Administrative Petition (Haifa) 68643-08-25 A.G. Octopus Cleaning Works Ltd. v. Ma’ale Iron Local Council

A petition concerning a tender for the execution of cleaning work.

Factual Background -

1. In 2025, the Ma'ale Iron Local Council (hereinafter: the "Respondent") published Tender No. 04/2025 for the provision of cleaning services (hereinafter: the "Original Tender").  Eight bids were submitted to the tender, including a bid by A.G.  Octopus Cleaning Works in a Tax Appeal (hereinafter: the "Petitioner") and a bid by Mag 58 Guard Ltd., which wishes to join the proceeding (hereinafter: the "Applicant").  The Petitioner is the company that currently provides the cleaning services to the Respondent, after winning a previous tender.
2. On June 17, 2025, the bid box was opened, and the proposals were reviewed by an external legal advisor.
3. On June 30, 2025, a legal opinion was prepared by an external legal advisor (hereinafter: the "Opinion"), in which it was determined, in section 8, as follows:

"After I have examined the bidders' proposals and the documents ...  and after we have carried out a re-examination ...  We found that each of the bids had defects, which from a legal point of view lead to the conclusion that none of the participants in the tender, except for the bidder A.G., does not meet the terms of the tender [A.G.  - i.e., the Petitioner]."

Later, in section 9:

"Moreover, an analysis of the defects that occurred in the bidders' proposals, each according to its own defects, raises a real concern that there was apparently an error in the tender documents or that there was a significant lack of clarity with respect to the components of the financial proposal...  In this state of affairs, and not due to a defect that can be deliberately attributed to one of the participants, but rather a mistake that is learned from the tender documents itself and which originates from the tender arranger and not from the participants themselves - it is not possible to compare the various bidders without examining and concluding the tender process as it is would constitute a violation of the principle of equality and especially fair competition."

4. At the end of the opinion, there is a legal analysis of the rulings surrounding the cancellation of a tender after the opening of the bid box and a summary of the rule according to which this is an exceptional step, which should be taken only in special cases, on the basis of a solid factual basis. However, there is a recommendation to cancel the tender in this case, in view of the error in the comparative model between the proposals (hereinafter: the "Error") and the fact that due to the error, it is not possible to make a comparison between the proposals, nor can it even correct the error by way of clarifications or supplements.
5. On July 1, 2025, the Respondent's Tenders Committee (hereinafter: the "Tenders Committee") decided to adopt the opinion, cancel the original tender and publish a new tender (No. 06/2025, hereinafter: the "New Tender").
6. On July 2, 2025, the Petitioner was notified of the cancellation of the tender.
7. The Petitioner approached the Respondent with a request to review the tender documents, including the opinion and the other documents, but the Respondent refused to allow full review of all the documents.
8. On July 10, 2025, the Petitioner filed the previous petition (Administrative Petition 25702-07-25, [Nevo] hereinafter: the "Previous Petition") demanding that all the documents of the original tender be reviewed and that the proceedings of the new tender be delayed.
9. The previous petition was handled by my colleague, the Honorable Justice Ali of this court. On July 13, 2025, a temporary order was issued prohibiting the Respondent from opening the bid box of the new tender and ordering the submission of a response.  Attached to the Respondent's response, the legal opinion was submitted, as well as other documents.
10. On July 22, 2025, during the hearing of the previous petition, no further arguments were raised on behalf of the Petitioner regarding the right to inspect the tender documents, since they had already been attached to the response. However, the Petitioner's argument was that a review of the opinion showed that her proposal was the only one that met the terms of the tender, while referring to paragraph 8 of the opinion quoted above.  Her argument was that since this was so, the Respondent was obligated to accept its proposal, being a "single proposal" - regardless of the mistake that occurred in the comparative model of the tender.  The argument was that the comparison model is relevant only when there are two or more qualifying proposals between which a comparison should be made, but it has no significance when there is only one valid proposal in any case.  It was further argued that the opinion contains a clear recommendation regarding the amendment that should be made in the wording of two clauses in the tender in order to correct the error, but a review of the documents of the new tender shows that the "problematic" clauses remain exactly the same.
11. The Respondent argued in advance that the subject of the previous petition was not the decision to cancel the tender, but rather a petition demanding a review of the tender documents (which were forwarded to the Petitioner for review in the annex to the reply), and the decision to cancel the tender cannot be discussed, if only for the reason that the other bidders were not added as respondents. It was further argued that the mistake in the original tender was around the clause that relates to the price that the performer of the work will pay to the cleaning workers on his behalf, and it was explained that the price must be such that it will enable the payment of the minimum wage to the workers, in accordance with the relevant labor laws and extension orders, in order to preserve the social rights of the workers.  The mistake was with regard to the manner in which the wording of the clause in which the bidders were asked to specify a rate of one hour of work per employee, together with the respondent's estimate that was part of the tender documents, while some referred to a discount from the estimate, some referred to an addition to the estimate, and the erroneous wording of the clause led to the fact that it was possible to make proposals that would mean a violation of the workers' rights, and in any case it was not possible to compare them fairly.  It was further explained that in light of the erroneous formulation, all the bidders did indeed make a proposal that would cause the price per hour of work to be less than the minimum wage obligated, and only the Petitioner's proposal was such that the price was higher than the minimum price, and it can be said that they all misunderstood the terms (due to the erroneous wording) and only the Petitioner "correctly understood the provisions".  It was further argued that if it were not for the mistake, it is likely that the other bidders would have also made bids that exceed the minimum price, since they would have correctly understood how the tariff should be calculated, assuming that it is not possible to quote a low price that falls below the legal minimum, and then it would have been possible to make a fair comparison between the proposals.
12. The Ottoman Settlement [Old Version] 1916 At the end of the discussion, an agreement was reached between the parties whereby the Petitioner's proposal in the previous tender would be returned for discussion before the tenders committee, which would examine it on its merits as the only proposal, after the tenders committee would allow the Petitioner to voice its arguments. It was further agreed that in the meantime the new tender proceedings would remain delayed, and the bid box of the new tender would not be opened.  The agreement was given the force of a judgment (hereinafter: "the judgment in the previous petition").
13. 12-34-56-78 Chekhov v. State of Israel, P.D.  51 (2)After the aforesaid, the tenders committee demanded from the Petitioner documents such as reports regarding deposits to a pension fund and a study fund regarding the Petitioner's employees and attendance reports of the employees (hereinafter: the "Documents").  The Petitioner argued that there was no basis for the demand for the documents, since they were not required as part of the tender documents and there was no agreement regarding the need to transfer them as part of the judgment in the previous petition, where it was ruled that all the tenders committee must do at this stage is to re-examine the Petitioner's proposal on its merits.  At the same time, the requested documents were forwarded to the Respondent (and see the correspondence between the parties).
14. After the Petitioner submitted the documents, on August 13, 2025, a hearing was held for the Petitioner's manager before the tenders committee, which was recorded in the minutes (hereinafter: the "Hearing" and the "Minutes").
15. On August 14, 2025, the tenders committee passed a decision (hereinafter: "the tenders committee's decision") according to which:

"The committee recommends not accepting the bidder, Tamnon Ltd.  The reasons for the tenders committee's decision."