Legal Updates

Depositing cash instead of a bank guarantee, as the threshold conditions of a tender requirement, is grounds for disqualifying the bid

January 17, 2023

A bidder for the placement and operation of food and drink vending machines at the Technion was selected as the winner in a tender, even though it deposited ILS 10,000 in cash as a security for its bid instead of attaching a bank guarantee of this amount, as required by the threshold terms of the tender.

The Court held that a failure to attach the guarantee justifies the disqualification of the bid and the annulment of the winning. A bidder is not allowed to take the law into its own hands. The principle of equality in tender law is an overriding principle that requires each of the bidders to follow the tender instructions accurately and meticulously, without any reservations. Here, the tender included a threshold condition according to which each of the bidders must attach as security to their bid an autonomous bank guarantee in the amount of ILS 10,000 and it was stipulated that failure to meet this threshold condition would result in disqualification. However, the tender committee ignored the lack of required guarantee and declared the bidder as the winner. A bank guarantee constitutes an "entrance ticket" that allows the bidder to enter the in the tender gates. A bank guarantee is not a mere security. It is also an indication of the bidder's financial situation, of its good relationship with the bank providing the guarantee and of the trust that the bidder is entitled to receive from the bank. Therefore, if the winning bid does not meet the threshold conditions andd it was not allowed, from the beginning, to enter in the tender gates as it is a clear breach of the principle of equality between the bidders.