'Swiss challenge': for fairer public bidding

The Central government’s plan to go in for the Swiss challenge method in the award of infrastructural and other projects is expected to increase transparency and efficiency in the implementation of projects. Swiss challenge is a method by which the government or any other public authority publishes the bid it has received for execution of a project and invites third parties to match or exceed it. The method is adopted in many countries for work on ports, roads or railways but can be used for many other kinds of enterprises like those in the areas of industry, education etc. The government has announced that the Swiss challenge method may also be used for deciding the venues of events like film festivals, national games, Pravasi Bharatiya Divas etc. It has already been decided to use this bidding model for redevelopment of about 400 railway stations in the country.

The method makes the award of projects more open than now. After a party submits a bid, others can give counterproposals to match or improve the bid. The original bidder will then be given a chance to improve the bid within a specified time. Public bidding and counter-bidding are meant to eliminate corruption and arbitrariness in the award of projects. Such arbitrariness has often been seen in the award of railway projects and the location of public institutions. When the details and parameters of a central project are known, states can bid for them and the state which offers the best terms can win the project. However, some basic conditions will have to be satisfied. For example, there should be availability of raw materials in an economically viable distance if a particular project needs it. One advantage is that the system promotes healthy competition, reduces delays and induces innovative thinking for
better execution of projects.

Some states have already started using the Swiss challenge method for awarding road and housing projects. The Andhra Pradesh government has proposed to adopt the method in the building of its proposed new capital Amaravati. But the high court has stayed thegovernment’s decision on a petition filed by a construction company. The Supreme Court had approved the method some years ago and had described it as a “perfectly valid way of awarding contracts.” However, a committee appointed by the Central government was critical of the method. If necessary and relevant information is deliberately hidden from the public, the system will not work successfully. All details about the project should be made known to all the bidders so that they can compete on a level-playing field.