Regions must adopt more transparent and competitive procedures for railway transport service contracts awarded directly
PRESS RELEASE
- Joint notification to Regions, Unified State-Regions Conference, MIT and MEF
- The exception on public evidence procedures imposes more stringent obligation on information and motivation, as well as obligations of competitive comparison between all expressions of interest
On 25 October 2017 the Italian Competition Authority (AGCM in the Italian acronym), Anti-Corruption Authority (ANAC) and Transport Regulation Authority (ART) resolved and sent the Regions, Unified State-Regions Conference, Ministry of Infrastructure and Transport (MIT) and Ministry of Economy and Finance (MEF) a joint notification on the procedures for the direct awarding of regional railway public transport service contracts.
Direct (as well as in-house) contract awarding is an option provided for by EU regulations (Regulation (EC) no. 1370/2007) alongside tender awarding procedures. The decision to make an exception to the principle of public tendering and proceed with direct contract awarding in any case responds to specific legal and motivational obligations.
In this regard, the Italian Competition Authority, Anti-Corruption Authority and Transport Regulation Authority believe that the procedures for awarding regional railway public transport service contracts directly must be interpreted both in light of the aforementioned Regulation (EC) no. 1370/2007 and of the general principles of transparency, non-discrimination and equal treatment which are the foundation of the Treaty on the Functioning of the European Union and are restated in Art. 4 of the Code of public contracts as well as in Recitals 29 and 30 of Regulation (EC) no. 1370/2007. This means that, in the case of direct contract awarding (the same would also apply in the case of in-house contract awarding), publication of the pre-information notice and, after the contract is awarded, of information on the awarding that occurred, as well as the motivation(s) for the choice made, do not exhaust the obligations imposed on the awarding bodies. There are more stringent information and motivational obligations impending on them, such as the requirement to make a competitive comparison between the offers from other interested operators and that of the operator to which they intend to award the service contract directly (or the obligation to make a comparison with appropriate benchmarks in case contracts awarded in-house).
The principles mentioned above can be broken down as follows:
- cost-effectiveness: requires the competent authorities to use resources efficiently in the selection process and in the performance of the contract; cost-effectiveness requires the authorities to ascertain the adequacy of considerations before awarding the contract. Considering the nature of the services in question and the importance of quality performance, saving on expenses is not the only decision-making guiding criterion for awarding bodies;
- effectiveness: requires that awarding bodies carry out appropriate steps to achieve the purpose and the public interest they must promote and protect. In this case, institutions will have to favour the project that best guarantees the pre-set transport objectives;
- impartiality: requires a fair and impartial assessment of competing bidders and, therefore, absolute prohibition to play favourites and discriminate; thus, this principle requires that contracts be awarded according to the procedural rules established at the beginning and that awarding bodies will make their final decision from a third party position with respect to all the parties involved;
- equal treatment: requires that economic operators be in a situation of “formal equality”, i.e., of reciprocal equality with respect to the procedures followed by the awarding body;
- transparency: consists in guaranteeing that every potential bidder will know the tender procedures to an adequate level, including the reasons underlying the choices made by the awarding body, also in order to allow control over the impartiality of the selections;
- proportionality: requires adequacy and suitability of the administrative action with respect to the purposes and amount of the contract;
- publicity: requires awarding bodies to publish, disclose or make accessible their documents and procedures; within the framework of regional public railway transport, the Regulation defines stringent publicity criteria to which the a administrations must comply (see below).
As regards the information disclosure requirement, the Authorities believe that, in view of any request by an interested party to be put in the condition to make a binding offer on a par with the company identified as a potential direct contractor, the awarding bodies cannot limit themselves to making available only the information explicitly requested for the publication of the pre-information notice, but must take steps to make available and accessible data and information relating to the configuration of the service and its past performance, this in compliance with the transparency obligation. If confidentiality requirements exist opposed to previous service operators disclosing their data, awarding bodies will have to reconcile these needs with the right of third parties potentially interested in getting a contract to access the information necessary to present an alternative offer.
In terms of motivational obligations, it is believed that they are particularly rigorous when two or more expressions of interest are received following the publication of the pre-information notice to the market. In this case, the awarding body must not only adequately justify in terms of effectiveness and efficiency why it believes that public service objectives are better guaranteed than in an open tender procedure, but must also justify compliance to such principles in its choice of the contractor, and therefore must also provide the reasons based on which one bidder was chosen over another in case alternative expressions of interest were presented.
Although current legislation does not establish a specific methodology according to which this competitive comparison should take place, useful indications can come from the best practices adopted by some local authorities, which took inspiration from the competitive procedure with negotiation or competitive dialogue, respectively under Articles 62 and 64 of the Code of public contracts; these institutions have the advantage of allowing awarding bodies to improve public service quality by knowing new solutions offered by the market.
The Authorities hope that the considerations made in this notification may provide an incentive for the implementation of the Regulation’s regulatory provisions on awarding regional public railway transport service contracts directly, in a manner more in keeping with the principles of competition, especially where the competent bodies receive expressions of interest from parties other than the potential contractor initially selected.
Rome, 31 October 2017