“Four Sons” participate in a tender – who will win?

“Four Sons” participate in a tender – who will win?

Yair Aloni, Adv.
March 5, 2021

The Game Theory is relevant also in case of tenders. The Torah refers to four sons: One wise, one wicked, one simple and one who does not know how to ask. When it comes to participating in tenders bidders with different characteristics and styles may find themselves competing in one game in which everyone has one thing in common - the desire to increase revenue and win the tender. The ability to play correctly affect the question of which of the players has the highest chance of reaching the finish line?

A tender is a public competitive procedure conducted under clear and meticulous rules that have been established by law and extensive case law. It is basically based on a number of key principles. Firstly, the principle of maintaining equality and purity of morals which purpose is to give equal opportunity to each of the bidders without bias. Secondly, the desire to promote efficiently and save public funds by obtaining the most economically preferable offer. While the field of tenders requires every player to be familiar with the unique regulations from the opening whistle, many bidders are unaware that the way they "play the game" may be directly related to their chances of success.

Bidder who does not know how to ask - this player is characterized by the fact that it accepts as its "destiny" any instruction and conditions published by the tender publisher. This bidder will pass on participating in the tender just because it does not meet the threshold condition, even though it is well familiar with the field of the tender and has the capability to provide the requested service. These bidders tend to ignore, or not take proper advantage of, the 'clarification questions' phase, even though it is an important tactical and strategic phase. Contrary to what one might think, when duly drafted (and thus the importance of an experience attorney) in many cases tender publishers consider the questions submitted by bidders, especially when it comes to a unique and professional commercial field. As part of this procedure, it is possible to even request a change in the terms of the tender, including conditions that are critical to the ability to participate (such as the threshold conditions and quality criteria) and to demand changes in various commercial terms in the accompanying agreement. A bidder who does not properly utilize the clarification questions phase may find itself in a contractual engagement with obligations that may even question the economic feasibility of the engagement. In some cases, refraining from asking the correct questions may significantly impair the chances of being selected and even participating. Noted, that a bidder who does not exercise the right to ask clarifying questions may be muted from later raising an argument regarding the terms of the tender in retrospect, if a ambiguity arises after the bids are submitted.

The simple bidder – the simple bidder is a player who puts a lot of effort into submitting a respectable, serious and worthy bid, but will submit to its destiny and ignore "red flags" or be indifferent upon receiving notice of non-winning. This bidder will submit its bid for the tender (which is a consent to the terms of the tender) even though the terms of the tender were "tailored" to a specific bidder in a way that gives such a significant advantage over others, for example by setting high thresholds without any justification or relevance to the tender purpose or setting a unique quality criteria designed to enable the tender publisher to prefer a specific bidder. This bidder will also tend to accept decisions of the Tenders Committee regarding non-winning without exercising the right to review the winning bid and the minutes of the Tenders Committee in order to check whether there were procedural defects.

The Wicked bidder - This bidder contends to be sophisticated and tries to beat the method. This bidder tends to take advantage of the tender procedure to give itself the maneuvering margin it needs to maximize profits. Thus, this bidder may submit a tactical bid with low prices for certain components to guarantee first ranking while burdening high prices on other components in a manipulative manner. In addition, this bidder may make false representations and attribute to itself non-existing "experience". The "winning" of such bidders may be of a short shelf life, because Courts do not kindly see manipulative bids and such behavior may thus backfire on the bidder.

The smart bidder - A smart bidder is a player who recognizes the importance of using a skilled professional (a lawyer with experience in tenders and sometimes also a commercial / economic professional), who will help formulate the correct strategy in the initial stages of the tender. A professional will assist in examining the terms of the tender will ensure that the bid documents are duly submitted and upon receipt of the results of the tender will conduct a quick and professional examination of the administrative procedure and recommend legal action, when necessary. Needless to say, this player has the highest chances of winning the tender!