Thomas P. Müller
Dr. iur., Certified Spe-cialist SBA Construc-tion and Real Estate Law
Nadja D. Leuthardt MLaw
In Switzerland, the public sector acquires goods and services in order to perform a public function in an estimated amount of more than CHF 40 billion each year. This so-called public procurement not only requires efficient and effective management of public resources, but also is of important economic significance.
Swiss public procurement law is essentially characterised by international treaties according to which Switzerland has undertaken to open up its public markets to providers from abroad in order to facilitate Swiss providers' access to foreign markets in return. Switzerland's international obliga-tions in the field of public procurement are incorporated in the WTO's Agreement on Government Procurement (GPA 1994) and the Bilateral Agreement between Switzerland and the EU on Certain Aspects of Government Procurement (BilA).
These international legal requirements have been implemented in Swiss domestic legislation. As a consequence of Switzerland's federal structure, public procurement law is highly fragmented. There are public procurement provisions at federal level (namely the FAPP and the corresponding Ordi-nance on Public Procurement (OPP)), at intercantonal level (Intercantonal Agreement on Public Pro-curement (IAPP)), at cantonal level and to a certain extend at municipal level.
V. Public Procurement
1. In General
2. Relevant Legislation
Meanwhile, the GPA 1994 has been revised (GPA 2012). The GPA 2012 was signed by Switzerland in 2012 but has not yet been fully ratified. As a contracting state, Switzerland is obliged to implement the GPA 2012 in its domestic law. The Swiss legislation on procurement law is therefore currently under revision. In June 2019, Swiss Parliament enacted the total revision of the FAPP which trans-poses the provisions of the GPA 2012 into national law (rev. FAPP). The rev. FAPP will enter into force on 1 January 2021.
The legislative process also involved the cantons with a view to harmonise Swiss public procurement law. On 15 November 2019, the revised provisions of the IAPP (rev. IAPP) that are, mutatis mutandis and subject only to few exceptions, identical with the provisions of rev. FAPP were approved and all cantons are expected to initiate accession to rev. IAPP and thus incorporate the rev. IAPP into the cantonal law in the near future.
Until the revision process is completed and the new provisions (rev. FAPP, rev. IAPP) come into force, the GPA 1994 and the current national legislation (in particular FAPP, IAPP) remain effective.
In accordance with the GPA, Swiss public procurement law shall ensure open, fair and transparent conditions of competition in the public procurement markets.
The rev. FAPP and the rev. IAPP summarise the main goals of Swiss public procurement law as fol-lows:
− Economically, ecologically and socially sustainable use of public funds;
− Transparency of the award procedure;
− Equal treatment and non-discrimination between suppliers; and
− Promotion of effective competition among suppliers, in particular through measures against unlawful agreements on competition and corruption.
3. Main Goals of Swiss Public Procurement Law
Basically, the applicability of public procurement law is determined by answering two questions:
− Which (public) entities are subject to public procurement law (subjective scope)?; and
− What kind of goods and services must be acquired pursuant to the rules of public procure-ment law (objective scope)?
Pursuant to the above-mentioned international treaties, which are currently in force (GPA 1994, BilA), the general federal administration and its departments, the cantonal administrations, – in ex-ceptional cases – municipalities, other territorial and personnel bodies, i.e. public or private organi-sations under the decisive influence of the public sector which are active in the water and energy supply sectors and in the transport supply sector, are subject to public procurement law. In relation to the EU, public procurement law also applies to further awarding authorities (providers of tele-communication, rail, energy and other public services) as well as municipalities and to private con-tracting authorities that perform public tasks.
For those areas not captured by Switzerland's international obligations, the OPP designates further awarding authorities at federal level which are subject to public procurement law, i.e. private and public law organisations that perform public tasks, in the areas of infrastructure, telecommunica-tions and the supply of transport services, water and electricity, which are either controlled by the Confederation or have been granted exclusive, special rights (e.g. concessions) by the responsible community. For public contracts awarded at cantonal and municipal level, article 8 paragraph 2 IAPP stipulates that all entities responsible for cantonal and municipal tasks and services in the field of supplies, services and construction subsidised with public funds exceeding 50 % of the total costs must tender their procurement in accordance with public procurement law (see section 5 below).
The rev. FAPP will even enlarge the subjective scope by including further awarding authorities (such as the federal courts and the parliamentary services).
4. Applicability of Public Procurement Law in Switzerland
4.1. The Subjective Scope: Entities Subject to Public Procurement Law
The objective scope of public procurement law is determined by the nature of the public contracts to be awarded. If the awarding authority falls within the subjective scope of public procurement law (see section 4.1 above), the award of the following public contracts must comply with the applicable provisions of public procurement law:
− Supply contracts, i.e. public contracts for the supply of movable goods, in particular by pur-chase, lease, rent or hire;
− Service contracts, i.e. public contracts for the rendering of services; and
− Construction contracts, i.e. public contracts for building and civil engineering work.
The FAPP/IAPP and rev. FAPP/rev. IAPP enumerate certain exceptions, e.g. services relating to na-tional security.
According to the Federal Supreme Court, the FAPP does not apply to the award of a monopoly con-cession. However, the rev. FAPP/rev. IAPP explicitly include the transfer of public tasks and the award of monopoly concessions into the scope of the revised legal provisions.
It is the estimated value of the procurement that determines whether the provisions relating to the international treaties (GPA 1994, BilA, GPA 2012) apply.
At federal level, the objective scope of the international agreements applies if the estimated value (excluding VAT) exceeds CHF 230,000 for supplies and services and CHF 8,700,000 for construction works, respectively. At cantonal level, the thresholds for supplies and services are slightly higher (CHF 350,000). Certain sectors (e.g. postal coach services, electricity, telecommunication) are sub-ject to higher thresholds.
4.2. The Objective Scope: Type of Public Procurement Subject to Public Procure-ment Law
5. Award Procedure
5.1. Differentiation between Procurement Governed by the International
Trea-ties and by National Procurement Law Only
All public procurement with an estimated value below these thresholds are subject to the specific federal or cantonal public procurement provisions only.
Public procurement law provides for four different types of award procedures: (i) the open proce-dure, (ii) the selective proceproce-dure, (iii) the procedure on invitation and (iv) the direct award.
Basically, the open or selective procedure apply. In the open procedure any interested supplier can participate and submit an offer. In the selective procedure only suppliers qualified in the pre-selec-tion process are accepted for submitting bids. Calls for tender and the award of public contracts must be published on www.simap.ch, a joint electronic platform of the federal government, the can-tons and the municipalities.
Within the scope of the international treaties only the open or selective procedure apply, unless the restrictive conditions for a direct award are fulfilled (e.g. no suitable tenders are received in an open or selective procedure, artistic or technical specificity of the contract etc.).
Outside the scope of the international treaties and if the estimated value of the procurement does not exceed a certain threshold the procedure on invitation or the direct award may apply. In the procedure on invitation, the awarding authority invites (at least three) suppliers to submit bids with-out a prior public call for tender.
Public procurement procedures in Switzerland are characterised by public law governed tender pro-cedure as first step and followed by the conclusion of the contract with the supplier of the awarded bid as second step. Typically, the contract is governed by private law.
The public law governed tender procedure is based on the general principles outlined in section 3 above and shall ensure that the economically most advantageous bid is awarded. To this effect, the awarding authority must define the relevant award criteria (price, quality aspects, environmental sustainability, customer service, expedience of the service, aesthetics and technical value) and dis-close them to the bidders including the relative weighting given to each of these criteria in the tender documents.
5.2. Types of Award Procedures
5.3. Tender Process and Conclusion of the Agreement
Under Swiss procurement law the award is construed as an administrative act that is subject to ap-peal by the non-awarded bidders (see section 6 below). Typically, the contract must not be con-cluded before this administrative act has entered into legal force.
The legal procedure under public procurement law is governed by federal law in federal procurement procedures and by cantonal and municipal law in cantonal or municipal procurement procedures.
The IAPP sets minimum standards for the cantonal and municipal legal procedure.
In the interest of procedural economy, not all procedural steps are subject to appeal. However, cer-tain procedural deficiencies (e.g. unfair definition of the relevant award criteria) must be objected immediately and might be rejected as late if included in the appeal against the award.
With regard to the award, the courts may only annul the award and cannot directly award to another supplier. Typically, if the contract has already been concluded between the contracting authority and the awarded bidder, the court will only conclude that the contested award was unlawful, but not cancel the contract. In this event, the awarding authority is liable for damages caused by its (unlaw-ful) award.
6. Remedies
Corporate Law in Switzerland
Adriano Antonietti lic. iur.
Valentine Schnyder MLaw
A commercial activity in Switzerland may be carried out through commercial structures that focus either on personal commitment and liability (partnerships) or on share capital commitment (capital companies).
In this context, there are many different legal forms available in Switzerland to do business, such as sole proprietorship, general partnership, limited partnership, corporations, LLCs or cooperatives. In addition, the simple partnership is available as contractual arrangements among partners. It is, how-ever, not a legal entity but a bare agreement.
The two most frequent forms for entrepreneurs who wish to develop a commercial activity in Swit-zerland are (i) corporations and (ii) LLCs.
This chapter shall therefore be limited to the review of the main aspects and particularities related to the incorporation of a Swiss corporation (see section 2 below) and LLC (see section 3 below).