Difference Between a Supply Contract and a Subcontracting Contract

As is well known, in the context of public tenders, the importance of distinguishing cases where the economic operator relies on subcontracting contracts as opposed to those where it stipulates supply contracts, is relevant in many respects, first and foremost the contracting authority’s verification of the economic offer, in terms of adequacy, of labor costs.  In addition to this is there is a different regulation of the Procurement Code which certainly provides for a lighter form of control with regard to supply contracts, which is carried out through a communication to the Contracting Authority for the verification of the possession of the requirements of the name of the subcontractor, the amount of the contract and the object of the service entrusted.

For this reason, administrative case law has often issued rulings outlining the two contracts’ different characteristics.

Recently, to this effect, the Regional Administrative Court of Molise, Sec. I, by means of ruling no. 45 of 24 February 2024, recalled how subcontracting and supply contracts, although similar to each other in some cases, differ, nevertheless, in their essential elements. The supply, governed by the legal scheme of the supply contract referred to in Article 1159 et seq. of the Italian Civil Code for the provision of goods, consists of a contractual form in which one party undertakes to provide periodic or continuous services of goods towards another party, in return for the payment of an amount. On the other hand, the subcontracting contract referred to in Article 105 of the Public Procurement Code of 2016 (now Article 119 of Legislative Decree No. 36/2023) describes the contractual form in which a third party entrusts the execution of part of the work, on site, at its own risk and through its own organization of means and personnel (Article 105 specifies that “Subcontracting is the contract by which the contractor entrusts to third parties the execution of part of the services or work covered by the contract “).

The distinction between the two forms of contract thus falls on the assumption of the final business risk: with subcontracting, the subcontractor replaces the contractor vis-à-vis the Authority, while with the sale or subcontracting, the basic service, though carried out by others, is acquired in the same business organization as the customer who purchases the supply or receives the provision, who in this regard, shoulders the business risk deriving from a possible defect or discrepancy in performance.

As clearly specified by the Council of State, Section V, in ruling no. 4150 of 31 May 2021, “the difference between contractual figures is based not only on the specificity of the services, but also on the diversity of the legal effects of the types of contract”.

The services are in fact directed to different recipients: in the case of subcontracting, the contract is stipulated with the Authority, replacing the contractor with a substitution; in the other case, the services are rendered to the successful tenderer who receives said services and includes them in the  business organization by incorporating the supply received in the services to be provided to the contractual authority necessary to fulfil the contractual obligations undertaken . In subcontracting, there is also an otherness on an organizational level, between the contractor and subcontractor, since the contractual part of the service is entrusted by the contractor to a third party who carries it out directly through his/her own organization; this is not the case if the service rendered is part of the contractor’s business organization. With the consequence that the rules on subcontracting are not applicable, unless one proves that the contract constitutes only a shield for the subcontract.

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