Attorney Gil Nadel, Gilad Paz
The District Court of Haifa has recently deferred an administrative petition that was submitted by Afcon Contracting and Services, against a tender carried out by the Israeli Electric Company. After the tender had been canceled, the Electric Company negotiated with the bidders and selected the offer of a foreign company.
Afcon, who had lost the negotiations, claimed that the Electric Company was supposed to give first priority to an Israeli company and to select their offer, but the court deferred this claim.
The case and party claims:
The tender was for the purchase of high voltage adjustors for the "Orot Rabin" and "Rottenberg" power plants.
The tender that is the object of this petition was a two-stage tender: In the first phase the bidders' ability to withstand the technical-commercial conditions of the tender was examined and in the second stage, which included only four participants, the bidders were requested to give a price quote.
At this stage, the tender committee of the Electric Company discovered that all the quotes had unreasonably exceeded the price estimate which the Electric Company had forecast for this tender. As such, the tender committee decided to cancel the tender and to begin negotiations by price alone with the four bidders.
Eventually, the Electric Company decided to make a deal with a Chinese company and not with Afcon.
In response, Afcon decided to challenge this decision by submitting an administrative petition.
In the petition Afcon claimed that the Electric Company obligated to act according to the Ordinance for Tender Obligation (preference for Israeli products), 1995. According to this ordinance, the Electric Company is obligated to give preference to the offer of the Israeli company, Afcon, instead of to that of the Chinese company, so long as the difference between the prices of both offers does not exceed 15%. That is, the Israeli offer must be given a 15% preference.
The court ruling:
The court deferred the petition by determining, among other points, that once the tender was canceled the Electric Company was not under any obligation to act according to the preference regulations, and these regulations are applicable only within the framework of a tender.
The court did not discuss the question of whether it was legal to cancel the tender, since the parties did not make any claims on the matter, and assumed that the cancellation had been carried out according to law.
The court even criticized the preference regulations through the verdict by determining that these regulations are liable to make governmental purchases significantly costlier, as well as raising prices on Israeli products, hindering the competition in the market of a certain products and negatively affecting the incentive to improve the quality of a product and the services that accompany it.
Thus, the petition was deferred and Afcon was charged with NIS 8,000 in expenses.
[Administrative petition (District Court of Haifa) 25962-07-12 Afcon Contracting and Services Ltd. vs. The Israeli Electric Company Ltd. Judge Yael Wilner, verdict of August 2, 2012. Party representatives: on behalf of Afcon- Attorneys Glusman- Shem Tov-Chowers-Broid and Co. On behalf of the Electric Company- Attorneys Herzog, Fox and others. On behalf of Galil Consultants- Attorney Yossi Levi and Co.].
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