Boost for infrastructure investment from Italian emergency legislation12 November 2020
"The Decreto Semplificazioni introduced procedural innovations aimed at simplifying, accelerating and, sometimes, derogating from the ordinary rules of public contracts in order to encourage public and private investment in the infrastructure and public services sectors."
1. New stimulus for companies and public works
The Decreto Rilancio provided for a series of financial interventions by the Government to support businesses during the initial crisis period at the beginning of the pandemic, as well as to stimulate new investment.
Among the allocations provided for in Decreto Rilancio, there are also additional incentives for intermodality (art. 197), in particular:
- The Marebonus allocated €30m for disbursement in 2020 to shipowning companies with registered offices in EU member states or in the EEA; and
- The Ferrobonus allocated a further €20m for disbursement in 2020 to companies operating combined transport networks based in the EEA, operating intermodal or transhipment services with full trains through rail service These measures may also encourage cooperation and contractual aggregations between transport system companies.
The subsequent Decreto Semplificazioni introduced procedural innovations aimed at simplifying, accelerating and, sometimes, derogating from the ordinary rules of public contracts legislation (the “Procurement Code”, Legislative Decree 18 April 2016 n. 50) in order to encourage public and private investment in the infrastructure and public services sectors.
2. The impact of the Decreto Semplificazioni on public contracts
The Decreto Semplificazioni contains several amendments to the Procurement Code that have been introduced permanently, together with more innovative provisions that remain valid until the end of 2021. It is reasonable to assume that if these “experimental” implementations are successful, the amendments will become permanent.
2.1. Among the permanent new provisions, of note are the changes in the public private partnerships (PPP).
Article 183, paragraph 15 of the Procurement Code now allows operators to submit proposals to the contracting authorities for the construction, under concession, of public works or public utility works, even if said projects are already included in programmes approved by the authorities.
The new provision is intended to ensure the actual performance of public projects included in the programming tools, when they are no longer fully adequate: it is now possible to propose alternative projects more advanced than those already included in the approved programming tools.
Therefore, this provision widens the scope of the public-private partnership and has the potential to realise more efficient infrastructure development.
"Central and local Public Authorities will have to choose between several derogations and exceptions to the ordinary rules, with the risk of generating litigation or causing anti-competitive effects."
2.2. Moreover, it is worth noting the main provisions which will be effective only until 31 December 2021 concern:
- The limitation of legal cases which might lead to a suspension of public works in order to speed up their completion;
- The reduction in the duration of tender procedures due to matters of urgency, which are considered as existing by law; and
- The obligation for all contracting authorities to establish a Technical Advisory Board for each contract that has a value exceeding the EU threshold (the EU thresholds updated to 2020 are: €5.35m for public works contracts; €139,000 for public supply and service contracts awarded by central government authorities and for design contests organised by these authorities; €214,000 for public supply and service contracts awarded by sub-central contracting authorities and design contests organised by those authorities), in order to resolve technical disputes during the performance of works. The purpose of this board is to unblock suspended works or to prevent those in execution from being blocked.
2.3. The Decree also introduces simplified procurement procedures applicable in 2021 (Articles 1-7).
In fact, to deal with the economic crisis resulting from the spread of Covid-19, the decree provides:
- The possibility of awarding contracts for services and supplies up to €75,000 and work contracts up to €150,000 without a call for tender;
- The possibility of awarding, by running a negotiated procedure, service and supply contracts, with a value exceeding €75,000 and work contracts with a value exceeding €150,000 (within the limit of EU thresholds), even without prior publication of the notice and inviting a variable number of operators (starting from five, up to 15 for the highest amounts); and
- For contracts relating to specific sectors, such as road, rail, port, airport, lake and water infrastructure, as well as for contracts relating to or linked to the implementation of the National Energy and Climate Plan, it is possible to derogate from any legal provision other than criminal law and anti-mafia regulations as well as the mandatory restrictions deriving from EU principles and the principles set out in the Procurement Code: this derogation is applicable only if necessary and due to matters of extreme urgency deriving from the Covid-19 pandemic.
The new changes introduced threaten to feed uncertainty and instability because they have to be applied by central and local Public Authorities, which will have to choose between several derogations and exceptions to the ordinary rules, with the risk of generating litigation or causing anti-competitive effects.
SACE will be the entity responsible for the analysis and evaluation of environmentally sustainable projects.
3. Support to specific sectors
In addition to these general simplification rules applicable to all sectors, procedural and financial support has been established for specific sectors that require urgent infrastructure investment.
3.1. Investments in the building sector (Art. 10)
"It is worth mentioning the option for public entities and institutional investors to increase up to 20% their building volume for specific projects, which can also be completed with a simplified procedure if started by 31 December 2022."
It is worth mentioning the option for public entities and institutional investors to increase up to 20% their building volume for specific projects (regarding social infrastructure, school and university facilities, student residences, health or welfare facilities and residences, hostels, neighbourhood sports facilities and social housing, however named), which can also be completed with a simplified procedure if started by 31 December 2022.
This provision must be read in coordination with the provision of the Decreto Rilancio (art. 106), which has established a fund of €3.5bn for the year 2020 available to local and regional authorities in order to make investments, primarily in the construction sector.
3.2. Procedural simplifications for electronic communications networks and services (Art. 38)
The Decreto Semplificazioni also simplified certain procedures regarding the realisation of electronic communications networks by providing for the following:
- The non-application of building and urban planning regulations to the construction of electronic communication networks by optical fibre;
- A simplified procedure for the authorisation of variations to the characteristics of communications systems, including changes to radioelectric features;
- A simplified authorisation regime for temporary mobile phone installations; and
- The introduction of automatic approval if the administration does not express its decision within eight days of the application date, for the realisation of crossings in ports, logistic centres, water, forestry and other real estate.
The abovementioned amendments to electronic communications, networks and services procedures should also be considered in the light of CJEU Judgment C-719/18 of 3 September 2020, which reaffirmed the importance of removing obstacles for European companies wishing to operate within the EU. The European Court specified that the electronic communications market must be accessible, without restrictions, to European operators wishing to invest in the transmission of information.
3.3 New focus on the strategic development of Special Economic Zones (SEZ) (Art. 46)
The introduction of amendments relating to the SEZs is also an important signal, the establishment of which was provided in Decree Law no. 91 of 2017 to encourage the creation of a favourable legal and tax environment to allow the development of new companies in ports in less developed areas of the country.
"Further financing aimed at improving infrastructure and services and relaunching investment in Italy concerns the maintenance of pipelines."
The changes aimed at relaunching and extending the creation of SEZs concern:
- The role and powers of the Government Extraordinary Commissioner, which should be aimed at resolving organisational and bureaucratic problems and ensuring that production activities in SEZs are fully operational; and
- The possibility of establishing inter-regional customs-free zones in SEZs and inter-regional SEZs under the special customs regime provided for in the EU Customs Code (Art. 243).
3.4 SACE guarantees for the green economy (Art. 64)
The Decreto Semplificazioni also provides, in line with the EU’s climate objectives, support for the green economy, in the form of public guarantees issued by SACE for Green New Deal projects of up to €2.5m for the year 2020.
The Government has identified SACE – the Italian export credit agency – as the entity responsible for the analysis and evaluation of environmentally sustainable projects.
In line with the objectives of the European Green New Deal (sent to the Council and the European Parliament on 11/12/2019, COM(2019) 640 final), the Decreto Semplificazioni has identified a number of specific areas of intervention including projects with a high level of environmental sustainability, such as those aimed at a more efficient use of natural resources and at promoting the reduction of CO2 emissions.
4. Italy’s economic revival path: the transport and infrastructure system
The Decretory Semplificazioni is the last part of a determined strategy to relaunch the Italian economy following the pandemic crisis by promoting necessary sustainable development.
"The National Reform Programme will outline the policies the government intends to adopt in the three-year period between 2021-23 to relaunch growth, innovation, sustainability, social inclusion and territorial cohesion."
In this scenario, in fact, on 6 July 2020, the document “Italia veloce – L’Italia resiliente progetta il futuro: nuove strategie per trasporti, logistica ed infrastrutture” (Fast Italy – Resilient Italy plans the future: new strategies for transport, logistics and infrastructures), was published as an annex to the Document of Economy and Finance 2020. The Annex concerns the Ministry of Infrastructure and Transport’s strategy regarding urgent infrastructure and transport investment requirements.
The Annex lists the priority infrastructures, the implementation of which is of primary importance for the country’s development, in light of some critical issues in various strategic sectors.
- Plans and programmes for the maintenance and safety of infrastructure, which can quickly boost local regional economies;
- Interventions in the logistics and freight transport sector in order to make it more competitive, especially internationally; and
- Plans for computerisation, digitalisation and further technological innovation in the transport and logistics systems.
Further financing aimed at improving infrastructure and services and relaunching investment in Italy concerns the maintenance of pipelines. The Regulatory Authority for Energy Networks and the Environment (ARERA) has authorised about €18m in investments to make Italian aqueducts more efficient, via the implementation of the National Plan of interventions in the water sector – aqueducts section.
The next stage of the Italian reform process will come in the form of the National Reform Programme, the publication of which is scheduled for the end of 2020, which will outline the policies the government intends to adopt in the three-year period between 2021-23 to relaunch growth, innovation, sustainability, social inclusion and territorial cohesion.