On 17 May 2022 the Official Journal of the Republic of Italy (general series no. 114) published Decree Law no. 50, known as the “Decreto Aiuti”, which introduces a compensatory mechanism in public works contracts to tackle the unprecedented rises in the prices of construction materials, fuels and energy products during recent months.
For contracts for works only, including those assigned to a main contractor, article 26 of D.L. 50/2022 envisages a mechanism to compensate for the excess costs incurred during 2022, on the basis of the updates to the regional price tables. Para 8 of the same article specifically states that this update will also be applied, until 31 December 2022, to framework agreements for works as defined by article 54 of Legislative Decree 50/2016 (“Public Tenders Code”) already contracted or in force as of 18 May 2022.
Time period of application
It is first necessary to clarify the method adopted by the lawmakers to define to which contracts the new compensatory mechanism is to apply. Article 26 refers only to contracts “awarded on the basis of bids, with presentation deadline before 31 December 2021”. It would therefore appear that the intention was to set a time break-off point before which the recent increase in energy and raw material prices was unforeseeable and thus not considered by contractors when preparing their bids (or by the last update of the applicable regional table of prices). Therefore, since no starting-point is set, the compensatory mechanism must be considered to apply to all contracts currently in force, even if they were awarded further back in time, provided the deadline for the presentation of bids was set by the call at a date prior to 31 December 2021.
Moreover, also with regard to the time-frame to which the compensatory measure applies, it is fundamentally important to specify that, at the time being, the price adjustment only affects works performed and entered in the accounts during 2022.
Application of price review
In practical terms, the compensatory mechanism is applied through the director of the works, who, under his own responsibility, must enter the works performed from 1 January 2022 to 31 December 2022 in the progress reports or field book and in the accounts “with application of the table of prices updated in accordance with para 2 or, if no such update has been made, the prices envisaged by para 3, even if this conflicts with specific clauses of the contract”. The contracting authority will pay 90% of the higher sums generated by the application of the above price tables, net of any reductions envisaged by the bid.
Update to regional price tables and temporary flat-rate increase
Under para 2 of article 26 of the “Decreto Aiuti”, the regional authorities are required to update their price tables by 31 July of this year, and if they fail to do so the competent local offices of the Ministry of Infrastructure and Sustainable Mobility shall perform the update within 15 days after the said date, after consulting the Regions concerned.
Pending the updating of the regional price tables, superseding article 29 para 11 of Decree Law 4/2022, para 3 of the said article 26 states that contracting authorities shall apply a flat-rate increase of 20% of the amounts stated in the regional price tables updated to 31 December 2021. The law also states that once the future update of the price tables has been decided, the contracting authorities shall reduce or increase the amounts of the works billed and paid for with application of the temporary flat-rate increase accordingly, to balance the accounts on this basis.
Shortening of payment times
As a further aid to contractors, article 26 orders an (actually almost negligible) shortening of the normal payment times for works approved for payment by the director of works. It states that the relative payment certificate must be issued simultaneously with and in all cases within 5 days after the approval of the progress report, and the payment must be made, net of any compensations already granted or paid under article 106, para 1, point a) of the Public Tenders Code, within the terms set by article 113-bis, para 1, section 1 of the Public Tenders Code (30 days after approval of the progress report, unless otherwise specified by the contract, and in no case more than 60 days).
Safeguards for progress reports already issued in 2022
The law also establishes a recoup mechanism for any progress reports entered in the books between 1 January 2022 and the date when the “Decreto Aiuti” comes into force (i.e. 18 May 2022), with the opportunity of issuing (within 30 days – i.e. by 17 June 2022) an extraordinary payment certificate calculating the down payment of the sums due for the works assessed during that period.
Coverage of the increased costs for contracting authorities
First and foremost, under article 26, para 1 of D.L. 50/2022, the contracting authority covers the extra costs generated by applying the updated regional price tables (and, pending the update, the 20% flat-rate increase on the costs in the regional price tables as of 31 December 2021) using:
- the resources specifically allocated for unforeseen costs in the financial planning of every project, up to a limit of 50%, not including the sums relating to existing contractual commitments;
- any additional sum available to the contracting authority and allocated on an annual basis for the same project;
- savings deriving from bid discounts, unless otherwise to be allocated under current law;
- sums available relative to other completed projects of the same contracting authority, for which the relative tests have been performed or certificates of correct performance issued, in accordance with the expenditure accounting procedures and within the authorised residual expenditure ceilings available as of the date when the “Decreto Aiuti” came into force (i.e. 18 May 2022).
Once the aforesaid resources have been exhausted, contracting authorities are authorised to apply for assistance to specific Funds – already established previously and topped up by the “Decreto Aiuti” – differentiated depending on the type of project:
- projects totally or partial funded by European resources or Resilience and Recovery Plan programmes, or projects for which special Commissars have been appointed under article 4 of Decree Law 32/2019 (converted, with amendments, by Law 55/2019) (see article 26, para 4, point a) of D.L. 50/2022);
- projects other than the above (see article 26, comma 4, point b) of D.L. 50/2022).
In both cases, applications for assistance under the relative Funds must be submitted:
- by 31 August 2022 for progress reports concerning works performed and entered in the accounts by the director of works or entered, under his responsibility, in the field book between 1 January 2022 and 31 July 2022;
- by 31 January 2023 for progress reports concerning works performed and entered in the accounts by the director of works or entered, under his responsibility, in the field book between 1 August 2022 and 31 December 2022.
Moreover, in order to qualify for assistance from the relative Fund, contracting authorities are required to provide a series of data and documents with different contents and procedures depending on the type of fund for which the application is made (see art. 26, para 4, point a), section 3 and art. 26, para 4, point b), section 3, D.L. 50/2022).
It should also be noted that access to these funds is not restricted to public sector authorities but also extends, according to the letter of the law, to any entity required to apply the Public Tenders Code, except only for concessionaires of public works which are not awarding authorities (as defined by Legislative Decree 50/2016).
The authors of this note are Giuseppe Fuda and Riccardo Rogliani. For further information or explanations on the topics covered in this article, please contact Giuseppe Fuda at firstname.lastname@example.org.
Todarello & Partners supplies legal advice on all matters relating to the topics covered in this article. The firm’s lawyers have impressive experience in this area and in all sectors of Administrative Law,, since they regularly advise some of the market’s biggest players, representing them before the courts in all competent jurisdictions.