 63 of the Italian Public Procurement Code.

Moreover, the said ordinances allow specific procedures “for cases of extreme urgency and civil protection” pursuant to Article 163 of the Italian Public Procurement Code, which state that the performance of works, supplies and services necessary to remove the state of emergency can be entrusted directly to one or more economic operators chosen by the person in charge of the procedure.

Furthermore, numerous other derogations to the Italian Public Procurement Code are allowed, mainly with the aim of simplifying and accelerating the purchase of medical devices and other supplies during the COVID-19 pandemic.

Measures to contain the negative effects on the internationalization of the country system

In addition to the significant derogations mentioned above, the Cura Italia Decree provided that, until 31 December 2020, supply, works and services contracts related to the containment of negative effects on the internationalization of the country system may be awarded using the negotiated procedure without prior publication of a contract notice pursuant to Article 63 of the Italian Public Procurement Code. The measures for internationalization include the implementation of an extraordinary communication campaign to support Italian export and the internationalization of the Italian agro-food sector, as well as the internationalization of other sectors affected by the emergency.

The Cura Italia Decree has extended the negotiated procedure without prior publication of a contract notice to the purchase of IT services and goods, as well as connectivity services by public administrations aimed at promoting the diffusion of smart working. Moreover, the direct award is generally allowed in case of under-threshold contracts for the purchase of supplies and services by agencies and bodies of the National Health Service when private donors finance said purchase.

Other options available to contracting authorities

The Cura Italia Decree suspended all the terms of administrative procedures, including tender procedures, until 15 May 2020. With Order No. 312 of 9 April 2020, the Italian Anti-corruption Authority maintained that, pursuant to said provision, contracting authorities are allowed, if needed, to delay the launch of tender procedures, as well as to suspend ongoing procedures and the performance of public contracts.

As to the performance of public contracts, it should be noted that, in any case, pursuant to Article 107 of the Italian Public Procurement Code, contracting authorities are allowed to suspend the performance of work, supply and services “for reasons of necessity or public interest” (as well as connected considerations due to the contractor), and during the COVID-19 crisis many contracting authorities have suspended or have announced the intention of suspending the performance of many of their contracts (those related to activities frozen during the crisis) based on said provision.

Furthermore, Article 106 of the Italian Public Procurement Code allows for the extension and/or amendment of existing contracts under certain circumstances. For instance, in case of “unpredictable circumstances for the contracting authority,” an amendment of the original contract is allowed if it does not modify the general nature of the contract. Thus, this provision allows additional needs to be covered due to the current COVID-19 crisis.

At the same time, the Cura Italia Decree stated that the COVID-19 emergency is considered a cause of force majeure, which justifies a delay in the performance of contractual services, thus excluding the liability of the debtor.

As to judicial remedies, until 31 July 2020, all administrative cases, including cases on public procurement, will be decided without a hearing. The parties, in place of oral pleadings, are entitled to file written “short notes” within two days before the date set for the hearing.

General remarks

The COVID-19 crisis and the necessity to resort to a discipline that overall derogates from the Italian Public Procurement Code has reinvigorated the debate on the excessive complexity of the public procurement system in Italy, which, allegedly, would delay public investments and therefore weaken the economy.

In this regard, with the aim of effectively facing the health crisis and facilitating a quick economic recovery once the pandemic subsides, it has been suggested: i)  to directly apply the EU public procurement directives without any implementing rules (or, at least, without any rule that is not strictly necessary) to simplify the legal framework; and ii) to limit the judicial intervention on public tenders by restricting the jurisdiction of the administrative courts and, in particular, their power of freezing, and then setting the awards aside.

At present, it is difficult to say whether these criticisms will lead to real legislative reform.

Baker McKenzie’s Public Procurement World contains more information about the world’s most important public procurement laws and guidance in light of the global COVID-19 pandemic.