Amaravati’s Swiss Challenge storm

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The High Court at Hyderabad, on Thursday, heard a petition by a city-based construction company challenging the Andhra Pradesh government’s technical eligibility criteria and the process to submit bids under the Swiss Challenge method for the construction of Amaravati.

According to reports, Aditya Housing Company argued that the state had formulated tender conditions with an intention to eliminate Indian companies from participating in the bidding to develop the start-up area of Amaravati capital city.

In September,  following a petition filed by Aditya Housing and NVN Engineers challenging the government’s decision to adopt the Swiss Challenge model, Justice MS Ramachandra Rao of the Hyderabad HC, had stayed the process and directed the state to file its response.

What is the Swiss Challenge method?

The Swiss Challenge method is a relatively new form of public procurement, wherein a government invites bids for a public project, and then publishes the bid, before inviting competing counter proposals to either match or better the initial proposal.

If a third party’s bid is more efficient, the first bidder is asked to submit a fresh bid.

If the first bidder comes up with a better proposal, it gets the project, and if it fails, the one with the more efficient bid wins the project.

The government in return, will have to reimburse ‘reasonable costs’ incurred by the initial company in preparing the proposals, if they end up losing the contract.


Reports  suggests that a lack of transparency could be a problem, and that the method could potentially foster crony capitalism by allowing companies to employ dubious means to bag projects.

For starters, the government will have to make all the details of the original proposal public, to allow third-party counter-proposals. But as is the case with Amaravati right now, the state often does not release the complete details of the contracts, citing “proprietary information”

Therefore, potential third-party bidders can only match or better the parts of the proposal that are in the public domain, which in-turn can be rejected by the government, claiming that the initial proposal with the withheld information was better.

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