Ireland has spent over €14m on Israeli weapons in recent years despite UN claims that it committed war crimes during its previous invasion of Gaza, and the use of Irish passports by Israeli secret service as cover in murder and political assasination.
However, on Wednesday Mr Shatter said that the principle of competitive tendering for Government contracts has to be used by the Department of Defence for the acquisition of defensive equipment.
He told Sean Crowe of Sinn Fein that central to the procedures was the requirement to allow fair competition between suppliers after tenders are advertised on the e-tenders website or the European Defence Agency's electronic bulletin board.
"Such tender competitions are open to any individual company or country in accordance with the terms of all UN, OSCE, and EU arms embargos or restrictions. "There are no such restrictions or embargoes in place on Israel or Israeli companies," Mr Shatter said.
The Israeli arms industry has done well in securing conracts in Ireland.
In one of the more recent successes a company based in Haifa, Elbit Systems Ltd, won a multi-million euro contract to supply surveillance equipment for a new fleet of RG-32M armoured vehicles built in South Africa.
Others included the purchase of a small fleet of Israeli Orbiter unmanned aerial vehicles – spy planes – for €780,000 used by the Army in Chad and by the Army Ranger Wing.
The elite special forces unit also uses the Israeli developed Cornershot, which allows a weapon to be fired around corners.
Another Israeli company, Rabintex Industries Ltd, won a €2.5m competition to supply 12,000 helmets, a success trumpeted in a newsletter from the Israeli embassy in Dublin.
The country also supplied Ireland with an artillery fire control system valued at €1.5m, while two orders were placed with Israeli Military Industries in 2005 for 5.56mm ammunition for the Army's Steyr Aug rifles.
However, after the use of false Irish passports by an assassination squad from Mossad, Israel lost out on multi-million euro contracts to supply more then 20 million bullets to the Defence Forces.
The lucrative series of deals, in one case worth up to €3m for the supply of 10 million bullets in a single tender, instead went to Belgium and other countries.