State Signs Deals Worth Billions Without Competitive Bidding

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Nearly 80% – 79%, in fact – of all government orders for goods and services from 2010 to 2012 were carried out without competitive bidding, according to Finance Ministry figures obtained by TheMarker.

In 2008 and 2009, by contrast, just 69% of such orders were exempt from the tender process.

Over the entire five-year period covered by the data, the government contracted for goods and services worth about 73 billion shekels ($21 billion) involving about 21,000 transactions without the competitive bidding that is normally required. The proportion of no-bid orders rose 10 percentage points over the period, to 79% of the total in 2010-2012, from 69% in 2008-2009.

The figures were provided by the Finance Ministry to the Knesset Constitution, Law and Justice Committee about two months ago. The data revealed that 78% of the orders exempt from bidding were for less 500,000 shekels and 45% involved renewals or extensions of existing contracts.

In response, the Finance Ministry said the extent of no-bid orders was actually much lower than the official figures suggest because many public tenders were listed as exempt if, for example, the tender was carried out by a municipality rather than a ministry.

The rise in no-bid procurements reflects the impact of a 2009 overhaul of public tender procedures that gave ministries more fiscal and administrative autonomy. As part of the reform, responsibility for granting exemptions from bidding was shifted from the Finance Ministry accountant general to the ministries themselves, although the accountant general still has the final say.

The Knesset committee is weighing a Finance Ministry proposal greatly expand even further the ministries’ authority to enter into no-bid contracts. Critics warn the change could encourage corruption and influence-peddling among big business, government and political parties.

For its part, the Finance Ministry says it has uncovered no evidence of abuse. “The exemption is designed to make the bureaucracy more efficient, to shorten procedures, to solve pressing ad hoc problems and to allow ministries to function better,” it said, adding that minutes of the deliberations of the ministries’ exemptions committees would be issued shortly.

The Knesset Constitution, Law and Justice Committee on July 12, 2010. Credit: Tomer Applebaum

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