Legal Updates

Cancellation of a tender after the stage of opening the bids and selecting a winner will be approved only in exceptional circumstances

October 10, 2020

The Israel Electric Corporation (IEC) canceled a tender after the bids were open and a winner was selected and approached all bidders to submit new bids in a competitive procedure.
The Court accepted the petition and held that canceling a tender at this stage is an extreme and unreasonable step. Cancellation of a tender and publication of a new tender or a competitive proceeding under it and in the same matter is possible only in exceptional circumstances. Tender cancellations should be avoided as much as possible, especially after the bids have been opened and already revealed to the other bidders and especially when the new tender or new competitive procedure deals with the same matter as the one that preceded it. Here, although the bids have been revealed and a winner has already been selected in the tender, the IEC sought to cancel the tender and hold a competitive proceeding in the same matter as there was a large gap between the winner’s bid and the updated estimate of the tender. However, the IEC refused to consider more proportionate alternatives such as allowing the winner of the tender and another qualified bidder to lower their bids, make an improved bid or negotiate with them as the tender provisions allow. Therefore, the cancellation of a tender in this case is an extreme act that should not be taken before the other alternatives have been looked into.