Public (and private) procurement: clarification regarding the exclusion of operators following findings of tax and social security violations

With the decree of Sept. 28, 2022, published in the Official Gazette on Oct. 12, 2022, the Ministry of Finance supplemented the rules dictated by Article 80, paragraph 4, of the so-called Procurement Code (Legislative Decree No. 50/2016) regarding the grounds for exclusion from public contracts of economic operators who have committed serious violations "definitively ascertained" of obligations to pay taxes, fees, and social security contributions.

Although these are rules dictated primarily for public law contracts, the interest in ministerial intervention is undoubtedly transversal, given that they are also conventionally referred to in several calls for tenders issued by large private contractors.

According to the definition contained in the rule under comment, "violations finally ascertained" are those contested in administrative judgments or acts that are no longer subject to appeal, meanwhile they are considered "serious" if they:

• result in the non-payment of taxes and fees more than the amount, equal to 5,000.00 euros, referred to in Article 48-bis, paragraphs 1 and 2-bis of Presidential Decree No. 602 of September 29, 1973, in tax matters; or

• are an impediment to the issuance of the Document of Regularity in Contributions (so called, in Italian, “DURC”), in social security matters.

Art. 80 also provides that contracting stations can still exclude those operators who have committed "serious" violations, with questionable deferral to the constrained discretion of public entities (which ends up becoming absolute for private procurers).

One can guess, therefore, the importance of the normative definition of "seriousness," which, with specific regard to violations in tax matters (i.e., other than those of a contributory nature), the Legislature had tied to a minimum value threshold of 35,000 euros, delegating to the Ministry the determination of a specific criterion, to be hinged on the relationship between the size of the violation and the value of the individual contract.

This criterion has finally been established by the Ministerial Decree under comment, which, in specifying the scope of application of the aforementioned Article 80, first clarifies that, by "violation," is meant the failure to comply with obligations to pay taxes and fees arising from the notification of:

1. tax acts, resulting from control or settlement activities of the Tax Authority;

1. payment notices concerning tax claims, deriving from notices of irregularities, issued as a result of automatic or formal tax return audits.

The M.D. goes on to clarify and specify that a violation, in order to be considered "serious," and thus falling within the scope of the aforementioned Art. 80, para. 4, must result from the non-payment of taxes or fees (with irrelevance of any interest charged and penalties imposed) for an amount that is equal to or greater than 10% of the value of the contract.

It is also specified that for procurements divided into lots, the seriousness threshold is related to the value of the lot or lots for which the economic operator competes. In the case of subcontracting or participation in joint ventures or consortia, the threshold referring to the subcontractor or participant is related to the value of the service taken on by the individual operator.

Finally, it is reiterated that the amount of the violation must not be less than 35,000 euros.

As for the rest of the ministerial decree, and in particular its Article 4, the clarifications that, in order to be considered non-final, a violation must be contained in a taxable act that has been appealed (thus Paragraph 1), and not annulled by a judicial ruling (thus Paragraph 2, first sentence), seem merely tautological, and therefore not particularly useful.

Definitely worthy of greater interest appears, on the other hand, the last sentence of Art. 4, paragraph 2, of the Ministerial Decree, which, in fact explicating a consequence of the definition reported in the previous art. 2 (but which was not to be taken for granted in the vigor of only, cited, art. 80 (1)), expressly recognizes that violations cannot be considered relevant under these regulations, being completely outside the relevant field of application, if arising from taxable acts subject to administrative or jurisdictional suspension measures.

By this way, the provision seems to configure ex lege one of the typical prerequisites for obtaining the suspension of the effectiveness of taxation and/or collection measures, since there is no doubt that, without prejudice to the need to demonstrate the so-called fumus boni iuris, the risk of exclusion from procurements goes to configure, in re ipsa, that danger of serious and irreparable damage to which, for the purposes of the so-called periculum in mora, all the recipients of the said measures will make a generalized appeal; including those taxpayers who, having no particular difficulty in fulfilling their payment obligations arising from the provisional and/or fractioned collection in the course of judgement, would not likely have had reason to request the suspension.

Are all interpretive doubts thus clarified and the limit of discretion in the hands of contracting stations reduced?

Doubts remain, and, not least, it will be interesting to see whether the aforementioned 10 percent limit, which, from the letter of the rule, seems atomistically bound to the individual violation, will be interpreted in this sense, or whether there will be cases in which the presence of numerous violations (perhaps each exceeding 35,000 euros, but only cumulatively exceeding 10 percent of the contract value) will not be considered as a cause for exclusion.

There remains, in parallel, the wide discretion provided by the regulatory provision that the operator "may" be excluded if they are the recipients of non-final orders, textually defines as "assessable" by the contracting station.

In any case, the provision of the last part of paragraph 4 of Article 80, according to which the rule does not apply when the economic operator has complied with its obligations by paying or bindingly undertaking to pay (including through an installment plan granted by the tax authority and honored by the taxpayer) the taxes or social security contributions due, including any interest or fines, remains unaffected, provided that the payment or undertaking was completed before the deadline for submitting applications to participate in the contract.

Therefore, it is not unreasonable to imagine that a taxpayer, in order to avoid any possibility of exclusion, decides to spontaneously pay what the tax authorities demand from him in a tax assessment, reserving the right to request the relevant sums for reimbursement, at the outcome of the instituted or instituting judgment.

Obviously, this is to be trodden carefully, lest the mere payment of the claimed quantum should take on the value of full acquiescence to the act being to be challenged.

Avv. Cristina Bassani

Avv. Paolo Visconti

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(1) The precautionary measure referred to in Art. 47 of Legislative Decree 546/1992, which provides the possibility for the taxpayer, upon the occurrence of fumus and periculum, to request the suspension of the execution of the contested act, does not, in fact, entail the disappearance of the act itself and, consequently, the existence, in the taxpayer's hands, of a "violation that has not been definitively ascertained," as it was (not) defined in Art. 80 of the Procurement Code.  

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