'Swiss challenge' ruled out in airport PPP projects

New Delhi: Private airport developers under the public-private partnership (PPP) model will not be able to get additional contracts in and around the airport that are part of the original project (like real estate development) by merely matching the lowest bidder without participating in the bidding process.
The government recently shot down an informal proposal from the GMR-led consortium Delhi International Airport Ltd (DIAL) that would have enabled GMR to win the contract for the real estate and hospitality district at the airport in this manner. DIAL plans to lease out 45 acres of the airport land area to real estate and hospitality companies through a competitive bidding process.
Called the Swiss challenge system, which is prevalent in several countries, the process would entail the inclusion of a clause in the request for proposals (RFP) sent to real estate companies to the effect that GMR had a right to match the lowest bid and take the contract without participating in the bidding process.
“Such an idea had come up in one of the DIAL board meetings recently. But it was discouraged by the government representatives there only since it undermined the purpose of a bidding process,” a senior civil aviation ministry official said. “So the proposal never came to the civil aviation ministry,” he added. DIAL spokespersons, however, denied that GMR had any intention of developing the hospitality project.
28/08/08 Anirban Chowdhury/Business Standard

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Categories: Airports Aug 2008