The 2009 Reforms of Israel's Mandatory Tenders Regulations: One Step Forward, Two Steps Backward?

In 2009, the Israeli Government initiated a comprehensive reform of its tendering regulations with the objective of streamlining and modernizing the procedures, adapting them to technological advances, and decentralizing authority in relation to choice of procurement method and the granting of exemptions from the use of public tenders. As a result of this reform, recent statistics obtained by the current author reveal that as much as 85% of Israel’s procurement is conducted by non-competitive procedures. Thus, the “mandatory tender” seems to have become the exception, rather than the rule, a development that ought to concern anybody that believes that public tenders are the best means to get best value for tax-payers’ money and to ensure probity in the procurement process. This paper discusses the 2009 reforms and the process that led up to them. It examines the various proposals made by several committees that were commissioned to review the functioning of Israel’s public procurement system and to what extent the proposals were influenced by the experience of foreign countries and by obligations under international agreements. Also, special attention is paid to whether technological changes have had an impact and to what extent the Israeli procurement system is taking advantage of modern technology. Finally, the paper presents extensive and detailed statistics on the actual use of competitive procedures and the new tendering methods following the reform and tries to draw conclusions from them on the wisdom and utility of the 2009 reforms and on decentralization of procurement decisions in general. These conclusions have important implications for other jurisdictions that consider decentralization of procurement decisions.