Court of Justice Sentence on Subcontracting

With the sentence of the 26th of September 2019, cause C-63/18, the European Court of Justice has held the Italian legislation that limits, in a general and abstract manner, the portion of a contract that the tenderer is authorised to subcontract to third parties, as non-compatible with European law in subject of public contracts.

The preliminary question examined by the Luxembourg judges was raised by the Regional Administrative Tribunal of Lombardy in relation to the exclusion of a company from 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 principles and legislations in this regard hindered the application of Italian national legislation, limiting the share of the contract that could be subcontracted.

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

The Court 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, such as the one at issue in the main proceeding, limiting the part of the contract that the tenderer is authorised to subcontract to third parties to 30%”: so the limit imposed by the internal Italian law contrasts the European law.

Nor can the new national legislation, as recently introduced by the so-called “Decreto Sblocca Cantieri”, which, as explained, increases the share limit to 40%, be considered acceptable. In fact, the problem highlighted by the Court does not lie in the specific share established by the Italian legislator, but rather in the general and abstract identification of a maximum contract limit that can be entrusted to third parties, regardless of the specific share. The judges in fact highlight that “the national regulation prohibits, in a general and abstract way, the recourse to subcontracting that exceeds a fixed percentage […], so that this prohibition is applied regardless of the economic sector concerned […] of the nature of the works or of the identity of the subcontractors. Furthermore, such a general prohibition leaves no room for a case-by-case assessment by the contracting entity”. Non-general and thus less restrictive measures of the competition could also be equally suitable to achieve the legitimate objective of protecting public orders pursued by the legislator without however, undermining the freedom of the competition in the market of public contracts.

Moreover, the Italian national law “already provides numerous disqualification rules specifically aimed at preventing access to public tenders from companies suspected of mafia conditioning or in any case connected to interests attributable to the main criminal organisations operating in the Country”. The contrast to the phenomenon of the infiltration of organised crime in public tenders, as stated by the Court, constitutes undoubtedly a legitimate objective and can justify a restriction of the fundamental rules and general principles of the Treaties relating to this scope. 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 works must be carried out by the tenderer themselves, under penalty of being automatically excluded from the award procedure, also in the case in which the tenderer is able to verify the identity of the subcontractors and also decide, after verification, that such prohibition is not necessary in the present case.

What could emerge amongst other hypotheses is the possibility of limiting the subcontract authorising the specific contracting station to establish the fraction of works or services to be subcontracted, also evaluating the concrete situations in a discretional manner (having to demonstrate – in any case – the necessity of the prohibition imposed in order to contrast criminal and mafia infiltrations).

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