Israel Forgoes HP Smart ID card Tender Win

The state notified the Supreme Court today that it would no longer insist on Hewlett-Packard's (NYSE:HPQ) win in the smart ID card tender, and that a new tender should be published.

The statement was in response to appeals by Hewlett-Packard, Beeri Printing and Electronic Data Systems (NYSE:EDS) against an Administrative Court ruling canceling Hewlett-Packard's win in the tender, and confirming the disqualification of the other bids in the tender. The Administrative Court thereby cancelled the entire tender.

The Ministry of the Interior published a tender for a vendor of smart ID cards, based on smart card technology. Eleven bids were submitted by five companies. Hewlett-Packard won when the other bids were disqualified.

Three companies petitioned the Administrative Court against the decision. Judge Moussia Arad ruled in favor of the disqualifications, but also cancelled Hewlett-Packard's win in the tender.

Three companies appealed the ruling to the Supreme Court. EDS withdrew its appeal, after its request to postpone the new tender proceedings was rejected.

In its statement of response to Beeri Printing's appeal, the state claimed that Beeri Printing's bid was disqualified because its smart cards could be easily forged, thereby negating the security purpose of the smart cards.

The state admitted that the bid by Hewlett-Packard, which won the tender, contained several flaws. However, perfect bids could not be expected in tenders of this kind, and the flaws did not justify disqualifying the company's bid. Nevertheless, after reading the ruling disqualifying Hewlett-Packard's bid, the State Prosecutor declined to appeal the ruling and accepted the court's judgement.

The state therefore decided to publish a new tender, and is already preparing to do so. The new tender will be amended to include the court's comments. Adv. Avraham (Avi) Licht submitted the state's response.