WORLD TRADE
ORGANIZATIONGPA/59
18 October 2001
(01-5136)
Committee on Government Procurement Original:  English
REVIEW OF NATIONAL IMPLEMENTING LEGISLATION
ISRAEL
The present document reproduces the questions put to the delegation of Israel, the responses
given and the comments made during the review of national implementing legislation at the
Committee's meetings of 20 September 2000 and 3 May 2001.1  Israel's notification of its national
implementing legislation in accordance with the Committee decision in GPA/1/Add.1 has been
circulated in document GPA/34, dated 5 May 2000.
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REPLIES TO THE QUESTIONS FROM CANADA, KOREA AND THE UNITED STATES
I. IMPLEMENTING LEGISLATION
Question from Korea
Are the provisions below of the Mandatory Tenders Regulations of Israel consistent with the
Agreement on Government Procurement?
(a) rate of preference for domestic products
• Domestic goods shall have a price preference of 15 per cent (10 per cent for a
government company which exports at least 30 per cent of its production).
(b) division of tender
• If the procurement has a value of more than NIS 30 million, the buyer may reduce
the volume of the contract with a foreign supplier to 50 per cent and re-contract
the procurement with a domestic supplier for the remaining value of the
procurement.
These provisions are consistent with Israel's obligations under the Agreement on Government
Procurement, because as we noted in our summary of the legislation, under Article 5A(b) of theMandatory Tenders Law, for tenders subject to the Agreement on Government Procurement,
procuring entities must follow the provisions of the Agreement even if the regulations under the
Mandatory Tenders Law provide otherwise.  Therefore, the provisions regarding domestic price
preference and the division of tender are not applied towards suppliers from Parties to the Agreement
on Government Procurement.
                                                     
1 The minutes of these meetings have been circulated in documents GPA/M/14 and 15.GPA/59
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II. PUBLICATION OF INFORMATION
Question from Canada
With regard to the response of Israel to Question 5, what is the address of the website of the
Israeli Government Publications Office?  What is  the website address of the Ministry of Finance that
is referred to in the response.  Is there a website that offers the tender notices on-line?
The address of the website of the Israeli Government Publications Office is:
http://michrazim.lapam.gov.il.  All tender notices are published on the website of the Israeli
Government Publications Office in Hebrew.  The website address of the Ministry of Finance is:
www.mof.gov.il.  It should be noted that in addition to the publication of tender notices in Hebrew,
this site has an English site in which tender notices are published in English.
III. PROCUREMENT PROCEDURES
Question from the United States
The selective tendering procedures contained in the Regulations of the Mandatory Tenders
Law allow that all suppliers interested in being considered for selective tenders may submit a written
request to be included to the procuring entity's tender committee.  The supplier may then be added if
the tender committee deems that the supplier is fit to be included in the list.
We would appreciate further explanation of this process.  Do we understand correctly that
tender committees include representatives of currently qualified suppliers and that those committees
decide on whether new suppliers should be qualified?  Please provide the criteria and procedures by
which interested foreign suppliers are judged by procuring entity tender committees to be fit for
inclusion in permanent lists of suppliers for the purposes of selective tendering procedures.
The tender committees decide whether a new supplier is qualified to be included in that
entity's list of proponents.  Members of the tender committees are comprised solely of employees of
the entity that issues the tender.
The lists of proponents are drawn up according to types of contracts and are updated and
published periodically.
There are no general specifications or criteria by which the tender committees are to judge
either the foreign supplier or the domestic suppli er, other than those published in the notice for
proponents' lists.  The tender committee will determine the fitness of a supplier applying to be
included on a particular list by examining the documentation and past performance of the applying
supplier.
When conducting a selective tender procedure, the tender committee must request at least five
proposals from different suppliers on the list.  The committee shall choose the suppliers for a specific
tender "… as far as possible, in rotation, all in a fair manner that yields the greatest benefit to whoever
conducts the tender".  (Article 16(d), Mandatory Tenders Regulations 5753-1993).GPA/59
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IV. BID CHALLENGE PROCEDURES
Question from Canada
Does Israel have any intention of establishing a Challenge Procedure to deal with
procurement issues that is separate from the regular civil procedure in the District Court?
No.In the event that a supplier is not satisfied with the decision of the District Court with respect
to a procurement challenge, what is the process by which the supplier can appeal the decision?
To appeal the decision of the District Court, a petition to appeal would be filed with the
Supreme Court.
V. OFFSETS
Question from Korea
According to Israel's Note on Offsets of Appendix I of the Agreement on Government
Procurement, Israel is required at the end of a five-ear period to submit a report concerning the
implementation of the Note on Offsets.  Is such a report ready for distribution?  If not, will it be ready
by 1 January 2001?
Israel shall submit the above-mentioned report in accordance with its obligation.
Question from the United States
We understand that Israel's public tendering law requires that all international public tenders
valued above US$100,000 must include proposals for "industrial cooperation" (IC) with Israeli
entities, valued at 35 per cent of the total contract.  Under Note 1(b) of Appendix I of the Agreement
on Government Procurement, these offsets will not require suppliers "to take any action which is not
justified from a commercial standpoint".  Note 1(c) provides that these offsets are to be gradually
reduced to 30 per cent after five years and 20 per cent after nine years, beginning from the date Israel
implements the Agreement.
With respect to Note 1(b) of Appendix I, please explain the implications of recent judicial
decisions relating to the consideration of offset s in determining contract awards.  Have those
decisions resulted in any changes in procurement law, regulations or practice?
Please indicate what Israel's intentions are in regard to implementing the reduction of offsets
and the submission of reports on the use of offsets, as set forth in Note 1(c) of Appendix I.
Under the Mandatory Tenders Regulations (Preference for Israel Products and Mandatory
Business Cooperation) 5755-1995, all foreign suppliers must attach to their tender offer in a
government procurement an undertaking for business cooperation (offset) in order to qualify for thetender.  The rate of offset is 30 per cent (as from 1.1.2001) for suppliers from GPA member states.  In
the process of determining the contract awards, no consideration is given to the business cooperation
undertaking other than a technical check of it being complete and signed.  Only after determining the
contract award does the ICA (Industrial Cooperation Authority) negotiate the ways to execute the
undertaking with the winning supplier.   Consideration is given to whether a purchase is commercially
justified.GPA/59
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To the best of our knowledge, there is no judicial decision in that area.
Israel has implemented the reduction of offsets,  for suppliers from GPA member states, from
35 per cent to 30 per cent, and a general directive has been issued to all relevant entities accordingly.
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