The Accountant General The Procurement Administration Jonathan Bezalel

 Percentage from GDP? 10 – 15%  Public procurement is a key economic activity of governments generating huge financial flows  Governments and state-owned enterprises purchase a wide variety of goods, services and works from the private sector  An effective procurement system plays a strategic role in governments for avoiding mismanagement and waste of public funds

 Established on December 2004  Part of the Ministry of Finance – Accountant General – The Logistic, Procurement and Assets Division.  The government procurement scope is approximately 25 billion NIS.  The scope of procurement done by the Government Procurement Administration amounts to around 14 billion NIS.  Overall there are 300 procurement units constituting an integral part of government ministries.  Approximately 160,000 active suppliers.  Approximately 700,000 procurement activities per year.

Increase the awareness of the private sector for government tenders Set preconditions and service agreements for the supply of products and services for the government ministries Write the tender documents Attend to the government units and entities Procurement and Logistic Control & supervise over suppliers Backup: Electronic catalogs, ministries feedback, reports on ministries usage scope, quality control of products and services Market System Characterization of government ministries’ needs Research on the usage of products and services Tender characterization: research and map potential suppliers and the competition potential Choose the optimal tender which will maximize the government returns Research & Instruction Signing the suppliers into the procurement system Publish and maintain the catalog Receive and send products and services in response to orders Suppliers

 Lack of ability to incentivize market research before publishing a tender.  Lack of ability to locate available procurement opportunities.  False beliefs that online procurement are complex and have no real need.  Insufficient knowledge on the dynamic procurement legislation.  Lack of ability to enforce the SLA on suppliers.  In some government units the procurement, the employee designated with procurement responsibilities has, concurrently, other unrelated responsibilities. Thus his procurement proficiency is derogated.

Chapter B in the Mandatory Tender Regulations:  Tender with Prequalification Stage – 17C  Tender with Two-Stage Evaluation – 17D  Public Tender with Additional Competitive Process - 17E  Framework Tender – 17F  Automated Tender – 19A  Evolving Automated Tender – 19D  Expedited Automated Tender - 19E

Exemption from Mandatory Tendering : 3 (1)  A contract for a value of no more than NIS 50,000. However, in any consecutive period of 12 months, the ministry may not contract with a particular party, without a tender, pursuant to this paragraph, for a total sum of more than NIS 100,000

 The tender was composed of numbers of slots.  “Integration Supplier For “Smart” Rooms Infrastructure” slot.  Two Israeli suppliers were competing in this tender.  Local Production Preference Amendment (LPP): Generally means that the local supplier which his local production components value adds to at least 35% of the overall components value of the product gets a 15% preference in his price offer.

 Problem with the LPP: The regulations addresses a single item while we are facing an integration service composed of multiple items.  Our Solution: We asked each supplier to present an official declaration for each component regarding his local production share.  The new first place qualified the minimum requirement of 35% Israeli Production component and received the 15% price benefit.

 The second place supplier appealed to the Tender Committee claiming that according to the – Mandatory Tenders Law andMandatory Tenders Law and Regulations Regulations a regulation can not undertake national treaty and referred us to the GPA treaty.  Now we requested proofs that the supplier is qualified to be covered by the GPA.  First GPA Issue: Do we need to check the supplier in general? His products origin? His development center location?

 Second GPA Issue: If components needs to be check – What is the percentage threshold?  Our Solution: We defined GPA qualification the same as we defined Local Production Preference entitlement.  The supplier was given two weeks to come up with the appropriate documents. We saw that his products do not qualify the 35% “GPA” component threshold.  Summary of open GPA issues following our practice: I. Which type of document is needed in order to proof GPA entitlement? II. What is the percentage threshold needed to qualify for a GPA “protection”? III. What determines – country of production? Development base country?

Regulations (Amendment No. 3) – 5A. (a)Regulations pursuant to this Law may be established, in general, for types of transactions or for types of contracting entities. (b)Regulations pursuant to this Law shall apply insofar as they do not conflict with an undertaking of the State in an international treaty. International Treaty – 44. These Regulations shall apply insofar as they do not conflict with an undertaking of the State in an international treaty.