3. Voluntary Measures by Individual Sectors

In order to further promote procurement based on procedures to ensure non-discriminatory, transparent, fair and open competition, the Action Program Committee has established voluntary measures and such in individual areas, in addition to the voluntary measures for government procurement on products in general.

(1) Supercomputers

a. Adoption and revision of procedures

Procurement of supercomputers has been governed by the "Procedures to Introduce Supercomputers" adopted at the July 1987 Meeting of the Action Program Committee. However, the Committee revised the Procedures on 19 April 1990, in response to the claim raised by the Government of the United States that, even after the implementation of the Procedures, the Japanese Government and government-related entities procured no American supercomputers, and the Procedures needed to be revised, especially with regard to the formulation of specifications and business practices of large discounts.

The Procedures govern the introduction of supercomputers by 152 entities (as of 1 January 2004) cited in Attachment I, Table 1 and Table 3 of the WTO Agreement on Government Procurement (Treaty No. 23, 1995). Each ministry and agency is to give guidance to quasi-governmental agencies within its jurisdiction to procure in line with the Procedures. Furthermore, the revised procedures have been in effect since 1 May 1990.

b. Major points of the revised procedures

The revised procedures are adopted to provide transparent, open, and non-discriminatory competitive procedures for the introduction of supercomputers and to ensure that a procuring entity procures the supercomputer that best enables it to perform its mission. Furthermore, the Procedures stipulate that to procure supercomputers based on bids that contravene the prohibition in the Anti-Monopoly Act against unjust low-priced sales is contrary to the policy of the Government.

c. Follow-up consultations with the Government of the United States

In order to assess the implementation of the revised Procedures, follow-up consultations have been held with the US Government each year since 1990.
With regard to the Japan-US Framework Talks, it was concluded between the two governments that, as with computers, the Procedures should aim at significantly expanding Japanese government procurement of competitive foreign products in the area of supercomputers.

NOTES: Range of Supercomputers
The Procedures of April 1990 stipulated that it would apply to the supercomputers with theoretical peak ratings of 300 MFLOPS and over. The threshold have been raised twice thereafter: 5 GFLOPS and over as from 1 April 1995, 50 GFLOPS and over as from 1 May 1999, and 100 GFLOPS and over as from 1 May 2000.

(2) Non R&D Satellites

The Committee adopted, to ensure openness, transparency and non-discrimination in procurement of non R&D satellites, the "Measures Relating to Procedures for the Procurement of Non-R&D Satellites," at its 14^th Meeting on 14 June 1990, based upon the preceding consultations with the Government of the United States concerning the research and development, and procurement of satellites. (For the entire text, please refer to the attachments.)

The final documents concluded under the above-mentioned consultations with the US Government comprise the following: (a) the letters exchanged between Ambassador to the United States Ryohei Murata and US Trade Representative Carla Hills; (b) Attachment I (Policies and Procedures Regarding Satellite R&D/Procurement); (c) Attachment II (Procedures for the Procurement of Non-R&D Satellites); (d) Attachment III (Typical Examples of Japanese Research & Development Satellites). Any potential supplier may file a complaint with the Government Procurement Review Board when it believes the procurement has been carried out in a manner inconsistent with the intent of the procedure or any provision of the procedures laid out in Attachment II.

One of the distinctive features of the final documents on the non-R&D satellites procurement is the provision relating to the consultations between the Government of Japan and the Government of the United States to resolve disputes over the classification of satellites (Attachment II, Section III. 1. 2.). Such provisions on the consultative mechanism, however, are not intended to restrict the scope of judgment by the Procurement Review Board. Rather, any complaint over the classification of satellites is also to be under the review by the board.

(3) Computer products and services

a. Adoption of the measures

In order to expand trade opportunities based on the principles of non-discrimination, transparency, and fair and open competition in the public sector procurement of computer products and services, the Action Program Committee, on 20 January 1992, adopted the "Measures on Japanese Public Sector Procurement of Computer Products and Services."

The Measures were formulated in response to the claim raised by the US Government in 1990, that due to the problems in Japanese government procurement procedures, the share of foreign products in public sector procurement of computers in Japan was continuously low and there was a discrepancy between the share in public sector and that in private sector. The Government of Japan was to initiate the Measures with the aim of expanding procurement of competitive foreign computer products and services.

b. Major points of the measures

The Measures govern procurement of no less than 100,000 SDRs by 159 entities (as of 1 January 2004) (in addition to all of the 152 entities listed in Chapter II, (in addition to all of the 152 entities listed in Chapter II, Japan Aerospace Exploration Agency, Shoko Chukin Bank, Electric Power Development Co., Ltd., Kansai International Airport Corporation Limited, the Japan Shipbuilding Industry Foundation, the Japan Broadcasting Corporation [NHK] and the Japan Workers' Housing Association), with the exception of procurement covered by "Procedures to Introduce Supercomputers." The Measures became effective on 1 April 1992 with respect to procurement of computer products, and on 1 October 1992 for procurement of computer services, with the exception of procurement of computer services by entities listed in Attachment II-B and II-C of the Measures, which were covered by the Measures by 1 April 1993.

It is stipulated in the Measures that the particular tendering procedures are to be chosen by each procuring entity. However, the "Outline of External Economic Reform Measures," adopted on 29 March 1994, stipulates that for certain procurement of computers, evaluation criteria for use of the overall-greatest-value evaluation methodology will be developed toward the end of FY1994, and procurement based on the overall-greatest-value evaluation methodology will be introduced. As a result, preparations were advanced to introduce the use of the overall-greatest-value evaluation methodology. (At the 24th Action Program Committee Meeting, held on 27 March 1995, it was decided that as from 1 July 1995, the overall-greatest-value evaluation methodology would be used for procurement valued no less than SDRs 800,000. On 28 March 1995, the relevant ministries and agencies formulated and made public the Understanding of a standard guideline on the overall-greatest-value evaluation methodology, which is designed for the administrative efficiency of procuring entities, and includes points to be evaluated.)

c. Follow-up consultations with the Government of the United States

In order to assess the implementation of the Measures, the Government of Japan and the Government of the United States have held follow-up consultations each year since 1992. With regard to the Japan-US Framework Talks, then-Prime Minister Kiichi Miyazawa and President Bill Clinton concluded in July 1993 that the Measures should aim at significantly expanding Japanese government procurement of competitive foreign products and services in the area of computers, as well as supercomputers and others. Recent procurement results based on these measures are outlined below.

Table I-2 Results of Computer Products and Services Procurement

(4) Telecommunications and medical technology sectors

a. Adoption of the measures

With regard to government procurement of telecommunications equipment and services and medical technology products and services, the Government of Japan and the US Government conducted consultations, as priority areas of the Japan-US Framework Talks. In consideration of the discussions under the Japan-US Framework Talks, the Government of Japan adopted voluntary measures related to government procurement in telecommunications and medical technology sectors (28 March 1994 decision of the Action Program Committee), which was included in the "Outline of External Economic Reform Measures," adopted by the Cabinet on 29 March 1994.

The Japan-US Framework Talks were concluded in 1994 in the sectors of government procurement of telecommunications and medical technology along with other sectors. In light of the results of the consultations, the Government of Japan decided upon Operational Guidelines, for the purpose of clarifying the "Measures" described above, at the 22^nd Meeting of the Action Program Committee on 7 October 1994.

b. Major points of the measures in the sectors of telecommunications and medical technology

(a) "Measures on Japanese Public Sector Procurement of Telecommunications Products and Services" and "Measures related to Japanese Public Sector Procurement of Medical Technology Products and Services."

The 21st Meeting of the Action Program Committee, held on 28 March 1994, in order to ensure non-discriminatory, transparent, fair, competitive and open public sector procurement procedures and with the aim of significantly increasing access and sales of competitive foreign telecommunications products and services and medical technology products and services in Japanese public sector procurement, adopted the "Measures on Japanese Public Sector Procurement of Telecommunications Products and Services" and the "Measures Related to Japanese Public Sector Procurement of Medical Technology Products and Services." These measures were, in principle, introduced for procurement under the initial budget of FY1994.

The Measures in the area of telecommunications govern special contracts for procurement of no less than SDRs 100,000 by the 151 procuring entities (as of 1 January 2004) (all of the entities listed in Chapter II except NTT) of telecommunications products and services.

The Measures in the area of medical technology govern special contracts for procurement of no less than 100,000 SDRs by the 105 procuring entities (as of 1 January 2004) of medical technology products and services.

(b) "Operational Guidelines with respect to the Measures on Japanese Public Sector Procurement of Telecommunications Products and Services" and "Operational Guidelines with respect to the Measures related to Japanese Public Sector Procurement of Medical Technology Products and Services"

In consideration of the consultations held with the United States since March 1994, with a view to complementing and clarifying the measures adopted in March 1994, at the 22^nd Meeting of the Action Program Committee on 7 October 1994, the Government of Japan adopted the "Operational Guidelines With Respect to the Measures on Japanese Public Sector Procurement of Telecommunications Products and Services" and "Operational Guidelines with respect to the Measures related to Japanese Public Sector Procurement of Medical Technology Products and Services." (See attached reference material for the complete documents.)

c. Follow-up consultations with the Government of the United States
In regard to reciprocal correspondence between Japan and the United States on voluntary measures, Japan-US Annual Review has been held and finished in 2001 in accordance with the initia agreement between two countries.

Notes:

Agreements, etc.

*GPA: Agreement on Government Procurement

Ordinances, etc.

*BSAAR: The Budget Settlement of Account and Accounting Regulations

*COSSPGPPSS: Cabinet Order Stipulating Special Procedures for Government Procurement of Products or Specified Services

*MOSSPGPPSS: Ministerial Ordinance Stipulating Special Procedures for Government Procurement of Products or Specified Services

Voluntary Measures

* AP: The Action Program for Improved Market Access

*Supercomputer I, II: Procedures to Introduce Supercomputers

*Non-R&D Satellites: Procedures for the Procurement of Non-R&D Satellites

*Computer I: Measures Related to Japanese Public Sector Procurement of Computer Products and Services

*AP on GP: Action Program on Government Procurement

*GP on Products: Procedures for Government Procurement on Products

*Telecommunications I: Measures on Japanese Public Sector Procurement of Telecommunications Products and Services

*Medical Technology Products I: Measures on Japanese Public Sector Procurement of Medical Technology Products and Services

*Telecommunications II: Operational Guidelines with respect to Measures on Japanese Public Sector Procurement of Telecommunications Products and Services

*Medical Technology Products II: Operational Guidelines with respect to Measures on Japanese Public Sector Procurement of Medical Technology Products and Services

*Supercomputers III: Revision of the Coverage of Procedures to Introduce Supercomputers

*Computer II: Introduction of the Overall-Greatest-Value Evaluation Methodology to Procurement of Computer Products and Services

*Understanding on GP (Services): Understanding on GP in the Service Sector

*Supercomputers‡W,V: Partial Revision of the Procedures to Introduce Supercomputers