Government urged to use 'Swiss challenge' in projects

MANILA, Philippines - The government was urged the other day to implement a system being practiced in developed countries for procurement projects known as the “Swiss challenge.”

In its latest policy paper, the new think-tank Forensic Law and Policy Strategies Inc. (Forensic Solutions) urged President Aquino to implement a competitive public bidding for big-ticket government projects, especially in line with his pronouncement of putting premium on public-private partnerships as the springboard for a public infrastructure buildup that will not hurt taxpayers.

The Swiss challenge system involves an unsolicited proposal for a government project, which allows third parties to challenge this scheme during a designated period and then lets the original proponent counter-match such offers, explained Forensic Solutions founder Alberto Agra, former Justice secretary and solicitor general.

This method ensures that the original offer is superior to other bids and also guarantees transparency, competition and accountability, just like during competitive public biddings, said the Agra-led think tank.

Forensic Solutions pointed out though, that clear-cut legislative guidelines should be put in place to regulate the practice of the Swiss challenge system—and avoid future controversies such as the one involving the Philippine International Airport Terminals Co Inc. (PIATCO) on the development of the Ninoy Aquino International Airport Passenger Terminal III (NAIA-3), which was the test case on this type of process.

It noted that such legislative guidelines will also address shortcomings and ambiguities in the Build-Operate-Transfer (BOT) Law and its implementing rules and regulations, which were exposed in the PIATCO-NAIA 3 controversy.

Agra and lawyer Cynthia Perez Alabanza, who co-wrote the policy paper, said that, contrary to common perception, the Swiss challenge method is clearly a legitimate form of competitive public bidding.

“The Swiss challenge method preserves all the elements of transparency, competition and accountability inherent in all government contracts,” said Agra and Alabanza in the think-tank’s first policy paper on public governance titled “Institutionalizing the Swiss Challenge Method of Bidding”.

Agra headed at one time or another the Office of the Solicitor General and the Office of the Government Corporate Counsel, while Alabanza was once a government corporate attorney at the OGCC and is an advocate of public-private partnerships.

“All the elements of a traditional public bidding as prescribed under the Government Procurement Reform Act (GPRA), in one form or the other, are present in the Swiss Challenge System followed under the BOT Law,” Agra and Alabanza said.

Thus, they said, the Swiss challenge method should be encouraged, especially after President Aquino emphasized in his first State of the Nation Address last month the need for public-private partnerships as a solution to the country’s infrastructural needs, primarily because government, through this process, will be relieved of the obligation to fund expensive, large-scale projects.

“However, to avoid another messy transaction like that of NAIA Terminal 3, clear legislative guidelines must be set in place to regulate, but nonetheless encourage this process. This is the position of Forensic Solutions,” they said in the policy paper.

The think-tank noted that the NAIA-3 case clearly showed that even with the BOT law in place, well-defined guidelines were absent in the acceptance and consideration of comparative proposals under the Swiss challenge system.