In February, the Defense Ministry published a competitive bidding tender for the purchase of two atomic clocks. These are extremely precise clocks that keep time based on measuring the transitions of electrons in the atoms of specific elements and are accurate to approximately one second per million years.
Atomic clocks are now used in most advanced technological systems and they ensure synchronization of the systems – so for example, the Iron Dome system has atomic clocks, as do the stock market and every communications network.
In this case, the Defense Ministry wanted the clocks for a project named “Pelican – an airborne server.” We have no additional information on the project.
One of the companies that participated in the tender is Focus Telecom, a firm that imports atomic clocks, one of which serves as Israel’s “national clock” in the Coordinated Universal Time Laboratory at Hebrew University on Givat Ram in Jerusalem.
The CEO of Focus Telecom, Ehud Sharar, estimates the tender was worth a few million shekels in the first stage of development of the product, but it seems the winning bidder would continue with the project for many years of installing and equipping the systems in planes – worth many millions more.
But very close to the date the tender was to close, only about a week before the deadline, the Defense Ministry suddenly canceled the tender. Instead, the ministry chose the company Accubeat as its sole supplier for the project. Some 50 percent of Accubeat is owned by Rafael Advanced Defense Systems, which in itself is a government-owned company under the auspices of the Defense Ministry.
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This is not the first time that the Defense Ministry has issued a tender for atomic clocks – and somehow, in the end Accubeat won the bidding.
In 2016, a tender was issued for the purchase of 11 atomic clocks for the Air Force, and the German company ADVA Optical Networking participated in the bidding. ADVA’s bid was thrown out, which led to claims by the company that the tender was “rigged” against it. At the time, the Defense Ministry’s spokesman said this was not true – and the winning bid, from Accubeat, was the cheapest.
This means, in the previous bidding process, the excuse was the price. In the present tender, the excuse is different, but the result is the same – Accubeat won the tender.
Haaretz asked the Defense Ministry why the tender was canceled suddenly. The ministry said it preferred Accubeat because it prefer to buy a “made in Israel” product.
“As a matter of policy, the Defense Ministry prefers ‘Blue and White’ procurement and even invests in preserving critical production lines in various areas for times of emergency. In the past, [the ministry] purchased imports for this product. Now, with the support of the ministry, a local supplier has achieved the ability to supply it, so the Procurement Administration canceled the tender and preferred to purchase the item from the Israeli supplier,” said the ministry.
It should be noted that Focus Telecom also has approval as an “Israeli manufacturer” according to the criteria set in the relevant regulations – in which if 35 percent of the total price of the bid stays in Israel, the company is defined as Israeli.
The Defense Ministry was not convinced by this argument, and said: “The fact that the additional supplier is Israeli does not matter. The Defense Ministry decided that there are critical production lines to manufacture such unique products for times of emergency. The ministry invests funds in these critical [production] lines and therefore, also makes sure to purchase the products from them. Everything is in the goal of preserving the line.”
This means, the Defense Ministry is saying the tender was stopped in order to preserve a production line in Israel. In its response, the ministry even quotes the exemption regulations from the law on competitive bidding tenders saying that such a purchase is one that “requires the use of a production line, which for defense considerations there is an interest in its continuous existence, when there is room to assume that conducting a tender concerning such purchases will cause the closing of the line.”
This leads directly to the question of whether this specific tender is what would bring about the closing of the production line of the company owned by Rafael? If so, is it possible to see the evidence? The Defense Ministry declined Haaretz’s request to provide the documents related to approving the sole supplier procurement process.
Another question is that if this is the case, then why was a tender process even begun? Why wasn’t the “sole supplier” procedure used from the beginning with Accubeat? The spokesman for the Defense Ministry said: “After the tender was published, it was realized they made a mistake and therefore they canceled it.”
Sharar is furious: “Who decides in the Defense Ministry what is a critical production line? On what basis? What are the criteria? What about all the investment I made to prepare a proposal? Why did they cancel after they conducted ongoing negotiations with us on this tender?”
In march, Rafael released its financial reports for 2020. The company reported a drop of 15 percent in profits for the year, and a drop of 7 percent in revenues compared to 2019. Rafael depends – to a much greater extent than its competitors, Israeli Aerospace Industries and Elbit Systems – on its sales to the Israel’s Defense Ministry: About 55 percent of its sales are in the Israeli market, and this share has grown over the years.
The company has also suffered from the relatively strong shekel. It seems that in the Defense Ministry they are paying attention to Rafael’s pain.
Elbit's new bid
Meanwhile, Yoram Gabizon reported that Elbit Systems won this week an $80 million bid from an Asian-Pacific country, which involves the supply of its SPECTRO XR multi-spectral electro-optic systems to the country’s naval forces.
Elbit won the bid after beating the Canadian company Wescam, which is controlled by L3Harris, as well as besting the French company Sagem from the Safran Group and the American company Teledyne Flir.
The contract will be implemented over four year, during which Elbit, under CEO Bezhalel Machlis, will provide these SPECTRO XR systems. These will be installed on naval vessels, affording naval, air and ground forces advanced intelligence, surveillance and gathering capabilities, as well as advanced capabilities of striking targets by day or night under conditions of reduced visibility, such as fog, high humidity, smoke, haze or dust.
Assisted by artificial intelligence, SPECTRO XR video monitoring of multiple targets, identifying their movement in order to begin continuous scanning in order to maximize operational insights while reducing human error. The relative advantages of this system are its range, which can reach tens of kilometers, and its ability to overcome conditions of humidity and dust, which characterize some Asian-Pacific countries. A further advantage is the ability to simultaneously monitor multiple targets, based on predetermined parameters.