What is the Swiss Challenge method in terms of Government contracts in India? Examine its positive and negative aspects.
Published: March 17, 2016
Swiss Challenge method is one of the ways of awarding government contracts to private players. It asks private sector participants to submit an innovative proposal to concerned government department for setting up an infrastructure project. Once the evaluation work is completed by government officials and if the proposal is considered suitable, then the government announces competitive bidding for counter proposals, the so called “Swiss Challenge”. If during the competitive bidding there is a superior proposal, the proposal initiator would be given an opportunity to match the competing counter proposal within a stipulated time-frame, and be selected as the project concessionaire. If the Proposal Initiator declines to match the superior counter proposal, then the applicant that has made the superior proposal would be selected as the concessionaire and the proposal initiator is liable to get reimbursement as a part or the whole of the development costs.
This method encourages private players to bring innovation, technology and uniqueness in development of projects especially in manufacturing and agriculture sector. It will bring in cost efficiencies, cut redtapism and shorten the project timelines. Also, the innovative ideas brought by individuals can be interlinked to “Start-up” campaign of GOI for funding the projects.
On the flipside, the method aims at higher technology innovation projects which require large capital funding. For this there must be higher transparency, accountability, proper disclosure of information and strong legal framework along with law dealing with insolvency and bankruptcy.
Model Questions Category: 058 - Indian Economy Issues Relating to Planning