In Italy, the “Public Contracts Code” (Legislative Decree No. 50/2016) pays particular attention to the integrity and reliability of the potential public tender contractor. The Code specifies a series of cases in which an economic operator must be excluded from the participation of a call for tender as it has been found guilty of grave professional misconduct in its execution of previous public contracts.

Evidently, the rationale behind these provisions recognises the importance of the competitors’ integrity on the public market. In the relationship between public administrations and economic operators, honesty and previous professional records are paramount. In light of these considerations, the rules have recently been amended by Decree Law No. 135/2018 (“Decreto Semplificazioni”), subsequently converted to Law No. 12/2019.

In particular, pursuant to new Section 80, 5° of the “Public Contracts Code”, the commissioning body, among other cases, shall exclude a competitor from the tender procedure whenever:

(c) it demonstrates by appropriate means that the economic operator is guilty of grave professional misconduct, bringing into doubt its integrity or reliability; 

(c-bis) the contractor has attempted to affect the decision-making process of the public administration or to gain confidential information for its own benefit, has provided false and misleading information likely to affect the decisions on the exclusion, selection or awarding of the contract, or has failed to provide the necessary information for the proper selection procedure; 

(c-ter) the contractor has showed significant or persistent deficiencies in the execution of a procurement contract or a concession, which have led to a termination for breach of contract or the contractor being given other sanctions, such as a conviction for damages. In these cases, the procuring entity shall take the seriousness and the time elapsed from the infringement into consideration.

The content of new letters c-bis) and c-ter) consists of a specification of what was previously disposed by original Section 80, particularly specifying the kinds of activity that could lead to exclusion. 

In line with Italian administrative case-law, the category of “grave professional misconduct” is broader than the notion of “termination for breach of contract” (let. c-ter), and it may include the refusal to underwrite the contract, even if the mentioned refusal is a result of non-cooperation with the public administration by failing to provide the requested documents. The company that does not allow the procuring entity to start the service or the activity of the public tender is contrary to Italian principles of fairness and good faith, which govern the pre-contractual phase (ex multis, T.A.R. Brescia, No. 215/2019). 

It is now clear how the provisions give wide leeway to the procuring entity. This leeway does not relate to the identification of cases that lead to exclusion – which is a matter reserved for the legislator – but to the assignment of the specific case to the general provision. In fact, the cases at hand are described using indeterminate legal concepts, such as the necessity to “demonstrate by appropriate means” the presence of grave professional misconduct and the use of generic sentences (“grave” and “bring into doubt”), together with a missing enumeration of exclusion causes.

In other words, the norms do not provide a specific list of cases that represent grave professional misconduct and, as a result, new modifications may lead to wider uncertainty on what is considered “grave professional misconduct”. 

Furthermore, the discretion conferred to the public administration has been increased following the change to the way in which the final ruling is taken into consideration. Contrary to the previous version of Section 80 of the “Public Contracts Code”, it is no longer necessary to reach a final ruling to establish the presence of a cause of exclusion. Until the final judgment, the commissioning body can evaluate for itself the records and the conduct adopted by an economic operator in previous public procurement procedures.

In the same way, the fact that the termination of a contract is not filed into the “Casellario informatico ANAC” – the Registry run by ANAC (the Italian Anti-Corruption Authority), pursuant to Section 213 of the “Public Contract Code” – does not mean that the information is irrelevant. The submission of the termination to the Registry is not constitutive and binding. If a case of grave professional misconduct is recorded on the aforementioned Registry, the commissioning bodies shall not ignore it, but they are given independence to evaluate it. It should be pointed out that the public administration can find out information about a potential public tenderer’s professional history in other ways, for example looking into its history following alerts from third parties. The public interest concerning the transparency of public procurement procedures and the expulsion of untrustworthy companies from the market allows a central control to be handled by ANAC and a decentralised control to be conferred to single procuring entities. 

With regards to a practical perspective, it is necessary to identify the obligations of the potential contractors and the procuring entities, deriving from the norms at hand. The former are obliged to declare all useful information in order to allow public administrations to make a proper evaluation. On the other hand, procuring entities are obliged to prepare an appropriate procedure to evaluate the previous professional conduct of the candidate. It is possible that doubts will arise: companies will be uncertain about the necessity of disclosing specific matters and procuring entities will be able to decide if a single matter has an impact or not on the competitor’s reliability. 

In light of this, through Law No. 12/2019, the legislator has streamlined the rules, providing a generic cause of exclusion whereby evaluation is reserved for the commissioning body’s discretion. The rationale behind these provisions consists of the necessity to protect the trust between the administration and the economic operator, allowing for the recognition of the importance of every kind of misconduct that is able to threaten the competitor’s moral integrity.

Every conduct linked to their professional activities contrary to a civil, criminal or administrative provision can be evaluated as a possible cause of exclusion, even if there is not a final legal assessment. The risk is that a similar rule may affect constitutional principles concerning the individual defence and the competition on the public market, given that the new norms introduce a restrictive system unable to anticipate the detrimental effects arising from a civil, penal or administrative final ruling.

The “revolution” – in terms of simplification of bureaucratic procedures – announced on the matter by the Italian Government does not seem to have achieved the desired result yet.