CGUE C-395/18: on the automatic exclusion of the subcontractor without the requirements

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With the sentence dated the 30th of January 2020, the European Court of Justice was called to comment on the provision of the Public Contracts Code which contains the automatic exclusion of the competitor for the tender, which indicated a subcontractor then found to be without the requirements.

This interpretation arose following a reference for a preliminary ruling, formulated by the Lazio Regional Administrative Tribunal, regarding the compatibility of the national discipline with Directive 2014/24.

The following queries were submitted:

  • whether the Italian legislation is compatible with the abovementioned Directive, especially referring to the article 80 c. 5 of Legislative Decree 50/2016, according to which, if one of the indicated subcontractors of the contract proves to be lacking requirements, rather than providing a replacement if it is excluded;
  • in the case of a positive response regarding the abovementioned query, if the mentioned national regulation is compatible with the principle of proportionality ex article 5 of the Treaty on the European Union, the general principle of the Union law, when that exclusion is provided even if there are other subcontractors not excluded and in possession of the requirements to carry out the subcontractor services or in the case in which the economic operator declares to renounce the subcontract, having their own requirements to carry out the services.

However, the Court declared the legitimacy of the mentioned national discipline, limiting the relative complaint only to the automatism that characterises this exclusion process.

Specifically, European judges have outlined that “the Union law does not prevent national legislation, such as the Italian one, according to which the contracting authority has the option, or even the obligation, to exclude the tenderer company if regarding one of the subcontractors mentioned in the tender is found of a reason for exclusion”. Nevertheless, in light of the proportionality principle and article 57 paragraphs 4 and 5 of Directive 2014/24, the Court has considered any automation in the exclusion of a company from the tender as unlawful. This means that, on the one hand, the company must have the possibility to demonstrate its reliability despite the discovery of a violation such as the one in question and, on the other hand, for the purpose of assessing the situation, the contracting authority must consider a series of concrete elements, such as, the means available to the bidder to verify the existence of a violation of its subcontractors, or the presence of an indication, in their offer, of the capacity to carry out the appeal without necessarily using the subcontractor.

Therefore, according to the European Court of Justice, the Italian legislation – read in conjunction with article 57, paragraph 6 of the abovementioned Directive, as well as the principle of proportionality – is contrary to European Union law in the measure in which it provides for the automatic exclusion of the offering company when a violation of legal obligations regarding environmental and labor committed by the subcontractors indicated in the offer is confirmed, without the possibility for the company to defend themselves and still test their reliability.

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