Public Procurement – No automatic Exclusion for Breaches of Pricing Rules

In its judgment 2C_207/2025 of 22 January 2026, the Swiss Federal Supreme Court (in German, French and Italian only) addressed a question of fundamental importance in Swiss public procurement law: Must a breach of the contracting authority’s pricing rules, in the form of cost shifting, necessarily lead to the exclusion of a tender? As is so often the case, the answer is no, but…

Background

In a tender for construction works issued by the University Hospital of Zurich, the hospital stipulated that costs must be correctly allocated to the respective service items and that reallocations were not permitted. The successful tenderer nevertheless carried out reallocations; however, following the tender adjustment ordered by the Federal Supreme Court (in German, French and Italian only), it remained around CHF 8 million cheaper than the runner-up. The potential profit from the reallocations amounted to CHF 1.1 million. Following an unsuccessful appeal before the Zurich Administrative Court (in German only), the appellant sought the exclusion of the successful tenderer before the Federal Supreme Court (in German, French and Italian only).

The Supreme Court’s ruling

The Federal Supreme Court (in German, French and Italian only) confirms that pricing regulations constitute formal requirements for a valid tender. Cost shifting could justify exclusion on the grounds that it renders the tenders incomparable. Consequently, contracting authorities are always obliged to carry out the necessary investigations. However, given the discretion afforded to contracting authorities, there is a mandatory obligation to exclude a tender only if failing to do so would run counter to the fundamental objectives of public procurement law. As the tender in question remained clearly the most economically advantageous despite the cost reallocation, the Federal Supreme Court (in German, French and Italian only) ruled that there was no obligation to exclude it.

Key takeaways

The judgement increases the discretion of contracting authorities and is, on balance, understandable from a cost-effectiveness perspective. However, it creates a tension with the principle of equal treatment and the strict formal requirements applicable under public procurement law. The ruling makes it clear that breaches of pricing rules – and, in particular, unauthorised reallocations – should be avoided. Whilst this does not necessarily mean that exclusion is mandatory in every case, a contracting authority may nevertheless decide to exclude a tenderer at its discretion. Companies are therefore still well advised to comply with the tender specifications as closely as possible.

The judgment is available here (in German only).