Swiss Challenge is a NICE headache

Swiss Challenge is a NICE headache
Rakesh Prakash | TNN

Bangalore: Will the ‘Swiss Challenge’ help the state government beat the NICE claim to BMIC?
Chief minister H D Kumaraswamy is trying to cower behind the Swiss Challenge method to bail the government out of contractual obligations with Nandi Infrastructure Corridor Enterprise (NICE), the promoters for the contentious Bangalore Mysore Infrastructure Corridor (BMIC) project. The state used it to cite objections in its affidavit to Supreme Court on Saturday.
But many in the bureaucratic and political circles are not enthused as the method is considered outdated the world over.
Swiss Challenge is a form of public procurement. It requires a public authority, which has received an unsolicited bid for a public project (example: road construction) to open the project for other bidders. They can either match or exceed the first bid.
As a precursor to the affidavit, the Swiss Challenge concept was included in the Infrastructure Policy-2007 cleared by the cabinet on July 4. But the run-up to the cabinet clearance has left many questions unanswered about the necessity of the Swiss Challenge system.
Documents accessed by The Times of India reveal that the Kumaraswamy government adopted Swiss Challenge system despite the Centre clarifying that “it was not a transparent solution in the current competitive scenario and instead was a solution for public-private-partnership (PPP) in the past.’’ A series of discussions on PPP organised by the Planning Commission during May-June 2006 also expressed the same views on the Swiss Challenge system. Subsequently, the state’s infrastructure development department and chief secretary held internal meetings and identified certain problems that render Swiss Challenge nontransparent.
The major problems were: The detailed project report prepared by the first proposer could be skewed towards a specific objective; the proposer has the first right of refusal at the final stage, so there would be no real interest in other competitors to submit good proposals.
The Centre has also made it clear that public projects taken up through Swiss Challenge system will not receive any central assistance. This apart, the state’s finance department headed by deputy CM B S Yediyurappa had opined that the Swiss Challenge was not in consonance with the provisions of Karnataka Transparency in Public Procurement Act.
Despite all this, the urban development department headed by Kumaraswamy decided to introduce Swiss Challenge in the infrastructure policy. It went a step ahead and changed the nomenclature to ‘suomoto/innovative proposal’.
An official, who advocated the Swiss Challenge method, said: “We have made some changes to make it transparent. Now, the government will have the right to review the first detailed project report and modify it depending on the public need. Secondly, the first right of refusal has been removed.’’
The official pointed to the existence of Swiss Challenge in Gujarat and Andhra Pradesh, but failed to explain how many projects had been completed after this method was introduced. Despite all such doubts, the Kumaraswamy government has cited Swiss Challenge to push forward the Global Infrastructure Consortium’s claim to develop BMIC.