The Haifa municipality has formulated a policy to encourage small and medium-sized businesses by adapting the municipal procurement system and municipal tenders. In light of this policy, the following measures will be taken:
- Encouraging Haifa’s small and medium-sized businesses to register with the municipality’s supplier database through advertising and disseminating information.
- Upgrading information available online and expanding online services.
- Training employees in municipal procurement, in the municipal tender system and in municipal corporations about encouraging small businesses (in cooperation with the Small and Medium Business Agency in the Ministry of Economy).
- Cancelling participation fees in small business tenders.
The share of small and medium-sized businesses is 99% of all businesses in Israel. They employ 60% of the workers in the economy, are responsible for 75% of new jobs each year and produce 54% of the business product. The figures in Haifa are similar to the national ones: over 99% of businesses in the city are defined as small and medium-sized, and over 93% of them are defined as microbusinesses – up to five employees or self-employed people who do not employ anyone.
Small businesses are one of Haifa’s most important growth engines, and the municipality sees them as the cornerstone of reinforcing the urban economy. Therefore, it invests efforts in supporting their activities in various ways. This document focuses on one issue that the municipality can directly influence – access to municipal tenders.
We should note in the background that the municipality operates within a regulatory framework, at the core of which are the governmental municipalities’ regulations regarding tenders from1987. In general, it can be argued that when it comes to the level of service and the adaptation of tenders to small businesses, these regulations set a low bar for the municipality compared to the threshold set by the Mandatory Tenders Law of 1992, which applies to governmental bodies and corporations. Some of the proposals presented here that the municipality will adopt, in whole or in part, stem from the Mandatory Tenders Law under which governmental bodies operate at the national level.
1. Encouraging Haifa’s small and medium-sized businesses to register as suppliers and service providers to the municipality through advertising and information campaigns
One of the most effective and available tools by which the local authority can encourage engagements with small and medium-sized businesses is through advertising and information. Therefore, from 2021 the municipality will conduct public campaigns to encourage Haifa’s small and medium-sized businesses to register as suppliers.
2. Upgrading the information available on the Internet and expanding online services in the field of tenders
Accessible and clear information makes it possible to save time and money, as well as streamline the work process for businesses interested in operating in the city.
- The information available on the municipal website – divided into fields of activity, presents a history of updates and clarifications regarding the tender, notice of opening envelopes for tenders, notices regarding the municipality’s intention to contact a single supplier, a pool of consultants and more.
- Expanding online services – e-mail registration option regarding publishing tenders (not only specific tenders).
3. Training of personnel in the municipality and municipal corporations responsible for formulating tenders suitable for small businesses
The best way to instigate a long-term change in this area is to have municipal employees and corporations responsible for procurement and formulating tenders to internalize the importance of this matter. Therefore, the municipality will conduct dedicated training on the subject every year, as well as training “ambassadors” of small businesses among those in key positions in the field.
In order to demonstrate the importance of the suitability of municipal tenders for small businesses, one should be familiar with the components that may lead to their exclusion and therefore require a specific examination according to the type of tender and the main considerations that guide it. The role of these ambassadors will be to examine the tenders from the perspective of small businesses, in order to minimize their exclusion from municipal tenders as much as possible. In this framework, the contents of the relationship and the conditions in the tender will be examined.
- Content of the relationship:
- The possibility of generating geographical division according to regions of the city;
- Type of service – to examine the necessity of a tender that requires one supplier to provide a wide range of services or work;
- Central tender – to examine whether major tenders can be prevented.
- Conditions in the tender:
- Experience and seniority
o – To avoid turning years of experience into a benchmark effectively used as a threshold condition for winning – additional standards should be examined that compensate for experience;
o – To distinguish between the bidder’s (business’s) experience and the work operator’s experience;
o – To avoid prioritizing suppliers with prior experience of working with the municipality, if there is no material advantage to such experience.
- Scope of turnover and scope of production and supply
o – To adjust the requirements of the scope of turnover or volume of production and supply to the scope of the contract, at least in accordance with the provisions of the Mandatory Tenders Law;
o – When the tender is segmented, to adjust the requirements of the scope of turnover or scope of production and supply to the required scope of work in each segment.
4. Cancelling participation fees in tenders for small and medium-sized businesses
- Participation fees as a condition for submitting a tender proposal block small and medium-sized businesses. For small businesses that compete in a large number of tenders, sometimes simultaneously, this cost may become a burden that will cause them to forfeit submitting an offer or embody this expense in the quote.
- Public bodies subject to the Mandatory Tenders Law do not charge fees for participation in tenders under 50 million shekels (as stated above, the municipality is not subject to this law).
- The municipality’s revenue from participation fees in tenders in 2019 and 2020 was 157,000 and 156,000 shekels, respectively. Any income is important to the authority, but this is a relatively low price for the municipality to pay for a move that will benefit small and medium-sized businesses in the city.
- “Seriousness fees” – Competing in tenders is for the most part a considerable effort on the part of the submitters, including filling out and signing many documents as well as depositing guarantees if necessary. There does not seem to be a real basis for the claim that participation fees show the bidder’s seriousness.
- We note that most local authorities currently charge participation fees, some at the Federation of Local Authorities’ recommended rate and others at a different rate. If Haifa cancels the participation fees, it will be counted among the pioneering local authorities to take this step.