Presentation by Marc Steiner, Switzerland, on the practice of the Swiss Federal Administrative Court on public procurement, at the SIGMA 2nd webinar on public procurement reality and challenges of post COVID, held on 9 March 2021. This webinar is the follow-up on the 1st webinar which took place on 26 January 2021 (https://www.slideshare.net/SIGMA2013/tag/ipa260121pup).

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Webinar 9 March 2021
Practice of the Swiss
Federal Administrative
Court on Public
Procurement
Judge Marc Steiner

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Legal review on public
procurement issues in Switzerland
I
• Federalist structure: Cantonal
Administrative Courts deal with cantonal
and municipal public procurement issues
• Federalist structure: The Federal
Administrative Court deals with public
procurement issues. On federal level
there is no review by an administrative
body, but bidders seize the court directly.
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Legal review on public
procurement issues in Switzerland
II
• How can be made sure that there is a
certain coherence in the practice of the
courts despite the federalist structure:
• The decisions of the Cantonal
Administrative Courts and the Federal
Administrative Court can be appealed to
the Swiss Federal Supreme Court, if the
party can show that there is a question of
fundamental importance to deal with. 3

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Interim measures / suspensive
effect
• Art. 54 of the Swiss Federal Act on Public
Procurement (FAPP):
• The Federal Administrative Court may, if the
procurement is governed by relevant public
international law (such as the WTO
Government Procurement Agreement 2012) on
request, give suspensive effect to an appeal.
• The suspensive effect can be accorded if the
grounds of the appeal are substantive enough
and if there is no conflict with prevailing public
interests.
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Effective legal review and
pacta sunt servanda I
• Art. 54 of the Swiss Federal Act on Public
Procurement (FAPP):
• In the event that the appeal is held to be
justified and the contract has already
been entered into with the tenderer, the
Federal Administrative Court will only
determine the extent to which the
contested order is in breach of Federal
law.
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Effective legal review and
pacta sunt servanda II
• Practice of the Swiss Federal
Administrative Court: This rule (art. 54
FAPP) does not apply if the conclusion of
the contract has been premature, for
instance when an appeal is pending and
the the decision on the suspensive effect
has not yet been issued. In this situation
the suspensive effect can be accorded
despite the contract law rule “pacta sunt
servanda”. (Decisions of the Federal
Administrative Court DFAC 2009/19)
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Judicial review as a key element
• In Switzerland there are financial market
supervision and the Competition
Commission, i.e. regulators, but there is
no specific supervision authority on
public procurement on federal level or an
administrative review body. Appeals
against decisions of procurement
authorties are directly dealt with by the
Federal Administrativ Court. A public
procurement judge on federal level must
therefore be particularly “weatherproof”.
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Governance as a key precondition
/ Financial supervision authority
• The Swiss Federal Audit Office is
independent and autonomous
within the scope of its legal
provisions.
• For administrative purposes the
Swiss Federal Audit Office is
assigned to the Federal Department
of Finance.
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Governance as a key precondition
/ Competition Commission
• On 1 September 2012, a new division
was created. The Construction Division
deals with restraints of competition in the
construction and procurement industries.
Competition law proceedings relating to
the construction industry primarily
concern horizontal agreements between
companies (i.e. bid rigging).
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Legal framework on procedure
• Art. 56 FAPP Grounds of appeal
(derogating from the Federal Act on
Administrative Procedure)
• Inadequacy will not constitute a ground of
appeal in appeal proceedings.
• The procuring authority is granted by law
a (not unlimited) discretionary power when
defining technical specifications, choosing
award criteria and when evaluating bids.
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Access to the file I
• Art. 27 of the Federal Act on
Administrative Procedure
• (1) The authority may refuse to allow the
inspection of the files only if:
• b. essential private interests, and in
particular those of respondents, require
that secrecy be preserved;
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Access to the file II
• Art. 27 of the Federal Act on Administrative
Procedure
• (2) Any refusal to allow inspection may only
extend to the documents that must remain
confidential.
• There is a specific practice on public
procurement denying every access to the bids.
• This can be dealt with by asking the award
winning bidder where he would be willing to
partially consent to the access (interim decision
B-1606/2020 issued 7th of October 2020)
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Transparency as a precondition
• Art. 2 FAPP Purpose
• a. Best value for money including
sustainability aspects
• b. Transparency of the award procedure;
• c. Equal treatment and
nondiscrimination of bidders
• d. Fostering effective fair competition
including measures against bid rigging
and corruption
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Transparency ex post I
• Judicial review is not possible if the
procurement procedure and the key steps
from the public call for tenders to the
decision on the award are not carefully
documented.
• This is particularly true when it comes to
negotiations or if the bid is completed
after having been submitted.
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Transparency ex post II
• Even without negotiations the lacking
documentation can be enough to endorse an
appeal.
• The facts of one of the landmark decisions of the
Swiss Federal Administrative Court can be
summarised as follows: The Federal University
for Science and Technology Zurich has
withdrawn an award decision and granted the
award to another bidder withoud documenting
the reasons for this way of proceeding (judg-
ment B-307/2016 issued 23rd of March 2016).
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Corruption / exclusion of bidders
• Art. 44 lit. e FAPP:
The procuring entity may exclude a
bidder having violated the regulation on
combating corruption.
• Art. 45 FAPP:
• If there is a severe breach of Art. 44 lit. e
FAPP, the procuring entity can exclude a
bidder for a period of until five years. In a
corruption case this exclusion has effect
for every procurement on federal level.
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Conflict of interests
• One of the important aspects of dealing with
conflicts of interests is that the enterprise (for
instance when designing an engineering project)
acting as a helping hand to the procuring authority
should not be too closely linked to the awarded
bidder.
• If a procuring entity wants to be tough when
assessing compliance risks it can go for an
exclusion of a bidder, which is a subsidiary (i.e.
daughter) of the same parent company/group as
the enterprise acting as a helping hand to the
procuring entity, if there is enough competition
(judgment B-4602/2019, issued 4th of March
2020). 17

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Most economically advantageous
tender I
• Art. 41 FAPP Award decision
• 1 The most advantageous tender shall be
awarded the contract.
• This is new! This way of thinking goes
beyond the concept of the most
economically advantageous tender. It is a
call for competition based on quality and a
more holistic approach. #paradigmshift 18

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Most economically advantageous
tender II
• What is clear is that the underlying
concept behind article 29 FAPP on
award criteria is that the award is
typically based on the “most
advantageous offer” and that the award
based on the lowest price only is the
exception when considering widely
standardized goods
(art.29(4) FAPP).
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Most economically advantageous
tender III
• The public procurement judge has to
assess the complexity of the
procurement at hand. The more complex
it is, the more important the quality
aspects are. So the the legal admissibility
of the weighting of the different award
criteria depends on the complexity of the
product, service or building procured
(interim decision B-3311/2009, 16th of
July 2009, judgment B-743/2007, 16th of
December 2011).
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Most economically advantageous
tender IV
• The method when assessing the quality
of a product or a service should not be in
contradiction with the announced
weighting of the (quality) criterion in
question. The higher the weighting is the
more important it is that there is an
evaluation method in place allowing for a
differentiating evaluation.
(Decisions of the Federal Administrative
Court DFAC 2018 IV/2)
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Dumping / abnormally low tenders
• Art. 38(3) FAPP:
Is a public authority confronted with an
abnormally low bid, there must be inquiries
(questions asked to the bidder) , whether
the conditions of participation are met and
the requirements of the call for tenders
have been understood.
• New mindset / paradigm change
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Questions?
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