Egged also argues that the issue of correcting the defect that fell in the Petitioner's proposal is subject to the discretion of the tenders committee, and since it has decided that there is no reason to order the correction of the defect, it is appropriate that the court should not replace the committee's discretion with its own discretion.
- The arguments of the other respondents
The other respondents in the petition did not express a real position on the issue at hand.
Discussion and Decision
- The Normative Infrastructure
As noted above at the outset, the competitive proceeding we are dealing with is not a "tender". Therefore, the Tenders Laws do not directly apply to it, including the Tenders Duty Law, Road Accidents without Bodily Injuries – 1992 and its Regulations. However: "When the Ministry of Transport conducts a competitive procedure for the allocation of licenses for the operation of the service lines, this procedure is subject to the rules of administrative law and the basic principles of tender law, first and foremost the protection of the principle of equality and fair competition" ( China Motors case, supra in paragraph 30 of the judgment of the Honorable Justice A. Vogelman). Indeed, the parties before me argued their arguments on the assumption that the principles of tenders law apply to the competitive proceeding in which we are concerned, and that the principles set out in the case law should be applied in our case with regard to the correction of defects in the proposals submitted in tenders. We will discuss these principles below.
- As a rule, the correction of defects in the proposals submitted in the tender is an exceptional move, because in many cases the correction of the defects is inconsistent with the basic principle in tender law, according to which the tender arranger determines the terms of the tender, which he is not entitled to change after the submission of the proposals, while the bidders must submit their proposals with vigorous precision in accordance with these conditions. An expression of this fundamental principle is also found in the provisions of the concrete tender before us. In clause 19.1 of the tender, it was determined that the bidder must prepare his proposal: "In accordance with the provisions detailed in this competitive proceeding...". In clause 20 of the tender, entitled "Completeness of the Proposal", it was emphasized in sub-provision 20.1 that: "The bidder shall submit a complete proposal in accordance with the provisions of the competitive procedure and the instructions for the preparation of the operational plan in particular...". And in sub-instruction 20.2 it was emphasized that: "... The submission of a complete bid is a condition for winning this competitive proceeding, and a bidder will not be able to win the competitive proceeding if his bid is incomplete, as detailed in the documents of the competitive proceeding in general and above in particular." These provisions are not a matter between the Petitioner and the Ministry of Transport alone. They express the "rules of the game" that bind all parties to the tender. These provisions are in the form of an "appendix contract" to the main contract for which the tender was published. Violation of these provisions, by the tender arranger or by any of the bidders, constitutes a breach of the "Annex Contract" (Civil Appeal 65/23 M.A. Automaton in Tax Appeal v. Mash-Kerr in Tax Appeal [published in Nevo] (January 17, 2023); Civil Appeal 700/89 Israel Electric Company in Tax Appeal v. Malibu Israel in Tax Appeal IsrSC 47(1) 667 (1993) at paragraphs 33-34 of the judgment; Civil Appeal 3051/08 Sassi Building Contractors, Dirt and Roads (1986) in Tax Appeal v. State of Israel, Ministry of Construction and Housing [published in Nevo] (January 19, 2010) at paragraph 15). Correction of defects that occurred in the proposals, after their submission, does not, therefore, be consistent with the provisions of the "Annexary Contract" embodied in the tender. Moreover, allowing the possibility of correcting defects in the proposals may in certain cases lead to improper negotiations between the tender arranger and the bidder who submitted the defective bid (High Court of Justice 688/81 Migda in Tax Appeal v. Minister of Health, IsrSC 36 (4) 85, 95 (1982)). Allowing a defect in a bidder's bid to be corrected also causes the contractual capacity to be perfected, the capacity that leads to the sophistication of the contract following the tender, is transferred from the hands of the tender arranger to the bidder, who willingly agrees to the correction of the defect and willingly will argue, for his own reasons, such as reasons relating to circumstances that changed after the submission of the bid, that there was no defect in his bid. (Migda in paragraphs 11-12 of the judgment; Appeal of Petition/Administrative Claim 7111/03 "Yosef Khoury" Building Works Company in Tax Appeal v. State of Israel IsrSC 58 (6) 170, 176 (2004)).
- However, in certain cases, according to the tenders laws and case law, it is possible to correct defects that occurred in the proposals. Thus, Regulation 20(c) of the Tenders Duty Regulations, 5753 – 1993, which, as stated above, does not apply directly in our case, states that in the event that "clerical errors or accounting errors are discovered in the proposals, the Chairman of the Tenders Committee is entitled to amend them". The case law held that:
"As is well known, not every defect in a proposal submitted to a tender will necessarily lead to its disqualification. The watershed that distinguishes between a "material flaw" that will lead to the disqualification of the proposal and a "technical flaw" that can be restrained is the violation of the principles of equality and fair competition. A material defect in a proposal is a defect that is likely to provide an economic or competitive advantage to one of the participants in the tender or that disrupts the rules of the tender in a way that does not allow comparison between the bidders, and where such a defect occurs, the defective proposal will usually be disqualified even if it is the most economically viable proposal (see: the Kaldi Brothers case, paragraph 11; the Y.T.B. case, 905). On the other hand, defects of a technical nature, which originate in a bona fide mistake on the part of the bidder, which do not go to the root of the matter and do not violate the basic rules of the tenders laws, the tenders committee is entitled to qualify them in accordance with its discretion... In practice, the classification of a defect as 'material' or 'technical' is not the main thing, and the main question is whether it is a defect of the type that justifies the cancellation of the proposal or not."