Public Procurement Archives

Procurement rotation: let’s analyse the rule to provide some clarity

10/04/2024/in Public Procurement/by Beatrice Puliti

The principle of rotation in awarding contracts has always been a cardinal principle in public law. The legislator’s rationale is clear and unmistakable: to subtract from the availability of contracting authorities as much discretion as possible in the choice of contractors and to discourage the fidelity of economic relations between entities and private entities that is ill-suited to public law principles. The principle in question is not the child of the latest reform but can already be found both in the ‘old code’ and in the ANAC directive no. 4, points 3.6. and 3.7, widely recognised as a reference for legislative integration. In point 3.6 ANAC emphasised that ‘the principle of rotation of awards and invitations shall be applied, with reference to the award immediately preceding the one in question, in cases where the two awards, the previous one and the current one, have as their object a contract falling within the same commodity sector, or within the same category of works, or even within the same sector of services. In any case, the application of the rotation principle cannot be circumvented, with reference to the assignments made in the last three calendar years…”. Point 3.7 specified how the re-invitation of the outgoing contractor should in any case be of an exceptional nature and thus carry a “stringent justification”.

The modern Article 49 paragraph I reiterates the principle of rotation as a universal rule, but then gives way to a series of exceptions a moment later. Let us begin with Paragraph II, according to which “it is forbidden to award or award a contract to the outgoing contractor in cases where two consecutive awards have as their object a contract falling within the same product sector, or the same category of works, or the same service sector”.

If at a first reading it seems to be a recalculation of the previous legislation, this is not the case, since it is clear that according to Guideline No. 4 the outgoing contractor had to be excluded for at least three years, whereas now he only has to skip one round of tenders and again he can be in like everyone else! But let us move on.

Paragraph III of the same article states that ‘the contracting station, by its own measure, may divide the assignments into bands on the basis of economic value and rotation shall apply with reference to each band’. Therefore, if the contracting stations draw up such a regulation, the general principle of rotation becomes a relative principle limited to each band, thus enabling the entities, with a minimum variation in the amounts of the award, to continue the collaboration with the outgoing user…(!).

Paragraph IV: “In justified cases with reference to the structure of the market and the actual absence of alternatives, as well as the accurate performance of the previous contract, the outgoing contracting party may be re-invited or be identified as the direct contractor”.

The novelty is evident since it is now merely stated that “in justified cases” (a wording that alone leaves a wide scope for action, losing even the qualification of the stringent justifications required in the past) the outgoing contractor may be reinvited.

The attempt to limit discretion by reference to market structure and the actual absence of alternatives is decidedly bland as these are expressions that can potentially contain everything but also its opposite.

So, to recapitulate, the new code has deliberately opened a window (but perhaps also a door) both to the freedom of choice of the contractor (for example, for assignments below EUR 5,000.00, the principle of rotation may also be waived) and to the possible continuity in collaborations with public administrations. This is without wishing to judge the choice made, but only to focus on the principles with which contracting officers must interface.

OFF-BUDGET DEBTS AND PRIOR LIABILITIES: THE DIFFERENCES TO KNOW IN ORDER TO KNOW HOW TO ORIENTATE ONESELF

03/04/2024/in Public Procurement/by Beatrice Puliti

For those who work with local authorities on a daily basis, it is well known how frequent it is that certain expenses must be recorded outside the normal commitment procedures, thus requiring the authority to turn to institutions such as off-balance sheet debt and prior liabilities. The choice is obviously not discretionary (although subject to a partial interpretation concerning the nature of the debt) and has precise and important repercussions. Normally speaking, off-balance sheet debts are provided for and governed by Article 194 of the Consolidated Law on Financial Intermediation, which qualifies them as a real exception to be applied to peremptory hypotheses such as:

executive sentences

covering deficits of consortia;

recapitalisations of corporations for the operation of public services;

expropriation or emergency occupation procedures;
acquisition of goods or services within the limits of proven and proven enrichment benefits.

What is evident in the above list is that off-balance-sheet debts constitute, civil law speaking, obligations that are entirely valid and capable of producing effects even if contracted in the absence of the necessary commitment of expenditure proper to administrative law.

In order to prevent these debts from remaining outside the entity’s budget, in open contrast with the principle of the universality of the budget, which prescribes that all revenue and expenditure must be entered therein, the legislature provided for an ad hoc procedure for their recognition. The procedure involves the Municipal Council, which is called upon to give its opinion as the holder of the power to scrutinise and make use of the commitments undertaken by the Local Authority.

As for past liabilities, these are envisaged by Article 191 of the Consolidated Law on Finance and can be qualified as expenses related to the year of their occurrence that have been placed within an ordinary expenditure commitment but, due to unforeseeable events, do not find suitable coverage. The adjustment mechanism in this case will be an ordinary expenditure procedure with a possible budget variation. Evident in this case is the incapacity nature of the expenditure.

Once the boundaries of the two cases have been delineated and clarified, it is clear that the qualification of the debt upstream of the two procedures is fundamental for adherence to either type, an activity to be delegated to technicians and experts in the sector in order to proceed with their regular classification.

Technical extension in public procurement: conditions of legitimacy

21/03/2024/in Public Procurement/by Beatrice Puliti

In today’s article we will try to shed light on some aspects of this apparently extraordinary instrument, which in reality is frequently applied within the dynamics of public administrations.

Before analysing when this institution is or is not provided with legitimacy, it is necessary to make a preliminary distinction between the technical extension and the contractual extension, both of which are provided for in the new procurement code. The former is governed by Legislative Decree 36/2023 at Article 120, paragraph 11, and exists when the duration of the contract is changed by the administration for reasons not attributable to it nor originally foreseeable, for the sole purpose of guaranteeing the continuity of an essential service pending the conclusion of the tender procedure to choose the new contractor. The main characteristics of the technical extension, therefore, are its temporariness and unpredictability, being a ‘bridge’ instrument between one contractual regime and another. The so-called contractual extension, on the other hand, provided for in paragraph 10 and thus kept quite distinct from the preceding one, finds its source directly in the contract. It is therefore a negotiation clause foreseen and provided for by the administration that is intended to crystallise the possibility of the parties to continue the synallagmatic relationship. Having made this necessary distinction: when is one’s technique (since the other is left to the availability of the parties) legitimate? Are there prerequisites for its adoption?

The answer is obviously yes.

In fact, it can only be used by administrations by following the following steps:

it must be of an exclusively exceptional nature, to which recourse must be had when the ordinary competitive mechanisms cannot be set in motion. The service in question must therefore be characterised by the character of necessity and public interest, fearing, in the event of its interruption, harm to the community;
It must be necessary to concretise the principle of continuity of administrative action;
It must be temporary and exclusively adopted in order to fill the gap between two contracts (bridging contract);
The tender must be launched before the original contract expires;
The administration must not have contributed to causing the delay in the definition of the new contractual arrangement.

All these characteristics are recalled in the recently published judgement of the Veneto Regional Administrative Court, section II, 11.03.24 no. 449, where the administrative judge identifies even more clearly the boundaries of the institution already outlined in the past, but now more than ever made clear and binding. Technicians called upon, therefore, to resort to this institute must always verify the existence of the prerequisites indicated in order to avoid incurring a declaration of illegitimacy.

The imminent deadline for the three-year corruption prevention and transparency plan: what changes with the new procurement code

23/01/2024/in Public Procurement/by Beatrice Puliti

The new public procurement code, which entered into force on 1 April 2023 with Legislative Decree No. 36, has not only offered users a single reference text on public procurement, but has revolutionised, in some cases, the regulatory landscape by introducing guiding principles such as result, trust, market access and transparency. It is precisely in relation to this last pivotal criterion of public law that the Plan for the Prevention of Corruption and Transparency, which the individual administrations must obligatorily publish every year in order to make clear, transparent and demonstrate how much corruption risk is contained within them, cannot but be called into question.

But let us go step by step. What is the PTPCT in brief? Is there a deadline by which it must be published? Have the provisions for its drafting and publication changed with Legislative Decree No. 36/23? The first question (perhaps a foregone conclusion for those about to read such an article!) is soon answered: the PTPCT is an act that identifies, in the wake of the national anti-corruption plan that ANAC adopted for the first time in 2013 as a policy act, the degree of exposure of the administration adopting it to the risk of corruption, indicating the measures it adopts to prevent and deal with the risk itself. Its articulation, reduced to a maximum sintering, can be broken down as follows: context analysis, risk assessment, risk treatment. Entities and administrations have an annual deadline for publishing the Plan and it is 31/01 of each year, unless extended (for local authorities, for example, the deadline is 15/04/24). An important simplification worthy of note is envisaged for entities with fewer than 50 employees, which, after the first adoption, may confirm in the three-year period the plan adopted in the previous year if no corruptive facts have emerged or no organisational changes have been introduced. This confirmation must result from a reasoned deed of the governing body.

With regard to the novelties introduced by the new procurement code, one cannot fail to note the enormous impact of the digitalisation of the procurement system on the transparency obligations of public administrations, which ANAC has punctually crystallised in Resolution 601 of 19/12/2023, which supplemented Resolution 264 of 20/06/2023, as well as the methods for the legal publicity of acts. The digitisation of the entire contract life cycle, in fact, implies that the planning, design, publication, awarding and execution phases are managed through certified digital procurement platforms, which implies total transparency of all phases of the contract life cycle. The publicity obligation for all kinds of public tenders and contracts is ensured through the Platform for Legal Publicity, which will be part of the ANAC database, and no longer through the Official Gazette. Contracting stations and awarding bodies will therefore compile notices on the platform according to the new European forms (‘eforms’) or according to models prepared for publication on the National Public Contracts Database. From the moment of publication, the contracting stations will have to make the tender documents accessible, guaranteeing access until the completion of the procedure and the execution of the contract. Under the new system, the legal effects of the published acts will run from the date of publication in the National Public Contracts Database. It goes without saying that these different provisions have an incisive impact on the mapping of the risk analysis processes to be assessed when drawing up the corruption prevention plan, giving rise not only to different types of corruption risks, but also to multiple and additional techniques for preventing them.

These in a nutshell are some of the novelties in view of the upcoming deadline of 31/01/24 for the publication of the PTPCT. We wish all those concerned good work in dealing with the new legislation!

THE SUSTAINABILITY BALANCE SHEET FOR PUBLIC INVESTEE COMPANIES

15/11/2023/in Public Procurement/by Beatrice Puliti

The sustainability report has become one of the most up-to-date documents within the corporate world today and will become increasingly so from January 2024 when it will be made mandatory for many more large companies.

This is bound to have a cascading effect on SMEs as well, which, although not obligated, can reap clear benefits in practical and economic terms from the preparation of this document.

The positivity of this compliance can be reflected a fortiori on public investee companies that intend to adopt it, but let’s go step by step.

What is the sustainability report?

The sustainability report is a document addressed to all stakeholders or otherwise bearers of interest to the company (employees, suppliers, customers investors, lenders, etc.) that communicates the commitments – and results – made in the area of corporate responsibility.

This document must, therefore, provide a representation of an organization’s sustainability performance by reporting on the positive and negative impacts generated by its activities in the five areas referred to by Directive 2014/95/EU, namely: active and passive anti-corruption, environment, personnel, social, human rights.

It can be understood, therefore, how much it is a document that photographs and crystallizes the company’s commitment to increasingly topical and relevant issues implying the assumption of responsibility (accountability) and its related communication, in relation to the relationship between the organization’s performance and sustainable development objectives.

What are the benefits of sustainability reporting?

The practical reflection that is generated for companies is less capital constraint and obvious cost savings.

In relation to the latter, this means, specifically, an increase in the likelihood of achieving the set goals by engaging the company in periodic data collection and reporting on management and performance, an improvement in operational effectiveness and efficiency as well as the retention of employees who find themselves highly motivated by a better working environment.

These features of the sustainability report and its positive consequences for companies that adopt it can only be, for a public company, one more reason to adopt it.

In fact, while it is true that the existence of the social balance sheet is in some respects close to the same conception, we can consider that the sustainability balance sheet is a form of evolution of the social one, which, being totally marked by transparency, immediately identifies with publicist principles.

Thus, it can be understood how, in pursuing its main targets in accordance with the Sustainable Development Goals (SDGs), a public company inevitably contributes to the improvement of the lives of the people belonging to the relevant social group, thus realizing, a public interest.

If we add to this the fact that in the case of adoption there are potential economic-financial benefits (with consequent positive repercussions in terms of investments to improve/increase the services provided to the community concerned), the profile of public interest that it can assume is even more enhanced.

Conclusions

In conclusion, this is the reason why most of the investee companies, although not obliged by the regulatory framework, are adopting this type of document that elevates public interests according to criteria of sustainability, legality and transparency and that makes public entities in perfect synchrony with the socio-cultural evolution that Europe is going through.

The RUP in the new procurement code

28/06/2023/in Public Procurement/by Beatrice Puliti

New RUP and old RUP: the continuity of the acronym does not help to denote the change that legislative decree no. 36/2023 has brought about (for some in a fruitful manner for others less so) in relation to the figure indicated.

In fact, the new public procurement code, which is gradually replacing the previous code, has significantly changed principles, professional figures and procedures belonging to the previous discipline.

One of these changes has concerned, precisely, the RUP (formerly the single person in charge of the procedure, now the single project manager) to whom the new code has reserved, in addition to the articles of the decree, Annex I.2 regulating the methods of identification, professional requirements and tasks.

What certainly cannot be denied is the increasingly clear definition of this professional figure as a project manager (previously the RUP had been influenced by a vision increasingly akin to the project manager as suggested by the European directive of public procurement transposed by ANAC with Guideline no. 3 Determination 1097/2016 then updated with the Code of Contracts Legislative Decree 56/2017 with Guideline no. 3 Determination no. 1007/2017) that can follow the implementation of a public work from its planning to its realisation.

Project management focuses, in fact, on the triangulation between time, cost and quality of performance, which are three aspects that can be in contradiction with each other and for this reason must be managed and regulated with extreme competence (decreasing costs, for example, means increasing time and generating uncertainty on the quality standard).

These, today more than ever, have become pivotal elements in the activities of the P.A. Just think, for example, of those to be carried out in connection with or as a consequence of the PNNR, which imposes stringent time constraints to be respected to which we in Italy are not accustomed, so it is necessary for ‘insiders’ to be trained in this perspective in order to make a qualitative leap on this front.

For this reason (perhaps) the new Code should have been more stringent in indicating specific technical skills to be found in such an apex figure rather than simply requiring ‘an appropriate level of education and one/three years’ professional experience’.

In view of the fact that one of the main innovations of the reform in relation to this figure consists in the fact that the RUP itself will no longer deal with the procedure as a single phase, but will supervise and coordinate, with a view to a result principle, the various phases (in which individual responsible persons will be appointed) preordained to the realisation of a project, accentuating more and more the managerial and responsibility aspect. In fact, it remains the responsibility of the RUP to ensure the completion of the public intervention within the prearranged deadlines, responding both in the event of failure to enter into the contract and in the event of delays in its execution.

Notwithstanding the fact that the appointment cannot be refused, Article 15, paragraph 6 provides, however, that contracting stations and awarding bodies may allocate financial resources not exceeding 1 % of the tender amount for the direct entrusting by the RUP of assistance assignments to the same. Obviously, the services that the RUP may directly entrust are technical or legal services, with the aim of managing the contract in the best possible way, but the fact remains that potentially high direct entrustments are left to its discretion.

For this reason, ANAC has already raised concerns in relation to this rule.

In principle, it can be seen that the changes made are all aimed at increasing the responsibility (without raising the basic levels of competence, however!) of the figure with the consequent expansion of his discretionary powers, which in the public sphere can always become a double-edged sword.

For this reason, the advice to those who are about to take on this role is to implement their training to the best of their ability in order to move autonomously and consciously within the public system.

The timeline of the new Italian public procurement code

10/05/2023/in Public Procurement/by Beatrice Puliti

The new public procurement code has undoubtedly reshaped the scenario crystallised for some seven years by Legislative Decree No. 50/2016.

In addition to qualifying the active subjects of public law, re-quantifying the thresholds in tenders, adapting public administrations to the age of digitalisation (and much more), it has also gradually coordinated the passing of the baton from the old to the new code, so as to allow operators a step-by-step adjustment to the new discipline.

Although, in fact, Legislative Decree No. 36 of 2023, published in the Official Gazette on 31 March 2023, officially came into force on 1 April 2023, its provisions, as specified in Article 229 of the same code, will only take effect, and thus be able to explain their effects, from 1 July 2023.

In addition to these two time references, there is also a transitional period expiring on 31 December 2023 during which the provisions of both the old code and the simplification and simplification bis legislative decrees apply.

This multiplicity of dates, as well as the time span of coexistence of the ‘old with the new’ generates, understandably enough, a situation (at least on the surface) of regulatory uncertainty in identifying which rules are to be applied by public sector operators.

The first step, which is also the simplest one, is to understand the discipline of the procedures in progress as of 1 April 2023 (specifically, by procedures in progress we mean procedures and contracts with notices or already published or for which notices to submit bids have already been sent out, as well as procedures for which the design assignment has been formalised). For these, as is generally the case, the rules of Legislative Decree 36/23 do not apply but those of the previous code remain in force.

The same discipline applies to proceedings commenced before 1 July 2023 (and after 1 April 2023), which is the only reference date for the repeal of the old regulations.

The articles of the old code, therefore, that will continue to be used the most will be Article 70 concerning pre-information notices, Article 72 concerning the drafting and publication methods of notices, Article 73 concerning the national publication Article 127 paragraph two and Article 129 paragraph four concerning contract notices and contract award notices.

On the other hand, the new discipline will apply to the procedures that are hinged after the date on which the rules of the new code become effective, with the exception of certain articles of the previous discipline that will “expire” only on 31/12/2023, giving rise to the so-called transitional period of coexistence of the two codes.

During this time period, in addition to the previously identified articles, other articles will remain in force, mostly concerning specific technical activities.

The activities concerned are, for instance, the drafting or acquisition of documents relating to the procedures for programming, design, publication, awarding and execution of contracts, access to tender documents, submission of the single European tender document, submission of tenders, opening and preservation of the tender file, technical, accounting and administrative control of contracts, including during execution, as well as the management of guarantees.

However, as of 1 January 2024, the articles of the new procurement code, and specifically articles 19 to 31, 35, 36, 37, 81, 83, 84, 85, 99, 106 paragraph 3, 115 paragraph 5, 119 paragraph 5, 224 paragraph 6, will also become effective for the activities listed above.

Analysing the timeline just illustrated it is easy to understand how the concern that an excessively fast transition to the new rules could block the procurement system, completely reversing the practical effect of the reform, has led to the generation of a complex discipline (even the De Lise code remains alive in the transitional period!), fragmented and consequently ill-defined.

The practical advice for those approaching the new discipline is to proceed with a careful analysis of the operations or activities that one is called upon to perform in order to be able to correctly identify one’s sphere of operation and understand whether this, both in terms of time and content, has been (already) touched by the reform.