Article 137 of the Italian Procurement Code applies to all offers containing products originating in third countries, with which the European Union has not concluded a multilateral or bilateral agreement that guarantees a comparable and effective access of the Union’s enterprises to the markets of said third countries.

The question has already been debated to the point that the Council of State, with the sentence 8/6/2015 No. 2800, had to decide against a tenderer who had offered products originating in China that accounted for more than 50% of the total offer.

In this specific case, 100% of the products originated in a third country. Therefore, the Council of State had no other option but to confirm their exclusion, underlining that the People’s Republic of China, despite having joined the W.T.O. (World Trade Organization), has not signed the agreement on public procurement and must, therefore, be considered a third country with respect to the European Union.

The sentence clarifies how, in order to identify which goods have been produced in third countries, it is necessary to verify if the goods were wholly produced in that country. In case of goods that have been produced with the contribution of one or more countries, the country where the last transformation occurred is relevant.

The issue was recently taken up by a ruling of the Veneto Administrative Court (5/4/2018 n. 129) which had to resolve a dispute concerning the annulment of an award decision. In that case as well, more than 50% of the products offered by the tenderer in question had been produced in third countries.

The sentence is not different from that issued by the Council of State. However, this ruling is important because it underlines that the Contracting Authority has the power, not the obligation to exclude the participant from the tender procedure. In any case, where the contracting authority decides to exclude a tenderer, it has to carefully evaluate the specific circumstances and to justify the choice to reject that offer. Not doing so may become a possible ground of appeal by the excluded tenderer.