After the housing cabinet approved a proposal by Minister of Finance Moshe Kahlon several weeks ago to allow foreign construction companies to build in Israel, the Ministry of Construction and Housing has now published a call to companies to submit bids for residential construction work in Israel. The proposal approved by the housing cabinet, which has been ratified by the full cabinet, allows each foreign company to bring 1,000 of its own workers to Israel to work in residential construction.
While many parties, including the Israel Builders Association and personnel companies, are strongly opposed to the measure, the Ministries of Finance and Construction and Housing are wasting no time in publishing an official call for proposals for overseas construction companies to submit bids to do business in Israel.
”Housing prices in Israel have risen steeply in recent years. One of the causes of this rise is the fact that for years, the volume of construction in Israel was substantially lower than the increase in demand for housing. This gap has created a shortage of tens of thousands of housing units, which is affecting housing prices in Israel,” the call for proposals stated in both Hebrew and English. “The Ministry of Construction and Housing wishes to invite foreign construction companies with proven experience in the retail construction sector to submit requests for inclusion in the list of foreign contractors eligible to build retail housing in Israel. A foreign company included in the list will be eligible to construct residential buildings in Israel and manage residential construction projects as the party responsible for all the engineering and performance aspects of the project. This call for proposals stipulates a process for selecting the foreign companies to be included in the list, including threshold conditions and criteria that the bidders must fulfill, as well as conditions for the winners; the conditions under which the companies will be eligible to perform residential construction work in Israel; and the supervision and overseeing model for their work. The Ministry of Construction and Housing intends to select two bidders for inclusion in the list.”
The call for proposals also lists the threshold conditions for companies seeking to become candidates. Among other things, this includes companies with no official place of business in Israel, an annual revenue turnover in the construction and infrastructure sector of at least $500 million over the past three years, a ratio of net debt to the balance sheet total no higher than an average of 60%, and proven experience in building at least 15 overseas residential construction projects of at least 3,000 sq.m. per project and at least one project being construction of a building taller than 15 storeys. The call for proposals requires a broad description of the company’s construction experience, construction methods, legal situation, and financial state, as well as the submission of various declarations. Because the companies can bring their own workers from overseas, the proposal is also designed to include a broad description of the workers’ experience.
In its call for proposals, the Ministry of Construction and Housing also specifies how the selection process will be conducted. In the first stage, the companies will have to submit a request to meet the threshold conditions. In the second stage, the quality of the data in each bid will be examined. The Ministries of Finance and Construction and Housing will select six companies meeting all the criteria for inclusion in the list. The call for proposals emphasizes that the state reserves the right to disqualify bids for security reasons, and to not allow two companies from the same country to operate in Israel; the aim is to find six companies from six different countries.
Employment of Israeli engineers and meeting targets
After the inclusion of a given company in the list is approved, it can operate in residential construction in Israel for five years. It may not buy land or engage in development activity unless the project is a joint one with an Israeli company.
The call for proposals also lists the obligations of a foreign company on the list. It must register as a contractor in Israel, it must employ two full-time engineers from the register of engineers and architects in Israel with at least five years of experience to oversee the company’s activity in Israel, and it must meet the timetable in its second year of doing business in Israel, it must prove that it is in the process of residential construction of at least 100,000 sq.m. on at least one site. In the third year, the foreign company must provide its involvement in a residential construction of at least 150,000 sq.m., and in the fourth year at least 250,000 sq.m. There is no commitment by the state to give the foreign companies on the list any specific amount of work.
Another interesting point is that the foreign company is also entitled to bring foreign workers to Israel who are not citizens of the country in which the foreign company operates, subject to approval by Israel, and subject to the requirement that the foreign company may not bring workers from countries hostile to Israel, countries in turmoil, or high-risk countries, as defined by the Israeli security services.
Bids must be submitted by representatives of the foreign companies by June 27 at noon.
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2016
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