Legal Updates

A governmental corporation may not contract a supplier with an exemption from tender when the ability to provide the service is not jeopardized

June 9, 2024

The Israeli Electric Company (IEC) announced that it intends to enter without a tender into a contract with a supplier for the management and operation of a call center, inter alia, due to the expected increase in calls to its hotline.

The Court accepted the petition and held that an IEC is obligated to publish a public tender. The State and every government corporation is obligated to publish a public tender that gives every person an equal opportunity to participate. Engagement of a government company does not require a tender if conducting the tender may jeopardize the corporation's profitability, its ability to compete with others, its business opportunity, its ability to fulfill a role or task assigned to it by law or its ability to provide an essential service or commodity to the public. Here, a tender procedure will not completely frustrate the provision of the service, but may only extend the response time at the IEC hotline, if there is indeed an increase in demand. Despite this, the IEC sought to enter into a contract with the supplier with an exemption from tender and for a period of five years, when the possibility of an exemption from tender for a limited period until a tender was conducted was not considered at all. Therefore, and because entering into an exemption from a tender harms the fundamental right to freedom of occupation and the principle of equality between competitors in the market, there is no justification for granting the exemption and the IEC must publish a public tender.