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Public procurement: the Commission requests Italy to respect EU rules for public works contract

Public procurement: the Commission requests Italy to respect EU rules for public works contract

The European Commission (the “Commission”) has recently sent to the Republic of Italy a reasoned opinion requesting the member Country to correctly apply EU public procurement rules for the construction of new buildings for the judicial administration of Bari (“Cittadella della giustizia”), with an estimated value of € 350 million. The infringement proceedings, launched in September 2012 (case No° 2012/400), concern the award decision by which the contracting authority selected the offer of the construction company responsible for executing the works.

The facts
In 2003, the Municipality of Bari published a call for proposals in the OJEU for a new ‘Cittadella della Giustizia’ (court complex) in view of the poor condition and inadequacy of the existing premises. In Decision 1045/2003 it announced that the requirements were met by the proposal submitted by Impresa Pizzarotti & C. S.p.A., under which an area of land and the complex being built were made available to the Council in the form of a rental contract.

Legal proceedings initiated in Italy by another company resulted in definitive judicial recognition that Decision 1045 did not constitute an ‘award of tender’ as this was not a tender procedure, but rather that the proposed contract was a ‘rental agreement’.

The EU infringement procedure
In September 2012, the EU opened an investigation into the infringement of Directive 2004/18/EC on public contracts and, despite the judicial ruling, in April the Council of State referred to the European Court of Justice the matter of whether a ‘future’ rental agreement fitted the definition of competitive tendering under Article 16 of Directive 2004/18/EC.

Recently, the Commission sent a reasoned opinion to the Republic of Italy, in which it indicated that although the contract was officially designated an ‘undertaking to rent’, it was in fact the equivalent of a works tendering procedure, while not taking into account indicative factors such as: a) ownership of the area; b) the absence of works specifications; c) evidence of the general characteristics usually associated with rental property; d) the value of the contract, which was inconsistent with a tendering procedure; e) the as-yet-unsigned undertaking to rent.

The Commission’s position is based on the case law of the Court of Justice of the EU, especially the judgments in Köln Messe and Helmut Müller (Judgment 29 October 2009, Case C-536/07, Commission v Germany; judgment 25 March 2010, Case C-451/08, Helmut Müller). According to that case law, public works contracts are all contracts, irrespective of their formal classification, whose object is, as in the present case — the execution of works.

Italy did not apply EU public procurement rules because it considered that the contract would only constitute a lease agreement, not a works contract. The Commission considers that Italy has violated its obligations for the award of public works contracts. According to the Commission, the fact that no contract has yet been signed does not exclude the existence of an infringement. The EU rules on public procurement are designed to ensure EU-wide competition, transparency and equal treatment as well as best value for money and therefore cannot be waived by the awarding authorities.

By: Marco Cerritelli, LLM

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