MEASURES RELATED TO JAPANESE PUBLIC SECTOR PROCUREMENTS OF COMPUTER PRODUCTS AND SERVICES

20 January 1992

The Committee for Drawing Up and
Promoting the Action Program

Decision of the 17th Meeting of the Committee for
Drawing Up and Promoting the Action Program

The Government of Japan, in accordance with the results of recent consultations with the Government of the United States concerning procurement of computer products and services, has decided to initiate the "Measures related to Japanese Public Sector Procurements of Computer Products and Services," as outlined herein.


MEASURES RELATED TO
JAPANESE PUBLIC SECTOR PROCUREMENTS
OF COMPUTER PRODUCTS AND SERVICES

I. General Policies

A. In the interest of expanding trade opportunities based on the principles of non-discrimination, transparency, and fair and open competition in public sector procurements of computer products (including peripherals and packaged software) and computer services (operation and maintenance of computers; input of data into computers; development of computer systems, including development of software and systems integration; maintenance of computer software; and other related services) (collectively referred to as computer Products and Services ), the Government of Japan ("the Government") will strive actively to further improve its public sector procurement procedures Accordingly the Government will initiate these "Measures Related to Japanese Public Sector Procurements of Computer Products and Services" ( the Measures ), set forth herein, with the aim of expanding procurements of competitive foreign computer products and services

B. The Government reaffirms its commitment to the obligations of the General Agreement on Tariffs and Trade (GATT) and the Agreement on Government Procurement, as amended ("the Code") The Measures will be implemented while ensuring consistency with the requirements of the Code, including any amendments thereto

C. In order to implement these policies fully and effectively, the measures will govern all computer products and services procurements above the threshold of 100,000 SDRs, or the Code threshold, as amended, whichever is lower, by entities covered by the Code and additional entities, listed respectively in Annexes I and II attached ("the entities ") Supercomputer procurements will continue to be covered by the 1990 Procedures to Introduce Supercomputers, and will not be covered by the Measures

D. The Government further reaffirms the policies and measures set forth in the 1985 Action Program for Improved Market Access with respect to government procurement, confirms that it will continue to implement such procurement policies in the area of procurements of competitive foreign computer products and services, and welcomes efforts by foreign computer manufacturers to increase their sales in the Japanese public sector market.

E. Implementation

The Measures will become effective on April 1, 1992 with respect to procurements of computer products by entities listed in Annexes I, II-A, II-B, and II-C and on October l, 1992 with respect to procurements of computer services by entities listed in Annexes I and II-A The Government will take steps so that all the entities listed in Annexes II-B and II-C will be covered by the Measures with respect to procurements of computer services by April 1, 1993

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* Computer products include services incidental to the supply or products if the value of these incidental services does not exceed that of the products themselves.

II. Policies and Procedures

The Government herein clarifies certain existing policies and procedures, and establishes and implements new policies and procedures, with respect to public sector computer procurement The Government undertakes these policies and procedures to fully ensure non-discriminatory, transparent, and free and open competitive opportunities, with the aim of expanding its procurements of competitive foreign computer products and services .

Pre-solicitation Phase

  1. All potential foreign and domestic suppliers will be accorded equal access to pre-solicitation information, where available, and provided with equal opportunities to participate in such pre-solicitation phase; and no advantage of advance knowledge will be given to any potential suppliers

  2. Procuring entities will ensure that all potential suppliers are given the same opportunities to participate in technical reference committees, advisory groups, study councils, or any such groups, lf established, that discuss the technology, budget, specifications, functions, or any other aspect of planned computer products and services procurements

  3. Information disseminated during this pre-solicitation phase will not be used to exclude or pre-qualify any potential suppliers

Specifications

  1. Specifications will be formulated in an impartial manner. If the procurement will replace or interconnect with an existing system, these specifications will not be designed to preclude competition. Features not essential to the assigned task will not be required

  2. Any supplier directly involved in the development of final specifications in a procurement will not be allowed to participate in the tendering process, if such participation would result in an unfair competitive advantage, except such cases where potential suppliers provide information or assistance to a procuring entity in preparing or refining specifications in a situation where the entity is controlling the process and conducting it in a fair and impartial manner and where a supplier provides, at the request of an entity, product specifications or data about a product it supplies. In such cases, all potential suppliers will be provided with an opportunity to participate or provide such product specifications or data

  3. The Government will establish a program to centralize and to facilitate the dissemination of information and provision of training related to specifications-formulation efforts of entity procurement officials.

Explanation Session

  1. The entity will hold, as necessary, an explanation session with regard to the procurement of computer products and services, including the opportunity for direct technical and administrative interaction between potential suppliers and the procuring entity.

Tendering and Bidding Procedures

  1. All potential suppliers will be accorded fair and equal opportunities to respond to the requirements of the procuring entity in the tendering and bidding phase.

  2. Because competitive procurements are the foundation of the Government's procurement policies and practices single tendering or sole sourcing will be used only in exceptional eases, justified in accordance with Code procedures, and will not be used to favor suppliers of domestic computer products or services. The entities will reduce their use of single tendering.

  3. The tender documentation and evaluation criteria will be prepared in an impartial manner so as to ensure that equal opportunities are provided to all potential suppliers on a non-discriminatory basis

  4. The bidding system, including the designated bidder system, will not be used to favor suppliers of domestic computer products or services. Procuring entities may restrict the number of suppliers that may bid on a procurement only in a non-discriminatory manner.

Evaluation of Bids

  1. Evaluation of offers will be conducted in a transparent manner that ensures equal treatment of all bidders.

  2. Technical evaluations, and system performance evaluations when used, will be conducted under the same conditions for all potential suppliers in the tendering process; and any testing criteria will be the same for all potential suppliers.

  3. All evaluation factors will be clearly set forth in the tender documentation. Evaluation of bids will be conducted in accordance with Code-consistent procedures, and as described in (a) and (b) below. The particular tendering procedure will be chosen by the respective procuring entities on the basis of the objective and characteristics of the procurements.

    (a) Bids will be evaluated on a pass/fail basis based upon the specific technical and other evaluation criteria stated in the specifications. and contracts will be awarded to the lowest-priced bid among those bids which have met the evaluation criteria; or

    (b) Contracts will be awarded to the supplier with the bid which meets the evaluation criteria and also best meets the requirements of the specifications in terms of technical and functional, as well as price cost, factors. Relative weights may be applied to the evaluation criteria, as necessary, and as specified in the tender documentation. The price/cost evaluation may be based on the total life cycle cost of the procurement.

Information on the Contract Award

  1. After a final selection has been made, procuring entities will publish information on the contract award and, upon request from an unsuccessful supplier who has submitted material, promptly provide such supplier with pertinent information concerning the reasons for not being selected, including the name of the selected system as well as information on its relative advantages. However, the information may exclude such information as would prejudice the legitimate commercial interest of particular suppliers or might prejudice fair competition among suppliers.

Information on Future Plans

  1. Information made available on a budget request to any potential suppliers will be made available on a non-discriminatory basis. Procuring entities will announce in the Kanpo any plans to introduce computer products and services that exceed 800,000 SDRs as early in the Japanese fiscal year (JFY) as possible, and issue a general invitation to potential suppliers for submission of materials and comments relevant to those plans.

Entity-specific Plans

  1. Pursuant to the Measures, individual procuring entities are encouraged to adopt entity-specific plans that describe the efforts that the entity is making, or will make, to implement the policies and procedures set forth in the measures. Such entity-specific plans are encouraged to be updated every fiscal year.

Bid Protest System

  1. An impartial bid protest system, described in Annex III, will be maintained to provide equitable, timely, transparent, and effective bid challenge procedures for potential suppliers of computer products and services covered by the Measures.

Local Governments

  1. The Government will inform prefectural and local governments of the Measures, and request their cooperation in following the purport of fully competitive procurement policies and procedures consistent with the measures.

Multi-vendor Open Systems

  1. An inter-ministerial group will be tasked to promote a multi-vendor open systems environment. Foreign and domestic computer companies will be invited on a fair and non-discriminatory basis to assist in the adoption of the multi-vendor open systems environment.

III. Unfair bids

Given that it is the policy of the Government to procure computer products or services based on bids that are consistent with the Anti-monopoly Act, including the prohibition against unjust low-priced sales, procuring entities will take appropriate actions to address anticompetitive practices.

A. Where a bid is submitted that, because of its price or other terms, unlawfully impedes fair competition, the bid will be deemed void in its entirety and the procuring entity will not consider that bid in arranging the contract.

B. Any bidder that submits a bid referred to in Paragraph III.A above will, as a matter of principle, be deemed ineligible to resubmit a bid in that computer product or service procurement; and the name of such bidder will be announced publicly.

C. When a procuring entity obtains information indicating the existence of practices that may unlawfully impede fair competition in relation to its procurement, including the formulation of its procurement specifications, the entity will provide such information on a timely basis to the Fair Trade Commission so as to enable the Commission to take such steps as it deems appropriate.

D. To this end, the procuring entities will assign a contact person with the Fair Trade Commission to facilitate procedures for the detection of, and exchange of information concerning, practices that may violate the Antimonopoly Act.


Annex‡T, ‡U

<Entitles Subject to the WTO Agreement on Government Procurement as of April 1,2001>

House of Representatives
House of Councillors
Supreme Court
Board of Audit
Cabinet
National Personnel Authority
Cabinet Office
Imperial Household Agency
National Public Safety Commission
(National Police Agency)
Defense Agency
Financial Services Agency
Ministry of Public management, Home Affairs, Posts and Telecommunications
Ministry of Justice
Ministry of Foreign Affairs
Ministry of Finance
Ministry of Education, Culture, Sports, Science and Technology
Ministry of Health, Labour and Welfare
Ministry of Agriculture, Forestry and Fisheries
Ministry of Economy, Trade and Industry
Ministry of Land, Infrastructure and Transport
Ministry of Environment


Hokkaido Railway Company
East Japan Railway Company
Central Japan Railway Company
West Japan Railway Company
Shikoku Railway Company
Kyushu Railway Company
Japan Freight Railway Company
Japan Tobacco, Inc.
Nippon Telegraph and Telephone Corporation (NTT)
National Life Finance Corporation
Housing Loan Corporation
Agriculture, Forestry and Fisheries Finance Corporation
Japan Finance Corporation for Small Business
Japan Finance Corporation for Municipal Enterprises
Social Welfare and Medical Service Corporation
Okinawa Development Finance Corporation
Development Bank of Japan
Japan Bank for International Cooperation
Water Resources Development Public Corporation
New Tokyo International Airport Authority
Japan Highway Public Corporation
Japan Environment Corporation
Japan International Cooperation Agency
Government Pension Investment Fund
Labour Welfare Corporation
Employment and Human Resources Development Organization of Japan
Japan Consumers Information Center
Japan Corporation Science and Technology
Japan Foundation
National Stadium and School Health Center of Japan
University of the Air Foundation
Japan Racing Association
Japan External Trade Organization (JETRO)
New Energy and Industrial Technology Development Organization
Japan Regional Development Corporation
Japan National Oil Corporation (J.N.O.C.)
Metropolitan Expressway Public Corporation
Urban Development Corporation
Japan Nuclear Cycle Development Institute
Metal Mining Agency of Japan
Japan Small and Medium Enterprise Corporation
Postal Life Insurance Welfare Corporation
Small Enterprise Retirement Allowance Mutual Aid Corporation
Teito Rapid Transit Authority
Northern Territories Issue Association
Japan Atomic Energy Research Institute
Pollution-Related Health Damage Compensation and Prevention
Association
Fund for the Promotion and Development of the Amami Islands
Japan Scholarship Foundation
Promotion and Mutual Aid Corporation for Private Schools of Japan
Social Insurance Medical Fee Payment Fund
Association for Welfare of the Mentally and Physically Handicapped
Mutual Aid Association of Agriculture, Forestry and Fishery Corporation Personnel
Japan Keirin Association
Japan Motorcycle Racing Association
Japan Institute of Labour
Mutual Aid Fund for Official Casualties and Retirement of Volunteer Firemen
Japan Green Resources Corporation
Corporation for Advanced Transport and Technology
Japan Railway Construction Public Corporation
Hanshin Expressway Public Corporation
Honshu-Shikoku Bridge Authority
Livestock Industry Promotion Corporation
RIKEN(The Institute of Physical and Chemical Research )
Japan Arts Council
Japan Society for the Promotion of Science
The National Association of Racing
Farmers Pension Fund
Japan National Tourist Organization


(Independent Administrative Institutions)
National Archives of Japan
Communications Research Laboratory
Institute of Fire and Disaster National Research
National Research Institute of Brewing
National Institute of Special Education
National Center for Teacher's Development
National Center for University Entrance Examinations
National Women's Education Center
National Science Museum
National Olimpics Memorial Youth Center
National Youth Houses
National Children 's Centers
National Institute for Japanese Language
National Museum
National Museum of Art
National Research Institute for Cultural Properties
National Institute for Materials Science
National Research Institute for Earth Science and Disaster Prevention
National Aerospace Laboratory of Japan
National Institute of Radiological Sciences
The National Institute of Health and Nutrition
National Institute of Industrial Safety
National Institute of Industrial Health
Center for Food Quality, Labeling and Consumer Services
National Center for Seeds and Seedlings
National Livestock Breeding Center
Fertilizer and Feed Inspection Station
Agricultural Chemicals Inspection Station
National Farmers Academy
Forest Tree Breeding Center
National Salmon Resources Center
National Fisheries University
National Agricultural Research Organization
National Institute of Agrobiological Sciences
National Institute for Agro-Environmental Sciences
National Institute for Rural Engineering
National Food Research Institute
Japan International Research Center for Agricultural Sciences (JIRCAS)
Forestry and Forest Products Research Institute
Fisheries Research Agency
Research Institute of Economy, Trade and Industry
National Center for Industrial Property Information
Nippon Export and Investment Insurance
National Institute of Advanced Industrial Science and Technology
National Institute of Technology and Evaluation
Civil Engineering Research Institute of Hokkaido
National Traffic Safety and Environment Laboratory
National Maritime Research Institute
Port and Airport Research Institute
Electronic Navigation Research Institute
Marine Technical College
National Institute for Sea Training
School for Seafarers Training
Civil Aviation College
Public Works Research Institute
Building Research Institute
The National Institute for Environmental Studies


Annex‡U(Other Quasi-governmental Agencies)

National Space Development Agency of Japan
The Shoko Chukin Bank
Electric Power Development Co., Ltd.
Kansai International Airport Co., Ltd.
The Japan Shipbuilding Industry Foundation
Japan Broadcasting Corporation
Japan Worker's Housing Association

(NOTE: The entities above are listed only under the names they held as of April 1, 2001, and the names of special corporations before their merger or abolition are not given.)



ANNEX III

COMPLAINT MECHANISM

  1. Overview

    In order to provide for fair and open competition and to achieve consistency with the provisions of the Measures in procurements of computer products and services, the following complaint process will become effective 30 days after the Measures go into effect.

  2. Procurement Review Board

    2.1. The Government will maintain a Procurement Review Board (Board), as an independent reviewing organ, to review complaints by potential suppliers of any aspect of a procurement of a computer product or service subject to the Measures. The Board will have no substantial interest in the outcome of a computer products and services procurement subject to its review

    2.2. The Board will receive complaints in writing, conduct investigations of the facts and make recommendations with respect to any aspect of a procurement of a computer product or service by an entity.

    2.3. The Board will be comprised of persons who have knowledge, and experience related to public sector procurements. No member of the Board will participate in the review of a complaint in which that member has a conflict of interest.

  3. Procurement Preview Process

    3.1. A potential supplier may file a complaint with the Board when it believes the procurement has been carried out in a manner inconsistent with the intent or any provision of the Measures. It may also file a complaint based upon the allegation that the contract was awarded to a supplier that had submitted a bid in violation of the Anti-monopoly Act. Potential suppliers are encouraged to seek resolution initially with the entity of any alleged inconsistency with these Measures.

    3.2. Timing of Complaints

    (l) A complaint may be filed at any time during the procurement process, but no later than 10 days after the basis of the complaint is known or reasonably should have been known. The potential supplier will submit a copy of the complaint to the entity within one day of filing it with the Board.

    (2) The Board may consider a complaint, even though not timely filed, if it finds that good cause is shown or that a complaint raises issues significant to the purpose of the Measures.

    3 3. The Board will review a complaint within seven days of its filing and may, in writing and with good reasons given, dismiss any complaint found to be:

    (1) not submitted in timely manner;

    (2) not subject to these Measures;

    (3) frivolous or trivial on its face;

    (4) not submitted by a potential supplier; or

    (5) otherwise inappropriate for review by the Board.

    3.4. Where the Board determines that a complaint has been filed properly, it will notify in writing all potential suppliers within one working day of the complaint.

    3.5. Suspension of award or procurement process

    (1) Within 10 days of the filing of a pre-award complaint, the Board will issue written requests for suspension of the procurement process pending resolution of the complaint.

    (2) Within 10 days of the filing of a post-award complaint, the Board will request in writing suspension of performance of the contract pending resolution of the complaint.

    (3) The entity will, as a matter of principle, suspend the procurement process or performance of the contract immediately after it receives the Board's request, unless the head of the entity determines that urgent and compelling circumstances do not allow the entity to follow the request, in which case he will immediately inform the Board of his determination.

    3.6. Investigation

    (1) The Board will conduct an investigation of the complaint, which may include the filing of briefs, pleadings and other documentation by the complainant and entity.

    (2) The Board may, on the request of the complainant or entity or on the Board's own initiative, hold a hearing on the merits of a complaint.

    3.7. Entity Report

    (1) Within 25 days after the day on which a copy of the complaint was sent to the entity, it will file with the Board a complete written report on the complaint, containing the following:

    (a) the solicitation, including the specifications or portions thereof relevant to the complaint;

    (b) all other documents relevant to the complaint;

    (c) a statement that sets out all findings, actions and recommendations of the entity and responds fully to all allegations of the complaint; and

    (d) any additional evidence or information that may be necessary in order to resolve the complaint.

    (2) The Board will, forthwith after receiving the report referred to in (l) above, send a copy or the relevant material to the complainant and give the complainant an opportunity, within seven days after it receives the relevant material, to file with the Board comments or request that the case be decided on the existing record. The Board will, forthwith after receiving the comments, send a copy to the entity.

    3.8. Participants: The entity and potential suppliers whose direct economic interest would be affected by the award of, or the failure to award, a contract may participate in a complaint proceeding.

  4. Findings and recommendations

    4.1. The Board will make a report of its findings and recommendations within 90 days after the day on which the complaint is filed. Its findings, in which the Board will grant or deny the complaint in whole or in part, will specify whether the procurement process or award was inconsistent with the intent or specific provisions of the Measures.

    4.2. (l) Where the Board finds that there is a significant likelihood that a contract was awarded to a supplies that had submitted a bid that contravened the prohibition in the Anti-monopoly Act against unjust low-priced sales, it will report the case to, and request that, the Fair Trade Commission (FTC) determine whether or not the Anti-monopoly Act has been violated and take appropriate measures.

    (2) Pending the notification by the FTC of its final findings, the Board will request the entity to suspend performance of the contract With this request, the entity, 25 a matter of principle, will suspend performance of the contract. Upon receipt of the FTC's notification, the Board will complete its review of the complaint and where the FTC found a violation of the Anti-Monopoly Act, the Board will recommend that the entity adopt a remedy set forth in 4.4 below.

    4.3. In making its findings and recommendations, the Board will consider all the circumstances surrounding the procurement process or award, including the seriousness of the deficiency in the procurement process, the degree of prejudice to all potential suppliers or to the integrity and effectiveness of the Measures, the good faith of the participants and the extent of performance of the contract to which the procurement relates.

    4.4. Where the Board finds that the intent or any provision of the Measures has not been realized, it may recommend an appropriate remedy, including one or more of the following:

    (l) that a new tender package be issued;

    (2) that new bids for the contract be sought;

    (3) that the bids be re-evaluated;

    (4) that the contract be awarded to another supplier; or

    (5) that the contract be terminated.

    4.5. The Board will send its findings in writing with its recommendations to the complainant, the entity and any other potential suppliers, within one working day after issuance. The Ministry of Foreign Affairs will respond to external inquiries concerning the findings.

    4.6. Where the entity does not follow the Board's recommendation. the entity will send a copy of its decision, and the rationale for it, to the Board within one working day after issuance. The Ministry of Foreign Affairs will respond to external inquiries concerning the decision.

    4.7. Whenever the Board discovers evidence of misconduct, or contrary to law or regulation, such evidence will be referred to law enforcement authorities for appropriate action.

  5. Express Option

    5.1. Where the complainant or entity requests in writing an expeditious handling of a complaint, the Board will consider the feasibility focusing the procedure set out in this section, referred to, herein as the "express option."

    5.2. The Board will determine whether to apply the express option within two working days after receiving a request therefore and will notify the complainant and entity as to whether the express option is to be applies.

    5.3. Where the express option is applied, the time limits and procedures will be as follows:

    (1) The entity will, within 10 days after the day on which it is notified by the Board that the express option is to be applied, file with the Board a complete report on the complaint, as specified in Section 3.7. The Board will forthwith after receiving the report, send a copy of the relevant material to the complainant. The Board will give the complainant five days to file with the Board comments on such material or request that the case be decided on the existing record. The Board will, forthwith after receiving the comments, send a copy to the entity.

    (2) The Board will issue its findings and recommendations on the complaint in writing within 45 days after the day on which the complaint is filed.



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