In Review: Rules and Procedures Governing PPP Projects in Italy

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All the questions

General framework

i Types of public-private partnership

In Italy, there are two main categories of PPP:

  1. contractual PPPs, in which a private party is contractually entrusted with carrying out works, services, or both, in the public interest under the control of the granting authority (for example, EOT concessions); and
  2. institutionalized PPPs, whereby a public entity and a private entity hold stakes in a vehicle created to build, maintain and/or operate a project or provide services of public interest (for example, local utility companies participating with competent local authorities, privatization of enterprises).

Public authorities are authorized to enter into PPP contracts for any type of public works27 provided that, in addition to the construction risk, the private party bears the availability risk or the demand risk of the services to be provided.28

The Code specifically identifies five types of contractual PPPs:

  1. project finance contracts (i.e. DBOT concessions);
  2. construction and operating concessions (EOT concessions);
  3. service concession contracts;
  4. public works finance leases; and
  5. supply contracts.

However, any other method of carrying out works or services in partnership may be qualified as a PPP contract insofar as it meets the conditions set by the Code.29 Concession agreements are the most common type of PPP contracts.

ii Authorities

Italy is a state made up of 19 regions and two autonomous provinces. Therefore, in addition to national governmental authorities, the Italian Constitution grants regional and local authorities several administrative functions.

In light of this, Italian authorities can be grouped into three institutional levels; national government,30 regional governments and local governments. These three levels have different but concurrent and coordinated powers and functions. Each level of authority is empowered to exercise these powers through PPPs. In addition, specific departments of a public authority at any of these three levels can conclude PPPs in their specific area, and individual local units of these departments can act as contracting authorities.31 As discussed above, the government intends to reduce the number of contracting authorities and increase their technical competence.

A special role is played by the Ministry of Infrastructure and Transport, which promotes the technical and administrative activities necessary for the adequate and rapid planning and approval of infrastructure and carries out, with the cooperation of the regions and autonomous provinces, the activities support needed to monitor infrastructure construction.

The Code also confers specific powers of surveillance and control on the ANAC.32 In addition, ANAC is responsible for approving studies and guidelines, and drafting model contracts, promoting best practices, and promulgating soft regulatory instruments. The ANAC has published the Guidelines on the “control by the authorities of the activities of the private partner in public-private partnership contracts” (Guidelines).33

In addition, the Higher Council for Public Works is empowered to issue:

  1. a mandatory opinion on the final design of projects of national interest or projects financed by the State up to at least 50% of the total value and whose value is equal to or greater than 50 million euros; and
  2. on request, an opinion on the projects of local authorities exceeding this threshold of 50 million euros.

For public works whose amount is less than 50 million euros, the powers of the Council are exercised by the administrative technical commissions of the interregional public works entities.34

Finally, the DIPE assists and accompanies, on request, any public authority at the various stages of procedures involving private resources for the construction or operation of infrastructure or public services.

iii General requirements for PPP contracts

A number of internal requirements must be met and approvals must be obtained from public authorities before launching a tender for a PPP or entering into a PPP. In particular, among other things, public authorities must:

  1. provide the reasons behind the need to execute a PPP and the advantages of using a PPP over another type of public procurement;
  2. ensure that sufficient funds for the PPP are available;
  3. carry out a feasibility study which analyzes the economic and financial basis of the contract. This study should provide an estimate of potential demand and profitability, construction, operational and technical risks, project costs and potential financing; and
  4. set out the administrative and technical procedures for the call for tenders and the PPP.

Tender and award procedure

The Code applies to PPPs insofar as they are compatible with the use of the same tendering and award procedures as those provided for public contracts, namely open procedures, restricted procedures, negotiated procedures , competitive dialogues and innovation partnerships.

Compared to other public contracts, PPPs have the advantage that, in accordance with the principle of free administration, the authorities have greater flexibility in deciding how best to manage the award procedures, provided that the principles general principles of economy, efficiency, impartiality, equal treatment and transparency governing all tendering procedures are respected.

In Italy, the procedure opened35 is the most widely used award procedure because it guarantees the greatest participation of bidders. The call for competition is published accompanied by the preliminary draft and the specifications of the works or services concerned, the draft PPP contract and the economic and financial plan establishing the distribution of risks between the private sector and the authority. public.

i Expressions of Interest

As mentioned above, any PPP must be preceded by an assessment of whether the authority really should use a PPP instead of acquiring the works under a traditional public works or utility contract. . The assessment includes an analysis of the relevant market, project sustainability and relevant risks.

Although not specifically regulated by the Code, authorities generally acquire this information by issuing a request for expression of interest to any private party. As this is an informal and non-binding phase of the procedure,36 the contracting authority has wide discretion to assess the feasibility of the project and decide whether or not to continue with the PPP.

ii Requests for Proposals and Unsolicited Proposals

This procedure is specifically regulated by the provisions relating to project financing, but it applies to any PPP. Any interested private party (promoter) can submit a proposal to start a PPP, even if the project concerned has already been placed on the agenda of the competent authority.37 The proposals will include a feasibility study, a draft PPP contract and an economic-financial plan validated by a bank. No later than three months after submission, the authority selects the best proposal. Once the proposal is approved, the proposed project becomes the basis for the public procurement procedure to be launched by the PPP awarding authority. The promoter is invited to the call for tenders and, if his offer is not the best offer, he is entitled to match the best offer.

iii Evaluation and grant

The PPP is awarded to the economically most advantageous tender identified on the basis of the best value for money. The call for competition specifies the criteria used by the authority to determine the economically most advantageous offer.

As provided above, if the PPP process is based on a developer’s proposal and the developer is not the successful bidder, they may match the best bid and be awarded the project. If the proponent decides not to match the winning bid, it will be entitled to reimbursement of its proposal preparation costs up to a maximum of 2.5% of the value of the project.

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