Quick Answer: Foreign companies may bid on Israeli government tenders under the Mandatory Tenders Law 5752-1992 (*Chok Chovat Makhrazim*). Because Israel is a signatory to the WTO Government Procurement Agreement (GPA), it must treat suppliers from GPA member countries on the same terms as Israeli bidders. In practice, foreign companies need an appointed Israeli local representative, must satisfy financial and technical qualification thresholds, and, if they win a contract above certain values, must fulfill an offset obligation requiring them to source a percentage of the contract value from the Israeli economy. Israeli courts give contracting authorities wide discretion to disqualify non-compliant bids, sometimes on minor procedural grounds, so knowing the rules before submitting is not optional.

Israeli government procurement is a substantial market. The State of Israel, its ministries, local authorities, and statutory bodies collectively spend billions of shekels on goods, services, and infrastructure each year. For foreign technology companies, defense contractors, pharmaceutical suppliers, and infrastructure firms, Israeli government contracts represent real revenue. The catch is that the legal framework governing access to that market differs meaningfully from US, EU, or UK procurement regimes, and procedural mistakes get bids disqualified with no second chances.

This guide covers the legal architecture of Israeli public procurement, the specific rules that apply to foreign bidders, the offset obligation most foreign winners must meet, and the practical steps to register and bid.

Israeli public procurement is governed by three primary instruments:

  • Mandatory Tenders Law 5752-1992 (*Chok Chovat Makhrazim*): The foundational statute requiring government bodies to procure above specified thresholds only through a public competitive tender process, unless a statutory exemption applies.
  • Mandatory Tenders Regulations 5753-1993 (*Takanot Chovat Makhrazim*): Detailed procedural rules on how tenders must be published, evaluated, and awarded. These regulations set the core financial thresholds and prescribe the forms that contracting authorities must use.
  • Government Accounting Regulations (*Takanot Nihul Chevrat Hashkaa*) and various Finance Ministry circulars: Administrative guidance that supplements the Law and Regulations, covering categories such as IT procurement, professional services, and emergency purchases.

The Mandatory Tenders Committee (*Va'adat Makhrazim HaMandattorit*), sitting within the Ministry of Finance, is the central body responsible for overseeing compliance and granting exemptions. Individual ministries and public bodies have their own tender committees that manage day-to-day procurement, but the Mandatory Tenders Committee has supervisory authority over the entire system.

Under the Mandatory Tenders Law, a "public body" (*guf tziburi*) — defined broadly to include ministries, government companies, local authorities, religious councils, and National Insurance entities — must hold a public tender whenever the purchase value exceeds NIS 50,000 for goods and services (the exact threshold is periodically updated by Finance Ministry order; verify the current figure). Purchases below the threshold may be made directly, but most significant contracts fall well above it.

Since 1994, Israel has been a full signatory to the WTO Government Procurement Agreement (GPA), which commits Israel to treat suppliers from other GPA member countries — including the United States, EU member states, the UK, Canada, Japan, South Korea, and others — on a non-discriminatory basis. This means Israeli tender rules that would favour Israeli suppliers over GPA-member suppliers are, in principle, unlawful under international trade law. In practice, however, the WTO GPA protections apply above certain contract-value thresholds, and there are legitimate national security and preference-programme carve-outs that contracting authorities use.

In Practice: The mandatory tender threshold under Section 3 of the Mandatory Tenders Regulations is periodically adjusted by Finance Ministry circular. As of 2026, the general threshold for goods and services is approximately NIS 50,000 per contract; for construction works it is higher. The WTO GPA thresholds that trigger Israel's non-discrimination obligations for central government bodies are set in Special Drawing Rights (SDR), currently equivalent to approximately USD 130,000 for goods and services and USD 5 million for construction. Below the GPA thresholds, Israel may apply procurement preferences without violating its international commitments. Always verify current figures with the Finance Ministry's procurement portal or a qualified attorney before assuming GPA protection applies to your contract.

2. Foreign Company Eligibility to Bid

The Mandatory Tenders Law does not restrict tender participation to Israeli-registered entities as a general rule. Foreign companies — whether corporations, partnerships, or other legal persons registered abroad — may participate in Israeli government tenders. An Israeli-registered subsidiary or branch is not a prerequisite for bidding, though establishing a local presence has practical advantages described below.

Each tender notice (*mechraz*) specifies its own eligibility conditions (*tna'im lekashirut*). Common eligibility requirements that foreign bidders must satisfy include:

  • Financial standing: Minimum annual turnover or balance-sheet thresholds, demonstrated by audited financial statements for the past two or three years. Israeli contracting authorities will accept financial statements in major foreign currencies, but they must usually be certified and translated into Hebrew.
  • Technical qualifications: Proof of prior experience delivering the relevant goods or services, often requiring reference projects of similar scale and complexity. Israeli authorities typically accept references from non-Israeli projects.
  • Insurance: Professional liability (*bituach achrayut miktzo'it*) and general commercial liability insurance in the amounts specified in the tender. Foreign insurers are generally accepted, but the policy must typically be governed by Israeli law or name the State of Israel as an additional insured.
  • Absence of criminal convictions: A declaration that the bidder (and its directors, in some tenders) has not been convicted of specific offences under Israeli or foreign law, particularly corruption-related offences. This declaration must often be notarized.
  • Applicable certifications: For regulated sectors — pharmaceuticals, medical devices, food, construction — the relevant Israeli regulatory approval (*ishur*) may be required as a condition of bidding, not merely of contract performance.

Israeli courts — particularly the Supreme Court sitting as the High Court of Justice — have consistently held that tender eligibility conditions must be read strictly. A foreign bidder that does not meet every stated condition at the time of bid submission is disqualified, even if it could meet the condition by the time of contract award. Foreign companies should review every eligibility condition with care before investing in bid preparation.

3. The Local Representative Requirement

Many Israeli government tenders — particularly for services and ongoing supply contracts — require foreign bidders to appoint a local representative (*natzag mekomit*) in Israel. The local representative is the entity responsible for receiving communications from the contracting authority, accepting delivery notices, coordinating warranty and maintenance obligations, and serving as the point of contact for any disputes that arise during contract performance.

The local representative requirement has been tightened in recent years. Finance Ministry circulars issued in 2024 and 2025 clarified that the local representative must:

  • Be a legal entity registered in Israel (an Israeli company, partnership, or registered branch of a foreign company)
  • Hold a signed representation agreement with the foreign bidder that authorises it to act on the bidder's behalf for all purposes connected to the tender
  • Maintain a verifiable Israeli business address (not merely a registered agent address)
  • In some tenders: hold the relevant product registrations or sector licences in its own name

The local representative is typically an Israeli distributor, agent, or subsidiary. Choosing the right representative is strategically significant: if the local representative holds product registrations or intellectual property licences in its own name, the foreign principal may have difficulty switching representatives later without losing the ability to perform under the contract.

In Practice: Foreign companies sometimes appoint a local representative under an informal handshake agreement, without a formal written contract specifying what happens if the relationship ends. When the tender is won and the contract runs for three or five years, a poorly documented agency relationship can create serious disputes. Under the Commercial Agency Law 5752-1991, an Israeli commercial agent who has been operating for more than one year has statutory termination rights and potentially a claim for compensation — even without a written contract. Any foreign company appointing an Israeli local representative for a government tender should have a written agency or distribution agreement reviewed by Israeli counsel before bid submission.

4. The Offset Obligation for Foreign Winners

One of the most important — and most frequently overlooked — rules for foreign companies winning Israeli government contracts is the offset obligation (*hok ha'ofset* or the "industrial cooperation" requirement). Under Israeli law and practice, foreign companies that win government contracts above specified thresholds are required to direct a percentage of the contract value back into the Israeli economy.

The offset obligation is administered by the Industrial Cooperation Authority (ICA), a unit within the Ministry of Economy and Industry. The ICA sets the applicable offset percentage based on the contract value and the country of the supplier:

  • Non-GPA countries: An offset obligation of approximately 35% of the contract value in the civilian sector, and up to 50% in the defense sector.
  • GPA member countries: A reduced offset obligation of approximately 20% of the contract value in the civilian sector, reflecting Israel's GPA commitments. Verify the current percentages with the ICA, as they are subject to amendment by ministerial decision.

The offset obligation can be satisfied in several ways: purchasing Israeli-made goods or components, subcontracting work to Israeli companies, making technology transfers to Israeli entities, investing in Israeli R&D, or placing orders with Israeli suppliers for goods unrelated to the main contract (so-called "indirect" offset). The ICA negotiates the specific offset plan (*tochnit ofset*) with each foreign winner before the contract is executed.

In Practice: The offset obligation is not negotiable in the sense of being waived — but the form it takes is negotiable with the Industrial Cooperation Authority (Ministry of Economy and Industry, 5 Bank of Israel Street, Jerusalem). A foreign company that wins a NIS 50 million government supply contract from a GPA-member country faces an approximately NIS 10 million (20%) offset requirement. Meeting that requirement by purchasing Israeli raw materials is straightforward; meeting it by transferring technology or subcontracting R&D is more complex and requires ICA pre-approval of each credited transaction. Companies that ignore the offset obligation during contract performance can find the contracting authority withholding final payments and the ICA pursuing damages. Build the offset plan into your bid strategy, not as an afterthought after winning.

5. The MERHAV Portal: Where Israeli Tenders Are Published

The Israeli government publishes all mandatory public tenders on the MERHAV portal (*Merkaz Rachesh*), the State's central procurement platform operated by the Ministry of Finance's Government Procurement Administration. MERHAV is the Israeli equivalent of the US SAM.gov or the EU TED (Tenders Electronic Daily).

Foreign companies wishing to participate in Israeli government tenders must register on MERHAV as a foreign supplier (*sapak zarim*). Registration requires:

  • Certificate of incorporation or equivalent document from the company's home country, apostilled and translated into Hebrew
  • Details of the company's directors and authorized signatories
  • Bank account details in Israel (or a commitment to open one within a specified period if a contract is awarded)
  • Contact details for the Israeli local representative, if applicable

Once registered, foreign suppliers can search for open tenders by category, ministry, and value. MERHAV publishes the full tender documents, including the eligibility conditions, technical specifications, evaluation criteria, and draft contract terms. In most tenders, foreign suppliers must download and submit the official tender forms (*makom makhraz*) — using unofficial versions or formats is a common ground for disqualification.

It is worth noting that a significant volume of Israeli government procurement — particularly defence, intelligence, and certain infrastructure categories — never appears on MERHAV because it is conducted under classified or restricted procedures. Accessing that market requires sector-specific relationships and, in many cases, Israeli security clearances.

6. The Bidding Process Step by Step

The Israeli tender process follows a fixed sequence. Each step has rules that, if missed, end the bid:

Step 1 — Publication: The contracting authority publishes the tender notice on MERHAV. The minimum period between publication and the submission deadline is typically 30 days for standard tenders, though urgent tenders (permitted under specific regulatory conditions) may have shorter windows. International bidders should monitor MERHAV continuously for relevant opportunities.

Step 2 — Clarification questions: Most tenders include a question-and-answer window during which bidders may submit written questions to the contracting authority. The authority publishes all questions and answers on MERHAV, making them part of the official tender documents. Foreign bidders unfamiliar with the specifics of Israeli procurement should use this window actively — asking about foreign-document requirements, language specifications, and the local representative rules for the particular tender.

Step 3 — Bid preparation: The bid (*hatzaah*) must be submitted in Hebrew, or in Hebrew and English where the tender documents permit bilingual submission. All foreign-language supporting documents must be accompanied by a certified Hebrew translation. Bid documents must be sealed in an opaque envelope (*ma'atafah satumah*) and submitted either physically to the tender box (*tivat makhrazim*) or, where MERHAV's electronic submission function is enabled, via the portal. Israeli tender law is strict on the submission format: a bid submitted late, to the wrong address, or in an unsealed envelope will be disqualified regardless of its substantive quality.

Step 4 — Evaluation: Israeli tenders use one of two main evaluation models: a lowest-price model (where the contract goes to the lowest compliant bid) or a best-value model (*afisiyut lefi eikud*) (where price and quality are each given a weighted score). The tender documents state which model applies and, for best-value tenders, the exact weights assigned to each criterion. The evaluation committee (*va'adat makhrazim*) is prohibited from requesting new documents after bids are opened — if a required document is missing, the bid is disqualified.

Step 5 — Award and standstill period: After the evaluation committee selects a winner, it publishes the intended award decision. Other bidders then have a standstill period, typically 14 days under Finance Ministry guidelines, to challenge the decision before the contracting authority's internal tender committee or seek interim relief from the courts.

Step 6 — Contract execution: Once the standstill period closes without a successful challenge, the winning bidder signs the contract (*chozeh*). The terms are almost always exactly those in the draft appended to the original tender documents. Israeli contracting authorities have very little room to renegotiate after award, and most of the leverage a foreign company will ever have is in the period before bid submission, not after.

In Practice: The physical tender box (*tivat makhrazim*) deadline is absolute. Israeli courts have consistently held — including in HCJ 8545/03 and subsequent decisions — that a bid arriving even one minute late at the tender box is invalid and cannot be accepted, regardless of the reason for the delay. Foreign bidders submitting paper bids from overseas should use courier services with guaranteed next-day delivery to an Israeli local representative who can hand-deliver the sealed envelope to the tender box at least two hours before the deadline. Never assume postal delivery will be sufficient.

7. Defense Procurement: A Separate Regime

The Israeli Ministry of Defense (MoD) operates a largely separate procurement system under the Defense Procurement Regulations (*Takanot Rachash Bitachoni*). Defense procurement is excluded from many of the transparency requirements of the Mandatory Tenders Law and is not published on MERHAV. The MoD's Directorate of Defense Research and Development (*Minhelet Mechkar V'Pituach*) and the Defense Procurement Mission (in New York) are the relevant contact points for foreign defense suppliers.

Three things trip up foreign defense suppliers most often. First, security clearances: any company wanting to supply classified goods or services needs an Israeli facility clearance (*ishur bitachoni*) from the Malmab (the MoD security authority), plus individual clearances for key personnel. That process routinely takes six months or more. Second, technology transfer: US-origin defense technology exported to Israel still requires a State Department (ITAR) or Commerce Department (EAR) license, regardless of what the Israeli-US bilateral defense cooperation framework might suggest about facilitated pathways. Third, the offset requirement in defense contracts runs at 50%, higher than the civilian rate, and must be agreed with the MoD's industrial cooperation unit before the contract is signed, not after.

Foreign companies entering the Israeli defense market for the first time consistently underestimate how layered the regulatory requirements are. Israeli defense procurement law and US export controls interact in ways that are not intuitive, and the cost of getting them wrong, whether a failed security clearance or an unlicensed technology transfer, can disqualify you from future contracts entirely. Specialized legal advice from counsel who works across both systems is not a luxury here.

8. Challenging a Tender Decision

Israeli law gives losing bidders meaningful rights to challenge procurement decisions. The challenge mechanisms are:

Internal challenge to the contracting authority: Before approaching the courts, a losing bidder should submit a formal objection (*hashgah*) to the contracting authority's tender committee. This is a prerequisite in most cases before judicial review is available. The contracting authority must respond within a specified period, and the standstill on contract signing continues during this process.

Petition to the Israeli Supreme Court (sitting as the High Court of Justice — *Bagatz*): Government procurement decisions are administrative acts subject to judicial review under the Administrative Courts Law 5760-2000. The Supreme Court has jurisdiction over petitions challenging decisions of central government bodies. Petitions must be filed promptly — typically within 45 days of the challenged decision. The court's approach is deferential to the contracting authority's technical evaluation but less deferential on questions of legal interpretation and procedural compliance.

District Court: For challenges against local authorities and government companies, the District Court has jurisdiction under the Administrative Procedure Law.

Israeli courts will grant an interim order (*tzav bitui zahir*) suspending the contract signing pending a challenge hearing if the petitioner demonstrates a plausible legal claim and that the balance of convenience favours a stay. Foreign bidders with strong challenges should move quickly — courts do not suspend contract performance indefinitely, and post-award challenges that succeed generally result in damages awards, not contract reversals.

In Practice: Foreign companies that win Israeli government contracts sometimes fail to fully understand what a "deemed acceptance" clause in the contract means. Most standard Israeli government contracts include a provision under which the contractor's failure to raise a dispute within a specified period — often 30 days from the event giving rise to the claim — is treated as a waiver of that claim. Israeli courts have enforced these clauses strictly. Foreign contract managers who escalate issues through their own internal hierarchy for months before engaging Israeli legal counsel often find their claims time-barred by the time legal action is considered. Build Israeli contract dispute procedures into your project governance framework from day one of contract performance.

Frequently Asked Questions

Yes, in principle. The Mandatory Tenders Law does not require foreign bidders to have an Israeli legal registration. However, many individual tender notices require a local representative — an Israeli-registered entity — as a condition of eligibility. Additionally, winning a contract will typically require an Israeli bank account for payment purposes, and ongoing contract performance almost always requires a local operational presence. Many foreign companies form a local subsidiary or register a branch before bidding seriously, because the practical advantages outweigh the cost of registration.
It provides a legal basis for equal treatment above the GPA thresholds (approximately USD 130,000 for goods and services at central government level), but it does not eliminate all advantages that Israeli companies may have. Israel maintains several lawful procurement preferences, including preference programmes for companies located in development areas and set-aside programmes for small businesses. The GPA also does not apply to defense procurement, certain utilities sectors, and contracts below the applicable thresholds. If you believe your company was discriminated against unlawfully in a GPA-covered tender, a formal complaint can be lodged with the WTO GPA Committee through your country's trade authority.
The offset obligation requires foreign contract winners to source a percentage of the contract value from the Israeli economy — approximately 20% for GPA-member country suppliers, 35% for non-GPA suppliers, and up to 50% in the defense sector. It is administered by the Industrial Cooperation Authority (ICA) within the Ministry of Economy and Industry. You must negotiate and agree an offset plan with the ICA before the contract is signed. Build offset planning into your bid preparation, not after winning — a credible offset plan can be a competitive differentiator, and the ICA expects it to be thought through before award, not improvised afterward.
Yes, but you must act quickly. First, submit a formal objection to the contracting authority's tender committee — this is usually a prerequisite to court challenge. If the internal challenge fails, you may petition the Israeli Supreme Court (for central government contracts) or District Court (for local authority contracts) for judicial review. Israeli courts will suspend a tender award pending a challenge if you demonstrate a plausible legal argument and that the balance of convenience favors a stay. Most successful challenges must be filed within 45 days of the disputed decision. Delays significantly reduce your chances of obtaining interim relief.
Some sectors are effectively restricted. Classified defense procurement, certain intelligence-related contracts, and tenders that require Israeli security clearances are practically inaccessible to foreign companies without an Israeli-registered subsidiary and cleared personnel. Additionally, some tenders require Israeli regulatory approvals — such as Health Ministry product registrations — that take years to obtain, making them effectively closed to new foreign entrants in the short term. Public construction projects over certain values may require registration with Israel's Contractors Registry (the Rasham Hakablanim), which has its own classification system and insurance requirements. Always review the eligibility conditions of a specific tender carefully before investing in bid preparation.

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Adv. Eli Shimony

Adv. Eli Shimony

Licensed Israeli Attorney

Adv. Eli Shimony advises international companies on Israeli corporate law, government procurement compliance, and commercial contract structuring for the Israeli market.

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