Court of Justice Sentence on Subcontracting

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Withthe sentence of the 26th of September 2019, cause C-63/18, the EuropeanCourt of Justice has held the Italian legislation that limits, in a general andabstract manner, the portion of a contract that the tenderer is authorised tosubcontract to third parties, as non-compatible with European law in subject ofpublic contracts.

Thepreliminary question examined by the Luxembourg judges was raised by the RegionalAdministrative Tribunal of Lombardy in relation to the exclusion of a companyfrom the tender launched by Autostrade per l’Italia for the expansion of the A8consequent to the 30% limit on subcontracting established by Legislative Decree50/2016. The administrative judge asked the Court if the European principlesand legislations in this regard hindered the application of Italian nationallegislation, limiting the share of the contract that could be subcontracted.

Pursuant to article 105 of the Code of public contracts, which regulates the institutionof subcontracting in the scope of public contracts, it is established that “thepotential subcontract cannot surpass 30% of the total value of the works” andrecently the legislator – with Legislative Decree 55/2019 – has increased thelimit to 40%.

TheCourt of Justice, deciding upon the present question, has explicitly ruled that“Directive 24/2014 on public contracts[…] must be interpreted in the sense that precludes national legislation, suchas the one at issue in the main proceeding, limiting the part of the contractthat the tenderer is authorised to subcontract to third parties to 30%”: sothe limit imposed by the internal Italian law contrasts the European law.

Norcan the new national legislation, as recently introduced by the so-called “Decreto Sblocca Cantieri”, which, asexplained, increases the share limit to 40%, be considered acceptable. In fact,the problem highlighted by the Court does not lie in the specific shareestablished by the Italian legislator, but rather in the general and abstractidentification of a maximum contract limit that can be entrusted to thirdparties, regardless of the specific share. The judges in fact highlight that “the national regulation prohibits, in ageneral and abstract way, the recourse to subcontracting that exceeds a fixedpercentage […], so that this prohibition is applied regardless of the economicsector concerned […] of the nature of the works or of the identity of thesubcontractors. Furthermore, such a general prohibition leaves no room for acase-by-case assessment by the contracting entity”. Non-general and thusless restrictive measures of the competition could also be equally suitable toachieve the legitimate objective of protecting public orders pursued by the legislatorwithout however, undermining the freedom of the competition in the market ofpublic contracts.

Moreover,the Italian national law “alreadyprovides numerous disqualification rules specifically aimed at preventingaccess to public tenders from companies suspected of mafia conditioning or inany case connected to interests attributable to the main criminal organisationsoperating in the Country”. The contrast to the phenomenon of theinfiltration of organised crime in public tenders, as stated by the Court,constitutes undoubtedly a legitimate objective and can justify a restriction ofthe fundamental rules and general principles of the Treaties relating to thisscope. However, a restriction – such as that provided by the Italian legislator- exceeds what is necessary to achieve the said objective. That which is deemed excessive is the fact that for all contracts, a significant part of the worksmust be carried out by the tenderer themselves, under penalty of beingautomatically excluded from the award procedure, also in the case in which thetenderer is able to verify the identity of the subcontractors and also decide, after verification, that such prohibition is not necessary in the present case

Whatcould emerge amongst other hypotheses is the possibility of limiting thesubcontract authorising the specific contracting station to establish thefraction of works or services to be subcontracted, also evaluating the concretesituations in a discretional manner (having to demonstrate – in any case – the necessity of the prohibition imposed in order to contrast criminal and mafiainfiltrations).

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