Public Procurement 2021

4 February 2021

After several years of legislative work, the total revision of the Federal Act on Public Procurement (FAPP) came into force on 1 January 2021. In parallel with the FAPP, the Swiss Conference of Directors of Building, Planning and Environmental Protection (DBPE) drafted and passed the total revision of the Intercantonal Agreement on Public Procurement (IAPP). The new IAPP will enter into force as soon as two cantons will have adhered to it.

Before briefly presenting the main new features of the new legislation, it should be noted that one of the main goals, namely the harmonisation of federal and cantonal law, has been achieved, as the content of the FAPP and the IAPP is almost identical, not only from the point of view of substantive law, but also with regard to procurement and appeals procedures.

Here are some of the features that will be of particular interest to companies:

1. Objective and subjective scope of application

The previous version of the law was silent as to its objective and subjective scope, thus obliging the courts to determine the scope of application of the FAPP. The new legislation contains detailed and rather complex provisions on this subject, which is why only a few salient points can be mentioned here:

Firstly, regarding its objective scope, the FAPP shall apply to proper public procurements (as defined in art. 8 para. 1 FAPP), but also to the delegation of public tasks and to the granting of concessions. The expansion of the scope of application to delegations and concessions raises many difficult and complex delimitation questions that cannot be addressed here. We will limit ourselves to a few examples of what the legal literature or case law illustrate. For instance, home care services (Spitex) as well as self-service bicycle systems are considered as delegating public tasks. In its message, the Federal Council references the collection of reception fees under the Federal Act on Radio and Television. However, the transfer of the management and direction of two municipal theaters or taxi licenses would be considered as concessions.

Secondly, as for its subjective scope of application, the new legislation already enumerates all awarding authorities subject to public procurement rules. Thus, in addition to the centralised and decentralised administrative units of the Federal Administration, art. 4 FAPP notably lists the Federal Tribunals, the Office of the Attorney General of the Confederation, Parliamentary Services as well as certain entities under public law which provide a public service.

Finally, it should be noted that the exclusion of inhouse, quasi-inhouse and in-state procurements from the scope of the public procurement legislation is now codified.

2. Sustainable development

The traditional aims of the public procurement act, namely the economic use of public funds, equal treatment and non-discrimination, competition and transparency, remain of course valid. In addition, sustainable development is now one of the goals of the FAPP. Indeed, the legislation aims at a usage of public funds "which is economic and which has sustainable economic, ecological and social effects" (art. 2 lit. a FAPP). Therefore, this will allow taking into account the "fair trade" or regional characteristics of a product. This latter illustration shows that this expansion of the aims of the law could be used for protectionist purposes.

3. Reinforcement of qualitative criteria for tendering

In line with the above, the awarding authority shall no longer award the procurement to the tenderer who has submitted the most economically advantageous tender, but rather to the one who has submitted, simply, the most advantageous tender. This leads to a strengthening of the qualitative criteria in the tendering process and also includes taking into account the above-mentioned sustainability criteria.

4. Taking into account different price levels

In future, awarding authorities shall take into account the different price levels in the countries where the service is provided in order to avoid Swiss companies being discriminated in comparison with foreign tenderers who can provide their services at lower cost.

5. Place of performance principle

The new FAPP provides that tenderers must comply with the provisions relating to the protection of workers and working conditions at the place where the service is provided (place of performance principle). This is one of the few points where harmonisation could not be achieved, the reason being the requirements of the Federal Act on the Interior Market. At the cantonal level, the principle of the place of origin is still applicable, i.e. the principle according to which tenderers must comply with the relevant provisions at the place of their registered office or place of business in Switzerland.

6. Electronic auctions

The new legislation provides that in order to acquire standardised services in the future, electronic auctions may be used by the awarding authority. The choice of the tenderer must be operated on the basis of quantifiable criteria such as price or quantity.

7. Dialogue

In response to many practitioners' criticism regarding the rigidity of public procurement procedures, art. 24 FAPP introduces the possibility for the awarding authority to open a dialogue with the tenderers in award procedures related to complex markets and intellectual or innovative services in order to establish the subject matter of the market as well as develop and set solutions or processes to be applied. It should be noted that this "dialogue" will not allow for price negotiations.

8. Framework agreement

Another innovation worth noting is the possibility for the awarding authority to issue a call for tenders for framework agreements, i.e. contracts of which the purpose is to set the conditions (in particular the prices) for an unlimited number of orders during a given period of time that shall not exceed five years.

9. Remedies

In this respect, it is essentially worth noting that the "pièce de résistence" of public procurement law, i.e. the issue related to the signing of the contract between the awarding authority and the winning tenderer before the end of the appeals' period, has not been solved by the new legislation. Despite the introduction of a new "standstill" rule, i.e. a prohibition for the awarding authority to sign the contract before the expiration of the deadline for appealing the award, the legal consequences of a violation of this standstill are not determined by the new FAPP. This is highly regrettable, as it means that the uncertainty surrounding this issue continues and that in many cases, it will not be possible to have a contract cancelled which was signed during the standstill.

It should also be added that the FAPP does not provide a standstill rule for procurements which are not subject to international treaties, which means that the contract between the awarding authority and the winning tenderer can be signed as soon as it is awarded. As surprising as it may seem, this is the consequence of the legislator's choice to limit the tenderer's remedies to the sole recognition of the violation of federal law (instead of the annulment of the award) in the context of an appeal against a public procurement not subject to international treaties.

Author: Lorenz Ehrler