"There is concern about a material defect that may reflect a violation of equality between bidders and the integrity of the competitive process... In light of this concern, the company should hold a written hearing before deciding to disqualify the proposal..."
(Appendix 13 to the petition).
Following the decision, the Petitioner submitted her written response (Appendix 17 to the Petition). In its response, the Petitioner confirmed that there was a flaw in its proposal in that "the amount of royalties to the State that Nahor requested to include in the framework of its proposal, was expressed under the component "Others + Management Fees". Accordingly, the financing costs for these royalties were expressed under "Financing Expenses". While both the royalties and the financing costs for them, were supposed to be included under the component of "required profit, risk factors and unforeseen (in the future)". The Petitioner claimed that this was a complete technical error, which was made in complete good faith. In its response, the Petitioner clarified that the correction of the technical error would lead to the result whereby the security component of the business plan would amount to the sum of "NIS 239,213 million" – as the Petitioner put it in paragraph 8 of its response. It should be noted that here too there was a mistake on the part of the Petitioner, who apparently intended that the component of the Petitioner would amount to NIS 239.213 million (and see the same mistakes in paragraph 13 of the Petitioner's response).
On June 12, 2023, the tenders committee decided to disqualify the Petitioner's proposal and to declare Respondent 2 as the winner of the tender. In its decision, the tenders committee determined that the question before it is a legal question – is the defect in the Petitioner's proposal a material or technical defect? The committee determined that this is a material defect that may affect equality and competition in the tender, since the registration of royalties under the "Other Expenses" section and not under the "Budget" clause affects the calculation of the scores of the other participants in the tender. This is the place to explain that according to the terms of the tender, as part of the examination of the bids and the awarding of the score for each proposal, the "operating cost per kilometer" is examined in each of the proposals. This cost is determined by dividing the total operating expenses of the bidder as detailed in its business plan, excluding the components of the budget and profit, in the total kilometers determined in the tender. The resulting result is compared by the tenders committee with the average operating cost per kilometer of the other bidders in the tender, and to the extent that the operating cost per kilometer proposed by the bidder deviates from the average, it has a negative impact on the grade that the bidder will receive for his bid. It therefore follows that the registration of royalties not under the Tender Clause affects the calculation of the average operating cost per kilometer in relation to which the bidders' overscores are determined in the tender. The Committee also noted in its decision that it gives weight to the fact that the defect in the Petitioner's proposal fell specifically in its financial proposal, to which great weight (52%) was given in the framework of the examination of the proposals in the tender. The Committee further determined that since this is a material defect, the question of whether it is a defect in the Petitioner's proposal due to a lack of good faith or whether it is a defect that occurred in good faith is irrelevant. In view of the fact that the defect is a material defect, and in view of the centrality of the financial proposal in the tender, the committee decided that there was no reason to allow the defect to be corrected.