Summary of the parties' arguments:
The Petitioner's arguments:
- The Petitioner's main argument is that the Council is prohibited by law from contracting with Ron Works. This is in view of the fact that one of the owners of Ron Works, Mr. Aharon Cohen (hereinafter – Cohen or his spouse), who holds 50% of the company's shares and serves as a director and has a right to sign therein, is the spouse of the council's employee, Mrs. Oriana Eliyahu, who serves as the secretary of the council's engineering department (hereinafter – the council employee or Mrs. Eliyahu). According to the Petitioner, in these circumstances, Ron's proposal should be disqualified, in light of the provision of section 59 of the Local Councils (Regional Councils) Order, 5718-1958 (hereinafter – the Regional Councils Order), which prohibits the engagement of a council employee, directly or indirectly, by himself or through his spouse, in any contract or business with the Council. It was argued that the Council's engagement with a company owned by the spouse of the Council employee, as is the case in our case, is contrary to this provision of the law.
- The Petitioner further argues that the specific tender that is the subject of our discussion is the responsibility of the Council's Engineering Department and that the Department's employees were actively involved in its management. The council's engineer, with whom Ms. Eliyahu is the secretary and with whom she interacts on a daily basis, was a member of the professional team that examined and rated the bids in the tender. In addition, another employee in the department, Ms. Yaakov, conducted the interviews with the bidders' recommenders in the tender. According to the Petitioner, in these circumstances and in view of the involvement of the Council's Engineering Department in the tender, the decision regarding the award of a company owned by the spouse of one of the department's employees is tainted by a conflict of interest and extraneous considerations, defects that go to the root of the tender proceeding and justify the disqualification of the decision. In this context, the Petitioner also claims improper conduct by Ron Works, in that she did not disclose about the family ties between one of her husbands and the council employee, as required by the tender documents themselves.
- In addition, the Petitioner claims that there was a flaw in the tender process due to the fact that according to its claim, one of the recommenders mentioned by Ron Works in her proposal was the Council's engineer, who, as stated, was himself a member of the professional team. This, too, according to her claim, is flawed by the fear of a conflict of interest that invalidates the decision.
- The Petitioner further claims that there were flaws in the ranking offered by the professional staff. It was argued that the team acted not according to clear criteria in a way that allowed for a choice that was not based on objective parameters and while adjusting the score according to the desired bidders to the council, while violating the principle of equality. It was argued that with regard to objective criteria such as financial strength and employees, the Petitioner clearly meets the criteria and nevertheless it was not given a corresponding rating. In addition, there is an inexplicable gap between the recommendations given about the Petitioner, a component in which she received the highest score, and the score given to her by the professional staff, which was lower than that of the two winners. In these circumstances, according to the Petitioner, the decision suffers from flaws of extreme unreasonableness and a violation of equality. In this context, the Petitioner even claimed in the petition that the professional staff did not prepare a proper protocol and did not satisfactorily justify its recommendations.
The Council's arguments:
- The Council argues that the petition should be dismissed, both in limine due to a delay in its submission and on the merits of the matter.
- As for the claim of delay, the petition was filed 41 days after the petitioner was informed of the results of the tender and dozens of days after the tender documents were served on it in accordance with its requests. The Petitioner was slow in its applications to the Council for documents, in such a way that even though all of its requests were answered quickly, it again raised new and late requests for additional documents. Even after the Council's counsel's response to the petitioner's attorney, in which she was informed that contracts had been signed with the winners, the petitioner delayed and filed her petition only 10 days later. This is a considerable delay, especially since in the meantime contracts have been signed with the winners, who have also deposited a performance guarantee and insurance approval as required in the tender. In the context of the claim of delay and in the context of the conflict of interest claim raised by the Petitioner in the petition, the Council notes that the Petitioner did not raise this argument prior to the filing of the petition, and that it did not clarify when and how it became aware of the facts regarding the family relationship between the shareholder Baron Works and the Council employee. It was further argued that the claim in the petition that the Petitioner became aware of this after receiving the results of the tender, was not supported by the affidavit that was attached to the petition in which it was declared in this regard that the facts are to the best of the declarant's knowledge and as provided by the Petitioner's attorney, so that this is a false statement.
- On the merits, ISBB claims that its conduct regarding the tender was in accordance with the law and the rules of proper administration, and that there was no flaw in the decision of the tenders committee that led to its cancellation. According to her, section 59 of the Regional Councils Order does not prohibit the council's engagement in the circumstances at hand. The section prohibits the engagement of the Council with the spouse of the Council employee, but it does not prohibit the engagement with a company owned by Ben-Zag as aforesaid. This is what emerges, according to the Council, from the conclusion of the aforementioned section 59, which states that "an employee should not be regarded as having such a share or benefit, if his connection to the Council's business is, as stated in section 89A(b) with respect to members of the Council." The section speaks of the council employee and the connection he himself has to the council's business, as opposed to the harm of his spouse. This is also learned from the reference to section 89A(b) of the Order, which deals with a corporate relationship (as a shareholder or officer) of the council member himself, as opposed to that of his spouse. According to the Council, from the exception of the explicit prohibition that was established in relation to a company owned by the Council employee, the same is heard in relation to a company owned by the employee's spouse.
- In addition to the provisions of sections 174 and 175 of the Municipalities Ordinance, the Council refers to the prohibition of a municipal employee from being a party to an engagement with the municipality directly or indirectly by himself or his spouse, but at the same time it was determined that the prohibition does not apply because a person is a shareholder in a company in which he is not a director. Hence, the provisions of the Regional Councils Order are stricter with employees of regional councils than with employees of municipalities, as far as contracting with companies they own. It was argued that an interpretation should not be adopted that would further widen the gap that exists in the law between regional councils and municipalities.
- The Council further argues that an examination of our case under the general principle of the prohibition of conflict of interest does not raise a real or reasonable concern of a conflict of interest due to the family connection between a shareholder of Baron Works and a Council employee. She has been working at the council for many years and since 2019 has been serving as a clerk in the engineering department. It does not take any part in tenders or works with contractors, including in the specific tender, and has no authority in these matters. The council engineer himself has no personal or other interest in relation to the tender or any of the bidders, but rather it is a claim of personal interest of a clerk in his department. These circumstances do not give rise to a real or reasonable concern of a conflict of interest on the part of the council's engineer, but at most it is a remote and/or theoretical concern that does not establish grounds for disqualification. The Council notes that the fact that Ms. Eliyahu is the spouse of one of Ron Avodot's shareholders was known to the Council's CEO and the Council's engineer, who were members of the professional team, who believed that there was no flaw in this. She also notes that the council's treasurer, who was also a member of the professional team, became aware of this only in retrospect. In any event, the issue of Ms. Eliyahu being the spouse of one of the owners of Ron Engineering was not discussed at all and in any case did not receive any weight in the decisions of the professional team.
- As for the claim of a conflict of interest due to the fact that the council's engineer appears on Ron Avodot's list of recommenders, the council claims that there is no substance to it. Acceptance of the Petitioner's argument in this context means that the Council Engineer will be found to have a conflict of interest in relation to all the contractors who have carried out work for the Council in the past, and may even lead to improper use by bidders who seek to disqualify the Engineer from participating in the tender process by adding his name. In any event, the Council's engineer was not included among the recommendations to whom the Council actually approached regarding the scoring in the recommendations component.
- As for the claims in the petition regarding flaws in the scoring of the proposals by the professional staff, the Council argues that they have no substance. The argument against the terms of the tender regarding the scoring of the bids in the aforementioned component is liable to be rejected out of hand, since the Petitioner did not validate the terms of the tender before the deadline for submitting the proposals, and therefore it is prevented from attacking them retroactively and only after it became clear to it that its bid did not win. On the merits, the score given by the professional staff was professional and to the point. He was influenced by the impression of the members of the professional team of the Petitioner's representative's answers in the interview, as well as by the fact that two projects carried out by the Petitioner for the Council are being carried out by subcontractors without involvement in the Petitioner's territory, in a manner that is inconsistent with the will and interest of the Council in the tender. The Council further argues that the Petitioner's claims regarding extraneous considerations and a defect in the protocol of the professional staff were made laconic and without any real basis.
- The Council further argues that even if the Petitioner's claim of a defect in the tender is accepted, this does not entitle it to the remedies requested in the petition. This is in accordance with the case law that states that where it is possible to neutralize the defect, and in particular a conflict of interest by more moderate means, this should be preferred to a sweeping disqualification of the administrative act, and in our case – by returning the matter to the examination of a new professional team that will upgrade the proposals. The Council further notes that according to the terms of the tender, it is entitled to select up to 2 bidders, and the tenders committee is entitled not to accept the cheapest bid or any other proposal, under circumstances that justify it. Therefore, even if Ron Works' bid is disqualified, this does not necessarily lead to a forced result of the Petitioner's win.
Ron Works' claims:
- Ron Avdot also claims a significant delay in filing the petition, similar to the Council's argument detailed above. In this context, it was argued that the severe delay caused Ron Works and the Council to change their situation for the worse, including signing a contract and providing a performance guarantee and confirming the existence of insurance, and that proposals were submitted on its behalf to carry out works within the framework of a number of localities in the council.
- Ron Avdot further argues that the Petitioner has been aware for years of the family relationship between the Council employee and a shareholder in the company, and has not raised any claim in this regard in previous tenders in which the parties in question participated or in the tender that is the subject of our discussion. The Petitioner does not state in her petition how and when she became aware of this, and it is not for nothing that she has known about it for a long time. Therefore, raising the argument now is tainted by a delay of years. The Petitioner is even prevented from raising the claim retroactively after her bid was not won. In addition, the Petitioner did not raise any argument in this regard in the framework of her letters to the Council prior to the filing of the petition, so that the petition suffers from the failure to exhaust the proceedings lawfully.
- On the merits, Ron Avodot argues that there is no legal prohibition on an engagement between her and the Council. Section 59 of the Regional Councils Order does not prohibit the council's engagement with a company owned by a family member of one of its employees. According to her, the Petitioner's interpretation of section 59 is baseless and is not supported by case law. The intention of the legislature in the 1950s, when enacting the order, was not to disqualify companies from participating in tenders because of such family ties, and in particular that this contravenes the Basic Law on Freedom of Occupation. The case law states that each case must be examined on its own merits and a careful balance must be struck between the fear of bias and freedom of occupation and the public interest.
- In terms of the concern of a material conflict of interest, according to Ron, work does not take place in our case. Cohen, the spouse of the council employee, does not take an active part in the management of the company and has not taken any part in the tender process. The role of his spouse as secretary of the council's engineering department cannot affect the council's engineer's institutional functioning. The council's engineer has no family or other connection that places him in a situation of conflict of interest in relation to the tender proceedings. He was not even presented as a recommender in Ron Works' proposal, but his name appeared only as a contact person for previous projects carried out by the company, which was required in order to meet the prerequisites of the tender. Ron Avodot further claims that Ms. Yaakov, who conducted the talks with recommenders, is the secretary of the tenders committee and does not work in the engineering department, and even in this respect there is no connection that could constitute a conflict of interest.
- Ron Avodot also claims that disqualifying her win will harm the public, since her offer was the most professional and cheapest. Even if it is determined that there was a defect, the doctrine of relative nullity must be applied, since no causal connection has been proven between the actions of the council's engineer and the Petitioner's failure to win the tender. In this context, Ron Avodot argues that even if in the framework of the professional staff examination the council's engineer had given the petitioner the maximum score, her weighted score in the tender would not have resulted in her winning. In addition, even if the engineer had scored Ron's proposal with a score of zero, in contrast to the score given to the Petitioner in the tender, Ron Works would have won on its face.
- With regard to the Petitioner's arguments regarding the manner in which the bids were scored in the tender and the arbitrariness and tendenture in this matter, Ron Avodot argues that the Petitioner's serious claims in this context were made without any basis or proof. There was no flaw in the judgment of the professional staff and the tenders committee in this context, and there is no reason for the court to intervene in their discretion. Additional claims in the petition regarding flaws in the protocol and the failure to provide sufficient details were made in vain and are inconsistent with the law and case law.
The Claims of the Valley Water:
- Mei HaEmek emphasizes in its response that the petition does not contain any arguments in its case and that the petition is not directed against its winning of the tender. The Petitioner does not claim any defect in the Mei HaEmek proposal or its point, and does not seek to disqualify it or the tender as a whole. Even if the Petitioner's arguments in the petition in the matter of Ron Works are accepted, the proposal of who is the winner of the valley will remain and the Petitioner's proposal will become the second winner. In these circumstances, Mei HaEmek argues that there was no room to include it in the petition, or at least there was room to request its deletion prior to the hearing that took place.
Discussion and Decision: