3. Action Program measures

(1) Government Procurement Seminar

The Ministry of Foreign Affairs holds a seminar on government procurement each year, based on the Action Program on Government Procurement adopted at the 20th Meeting of the Action Program Committee in February 1994 and on the Procedures for Government Procurement on Products (Operational Guidelines) adopted at the 21st Meeting of the Action Program Committee held in March 1994. In 2001, the seminar was held on 26 April (with 89 domestic and 32 foreign suppliers participating).

The above two voluntary measures also call for the other ministries and agencies to hold seminars on government procurement as necessary. In 2001, the following seminars were held.

Table III-1 Government Procurement Seminars in Japanese Ministries and Agencies in 2001

Procurement Organization	Date	Content
National Public Safety Commission (National Police Agency)	17 May 2001	Government Procurement Seminar, Government Procurement Annual Meeting (Telecommunications)
Defense Agency	25 May 2001	Government Procurement Seminar, Government Procurement Annual Meeting (Medical Technology)
Ministry of Public Management, Home Affairs, Posts and Telecommunications	16 May 2001	Government Procurement Seminar, Government Procurement Annual Meeting (Telecommunications, Medical Technology)
Ministry of Health, labour, and Welfare	16 May 2001	Government Procurement Seminar, Government Procurement Annual Meeting (Medical Technology)
Ministry of Education, Culture, Sports, Science and Technology	16 May 2001	Government Procurement Seminar, Government Procurement Annual Meeting (Telecommunications, Medical Technology)
Ministry of Land, Infrastructure, and Transport	10 May 2001	Government Procurement Seminar, Government Procurement Annual Meeting (Telecommunications)

(2) Voluntary Review Meeting

In 2001, by means of questionnaire survey, the opinions of suppliers were solicited concerning implementation and utilization of voluntary measures. In addition, a voluntary review, a follow-up to the voluntary measures based on statistics, etc., was held on 5 December and gave consideration to the results of the survey (Reference Materials III-4). The Voluntary Review Meeting drew up the Government Initiative on Future Management of Government Procurement (Reference Materials III-5) based upon the reviews above.
As a new measure in 2001, among the opinions and requests gathered by the questionnaire survey, the government picked up those ‡@ from many respondents, ‡A considered important to improve the current measures, and ‡B considered necessary information to the public, and release their answers to them on the website of the prime minister: https://www.kantei.go.jp/ (Reference Material III-6).

(3) Action Program Committee

In the 33rd Action Program Committee held on 21 December 2001, the state of the implementation of the voluntary measures reviewed at the voluntary review meeting was confirmed, and the Government Initiative on Future Management of Government Procurement drawn by the voluntary review committee was approved.

(4) Thresholds

Thresholds, which vary according to types of contract specified in the WTO Agreement on Government Procurement, are obtained by converting the applied standard values (in SDR) into the national currency (The Standard Values are revised every two fiscal years.).

The thresholds in the voluntary measures related to government procurement as formulated by the Action Program Committee are revised according to these notifications. The current thresholds applicable are in Reference Material III-7.

Reference Material III-1:
World Trade Organization Agreement on Government Procurement

Reference Material III-4: Results of the Inquiries to Suppliers (2002)

* Fifty respondents answered to the questionnaire (27 from products in general, 13 from the area of telecommunications products, and 10 from the area of medical technology).

* Due to rounding of figures, the totals do not add up to 100% in some cases.

Reference Material III�|5

1. Efforts will be made to more strictly apply of the conditions in the Article 15 of the WTO Agreement, considering the fact that the ratio of single tendering has not reduced. Special attention will continue to be paid to implementing the appropriate internal examinations for new single tendering contracts. For continuing matters as well, attention will be paid so that there is no easy application of reasoning such as compatibility.
   

2. The validity of the current guideline concerning criteria and methods taken in the implementation of the Overall Greatest Value (OGV) Evaluation Method will be examined, for example, at another inter-ministerial council. In addition, efforts will be made to make it possible to perform the administrative costs more efficiently, for both the procuring side as well as the suppliers, by keeping the requested materials for OGV evaluation to the minimum requirement.
   

3. For additional procurement with the estimated value of 100,000 SDR or more, such as procurements associated with supplementary budgets and the alteration of procurement plan released at the beginning of the fiscal year, efforts will be made to publicize their information as soon as possible.

Reference Material III - 6

The Japanese government has listened to suppliers' opinions and requests about our voluntary measures on government procurement by conducting a questionnaire survey every year. On this website, among the opinions and requests gathered by the survey in this fiscal year (2001), we pick up those (1) from many respondents, (2) considered important to improve the current measures, and (3) considered necessary information to the public, and release our answers to them.

�œ We welcome the fact that the unification of the license to tender between the central government agencies has reduced our labor for bidding. However, because of the unification, in some cases, for example, computer system procurement, we were not allowed to tender for it even though we used to bid for similar-scale procurement. We would like the government to revise the current graduated licensing system.

Answer from the Government
The government is aware of the request aforementioned. In fact, we established the Inter-Ministerial Council for Government Procurement on Information System last December (2001) and plan to discuss the revision of the current licensing system, including more flexible application of it.

�œ To make appropriate tenders for requests of buyers, it is very important for suppliers, such as suppliers of computer systems, to get information about procurement before the public notice for it. We would like the government to promptly provide the information of extra procurement plans, for example, ones added by a supplementary budget.

Answer from the Government
Based on such requests aforementioned, the government has striven for quicker release of procurement information. In fact, at the contact points of the central government, we release information as much as possible, for example, by providing the latest list of procurement plans for public reading before release in the official gazette. On the other hand, we provide information carefully, considering that uncertain information might disadvantage suppliers in their business.
If you are interested in getting more information at an earlier stage, please feel free to get in touch with each contact point. (The list of contact points is available at https://japan.kantei.go.jp/procurement/2000/contact.html.)

�œ The JETRO Database System for government procurement should be improved, for example, in terms of its search engine. We would also like you to reconsider the positioning of the Japan's Government Procurement: Policy and Achievements Annual Report, because it is difficult to search out the report on the homepage of the prime minister.

Answer from JETRO
On the website of the Database, JETRO prepares a questionnaire corner and has taken into consideration opinions submitted through the corner to improve the management of the Database. Please provide more details of your request through the corner to further improve the Database.

Answer from the Government
As you know, the Cabinet Secretariat has published the annual report of government procurement, Japan's Government Procurement: Policy and Achievements Annual Report, and released it, except the list of procurement data, on the website of the prime minister (https://www.kantei.go.jp/). To be more specific, you can find the annual report of 2000 in the "What's new" corner of the website. (You can directly get access to it at https://japan.kantei.go.jp/procurement/2000/. We plan to release the report of 2001 in March 2002.). Based on your request, we would like to reconsider where this e-report should be placed on the website so as to enable you to reach it more easily.

�œ We are afraid that the current Overall- Greatest-Value Evaluation method thinks little of technical points, while it attaches too much importance to price. As a result, the method has still allowed suppliers who offer an extremely low price to make a successful bid in many cases even under the Overall- Greatest-Value Evaluation. We would like you to improve the current method.

Answer from the Government
The government is aware of such requests aforementioned. In fact, we decided to start examining the current application of the method at the Voluntary Review Meeting on Government Procurement last year (2001). In addition, we established the Inter-Ministerial Council for Government Procurement on Information System last December (2001) and plan to discuss this method, thinking of a revision of it.

�œ In the sector of telecommunication and medical technology products, procurement cases under the threshold for Overall- Greatest-Value Evaluation: 385,000 SDR (equals to \ 63 mil. in February 2002) have been increasing, for example, by technological innovation. We would like you to think about lowering this threshold.

Answer from the Government
The threshold for Overall- Greatest-Value Evaluation in the telecommunication and medical technology product sector has already been lowered step by step from 800,000 to 600,000 SDR in April 1996, from 600,000 to 400,000 SDR in April 1997, and from 400,000 to 385,000 SDR in April 1998.
The government would consider lowering the threshold again if the market price of many procurement goods declines so as to influence suppliers' business activities. However, according to the "Survey on Government Procurement under the Action Program (2001)" on suppliers, more than 80% of respondents still recognize that the present threshold should be kept. Based on this result, at present we conclude that it is not necessary to further lower the threshold.

�œ We did not file a complaint because we were afraid that it might bring about business disadvantage in the future. The procedure for filing seems troublesome, and it also makes us hesitate to file a complaint.

Answer from the Government
To discriminatingly treat suppliers who made use of the Complaint Review System violates the Agreement on Government Procurement, of which Japan is a member state. Therefore, the government has diligently informed procurement entities about the Agreement and instructed them to observe it. We have also made an effort to provide information that is as easy to understand as possible. For example, on the Cabinet Office Homepage (http://www5.cao.go.jp/access/english/chans_main_e.html), we present the relevant regulations and the Review Board's reports on past complaints. In addition, your agent, e.g. lawyer, can take procedures for you in this system. If you have any other questions about the system, feel free to contact the Office for Government Procurement Challenge System at the Cabinet Office
(Tel: 03-3581-0262).

�œ We insist that the government should introduce the minimum award price rule as a countermeasure against the recent controversial ultra-low-price bid.

Answer from the Government
The government makes it a principle to procure "goods in high quality" at "the lowest price possible" since our financial source is the people's precious assets.
While maintaining this principle, we have an exception that we can avoid contracting with a supplier who offers the lowest price. This rule is called "enquiry for abnormally low tenders" system. On contracts for construction and manufacturing, the enquiry has been conducted based on this system. Last year (2001) we expanded the subject of the enquiry to contracts for other services, such as procurement of software. We consider that full application of this system can be an effective countermeasure against ultra-low-price bids.
In addition, the system is well in line with the Agreement on Government Procurement, of which Japan is one of many member states, while the agreement does not endorse the introduction of the minimum award price rule.

Reference Material III-7

The standard values for all types of voluntary measures determined in the Committee for Drawing Up and Promoting the Action Program, based on Notification No. 37 of the Ministry of Finance as published in the official gazette (Kanpo) dated 25 January 2002, have been set as follows: (Applying to procurement contracts awarded between 1 April 2002 and 31 March 2004)

1. Overview of Standard Values for Japan

2. International comparison of standard values