By Matthias Scherer and Samuel Moss
In May 2008, the Swiss Federal Government commenced a consultation process with a view to the full revision of the Federal Law on Public Procurement. During the process, however, it became clear that a full revision was not advisable due to delays of the WTO Government Procurement Agreement of 15 April 1994 to which the Federal Law has to conform. The Federal Government therefore decided to put the full revision on hold and to focus on certain elements of the Law that required urgent attention.
In May 2010, the Government submitted to the Parliament a proposal for an amendment of the Federal Law on Public Procurement (Message to the Parliament of 19 May 2010, 10.051, http://www.admin.ch/ch/d/ff/2010/4051.pdf). The amendment would, in respect of Federal procurement processes for certain types of projects, preclude unsuccessful bidders from seeking a stay of the entire process when challenging a decision of the adjudicatory authority. According to the Government, the current public procurement regulations do not achieve one of their stated main goals, namely the efficient use of public funds.
Pursuant to the legislation in force, challenges of a tender process by unsuccessful bidders, as a rule, do not automatically stay the process. However, courts may grant a stay of the tender process. Bidders bringing a challenge often file a request for such a stay, and these requests are often granted by the courts. This is the opposite of other areas of Swiss public and administrative law, in which challenges, as a rule, automatically have the effect of a stay, and in which the relevant agency or the courts may lift the stay if warranted by the circumstances.
The Government’s experiences in two highly publicized procurement processes in particular are at the origin of its amendment proposal. Both processes came to a grinding halt when certain decisions of the adjudicating authority were challenged:
• The dispute arising out of the procurement for the construction project of the Erstfeld tunnel, which is part of the NEAT project (the world’s longest railway tunnel; see our blog of 6 July 2010), delayed the commencement of the works for 18 months and caused an approximately 50 million Swiss Franc increase of the costs of the project.
• Also in the framework of the NEAT project, the award of the 1.7 billion Swiss Franc contract for the installation of technical railway equipment in the Saint-Gotthard base tunnel was challenged by an unsuccessful bidder. The court in charge of handling the challenge took six months to decide on the request for a stay of the works, which resulted in a de facto stay of the same length. It ultimately rejected the request, but estimates are that every month of stay entailed additional project costs of approximately 10 million francs. Fortunately, the adjudicator and the bidder subsequently reached a settlement.
The Federal Government’s proposed amendment to the Federal Law on Public Procurement would first provide for an automatic stay of a procurement process where a decision of the adjudicatory authority is challenged. Most importantly, however, the amendment provides that if important supra-regional procurement projects are urgent or if their postponement would cause disproportionate delays or damage, a challenge would not prevent the procuring entity from entering into a contract with the successful bidder.
Critics of the proposal consider that it is difficult to reconcile with Switzerland’s treaty obligations and with the fundamental right to court review of adjudicators’ procurement decisions (Peter Galli, Kein Verzicht auf aufschiebende Wirkung, Neue Zürcher Zeitung, 6 August 2010, p. 10; Marc Steiner, Der Rechtsschutz im öffentlichen Beschaffungswesen – ein Baustellenbericht kurz vor dem Durchbruch am falschen Ort, http://www.sgvw.ch/d/fokus/Seiten/100727_lexleuenberger_steiner.aspx).