Swiss Challenge Mode
The Dr Vijay Kelkar Committee Report on Public Private Participation (PPP) has strongly opposed the Swiss Challenge mode as it lacks transparency and...
The Andhra Pradesh State government has cleared Swiss Challenge route for taking up capital construction. It has decided to entrust the capital project to a consortium of two Singapore-based companies which will enter in a joint venture with Amaravati Development Company set up by the State government. The opposition YSR Congress has taken serious exception to the move and alleged that the AP government is acting the interests.
The Dr Vijay Kelkar Committee Report on Public Private Participation (PPP) has strongly opposed the Swiss Challenge mode as it lacks transparency and goes against the state’s interest. The mode was written off by the Committee in the Report submitted to the Department of Economic Affairs, Finance Ministry recently,” it has pointed out.
A Swiss challenge is a form of public procurement in some jurisdictions which requires a public authority (usually an agency of government) which has received an unsolicited bid for a public project (such as a port, road or railway) or services to be provided to government, to publish the bid and invite third parties to match or exceed it, according to Wikipedia.
Some Swiss challenges also allow the entity which submitted the unsolicited bid itself then to match or better the best bid which comes out of the Swiss challenge process.
The advantage given to the original proponent in the bidding is usually intended to compensate for use of the project concept. In addition, the bidding documents sometimes specify reimbursement for project development costs by the winning bidder or the government. Other countries (such as Korea and the Philippines) allow no reimbursement of project development costs.
Advantage of offering cost reimbursement maintains private sector interest during the development phase of an infrastructure project.
Government often sets time limits on the approval and bidding phases. Time constraints on counter proposals give an obvious competitive advantage to the original project proponent. The proponent has already spent much time and effort preparing the project and thus is much more familiar with its characteristics.