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Suggestions for Accessing the Government Procurement Market of Japan

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Suggestions for Accessing the Government Procurement Market of Japan Suggestions for Accessing the Government Procurement Market of Japan Government procurement contracts discussed in this Q&A basically refer to those procurement contracts that are subject to the WTO Agreement on Government Procurement, and voluntary measures. (1) Since necessary information on tender is published in the official gazette, “Kanpo” (or Kenpo and its equivalents for sub-central government entities), it is important to read the gazette carefully. In addition to that, establishing an office or an agency in Japan to conduct daily commercial activities would be effective for increasing opportunities to access to the government procurement market of Japan. Please see Appendix 3, for methods of obtaining the official gazette. (2) Each procurement agency has a contact point, as set out in Appendix 4 on particular government procurements. (3) The government procurement of Japan is conducted on the basis of competitive tendering procedures with the participation of qualified suppliers. Therefore, those who are interested in participating in tender, need to apply for qualification by the procuring entity concerned. In order to increase opportunities to participate in tender, suppliers are recommended to apply for qualification in advance. (4) There are laws and regulations of Japan which require distributors and manufactures of specified goods or services to obtain necessary licenses. For example, distributors of medical equipment must register with the Government according to the Pharmaceutical Law. In the case of public works construction, those who are interested to participate need to undertake business evaluation (“keishin”) before qualification by the procuring entity concerned. Non-mandatory technical specifications like the Japan Industrial Standard (JIS) have been established in Japan. Since distributors and manufacturers are sometimes required to meet these specifications, it is important to have sufficient knowledge of them. 1 (5) Procuring entities are sometimes incapable of responding to inquiries in languages other than Japanese. Therefore, it is important to make inquiries in Japanese in order to obtain information on government procurement in an effective and timely manner. 2 Q. 1 What regulations are the basis of government procurement procedures ? With respect to Japan’s government procurement procedures, numerous domestic laws and ordinances have been enacted. These include the Accounts Law (Law No. 35 of 1947), Cabinet Order concerning the Budget, Auditing and Accounting (Imperial Ordinance No. 165 of 1947), and the Local Autonomy Law (Law No. 67 of 1947). Agreement on Government Procurement under the framework of the World Trade Organization (WTO) provides for the international rule of the government procurement. In March 2012, “Protocol Amending the Agreement on Government Procurement” which aims at expanding the coverage of the Agreement was adopted. Japan accepted the Protocol in March 2014. The Protocol came into force for Japan on 16 April 2014. Between Japan and a Party which has not accepted the Protocol, the previous Agreement applies until the Party accepts the Protocol. (Note 1, Note 2). As a part of Japan’s efforts to increase opportunities for foreign suppliers to get access to the Japanese market, the government has established, as a voluntary measure, non-discriminatory, fair, and transparent procedures that surpass those stipulated in the Agreement on Government Procurement. Under these domestic laws and ordinances, the Agreement on Government Procurement, and voluntary measures, our country’s governmental procurement has been conducted in a transparent, fair, and competitive manner. Additionally, some Economic Partnership Agreements (EPA) have the provisions of Government Procurement (Note 3). 3 Note1 (1) The Parties to the revised Agreement on Government Procurement (as of July, 2016): Armenia, Canada, the European Union (EU) and its 28 Member States, Hong Kong China, Iceland, Israel, Japan, the Republic of Korea, Liechtenstein, Montenegro, the Netherlands with respect to Aruba, New Zealand, Norway, Singapore, Taiwan, the United States, and Ukraine. (2) The Parties which has not accepted the revised GPA (as of June 2016): Switzerland ＊Between Japan and Switzerland, the previous Agreement applies. Note2 Procurement procedures under the Agreement on Government Procurement are also ensured under domestic law by the Cabinet Order Stipulating Special Procedures for Government Procurement of Products or Specified Services (Government Ordinance No.300 of 1980) , the Cabinet Order Stipulating Special Procedures for Government Procurement of Products and Specified Services in Local Government Entities (Government Ordinance No.372 of 1995) and relevant ministerial ordinances, among others. Note3 The EPAs include the provisions of Government Procurement concluded by Japan as of July, 2016. (URL: http://www.mofa.go.jp/policy/economy/fta/index.html) (1) The Agreements have the independent Government Procurement chapter. Japan-Singapore EPA , Japan-Mexico EPA, Japan-Chile EPA, Japan-Thailand EPA, Japan-Indonesia EPA, Japan-Philippines EPA, Japan-Switzerland EPA, Japan-India EPA ,Japan-Peru EPA, Japan-Australia EPA and Japan-Mongolia EPA. (2) The Agreements do not have the independent Government Procurement chapter. Japan-Brunei EPA and Japan-Viet Nam EPA. 4 Q.2 What is the range of procurement contracts covered by the Agreement on Government Procurement? The Agreement on Government Procurement applies to any contract whose estimated value is not less than the relevant threshold (Note 1) specified in Japan’s Appendix I of the above Agreement, regarding the procurement of goods (Note 2) or services (Note 3) through purchase or lease by any of the entities subject to the above Agreement. Furthermore, as a voluntary measure to facilitate access to opportunities for foreign suppliers in the Japanese market, the Government of Japan has lowered the thresholds for the procurement of goods and services covered by the Agreement on Government Procurement (except construction services and architectural, engineering and other technical services related to construction services)by the entities listed in Annex 3 of Government of Japan in Appendix Ⅰ of the Agreement on Government Procurement amended by the Protocol, and follows the procedures consistent with the above Agreement. Appendix 4 shows the entities subject to both the Agreement on Government Procurement and the voluntary measures, and other entities subject only to voluntary measures related to the procurement of computer products and services. “Sub-central government entities” subject to the Agreement on Government Procurement in Japan listed in Japan’s Annex 2 of the Agreement. 5 Note1 Threshold values specified in the Agreement on Government Procurement and the Japanese voluntary measures as well as their equivalent values in Japanese Yen (valid from 1 April 2016 through 31 March 2018). The threshold values, in Japanese yen, are published in the government’s official gazette “Kanpo” every two years. (Ten Thousand SDR / Ten Thousand Yen) GPA Voluntary Measures SDR YEN SDR YEN <Central Government Entities> 1.Goods 10 1,600 10 1,600 2.Construction Services 450 74,000 ＊ ＊ 3.Architectural, engineering & Other 45 7,400 ＊ ＊ Technical Services covered by this Agreement 4.Other Services 10 1,600 10 1,600 <Sub-central Government Entities> 1.Goods 20 3,300 ＊ ＊ 2.Construction Services 1,500 247,000 ＊ ＊ 3.Architectural, engineering & Other 150 24,000 ＊ ＊ Technical Services covered by this Agreement 4.Other Services 20 3,300 ＊ ＊ <All Other Entities> 1.Goods 13 2,100 10 1,600 2.Construction Services for Japan Post in 1,500 247,000 ＊ ＊ GroupA 3.Construction Services for Japan Post and 450 74,000 ＊ ＊ entities in Group B 4.Architectural, engineering and Other 45 7,400 ＊ ＊ Technical Services 5.Other Services 13 2,100 10 1,600 ＊indicates the goods or services to which the Japanese voluntary measures are not applied. (The Agreement on Government Procurement applies.) Note2 Goods subject to the Agreement on Government Procurement are defined by relevant Japanese laws and regulations as movable assets other than cash and valuable securities, and the programs as defined by the Copyright Law. Note3 Services subject to the Agreement on Government Procurement are specified in Annex 5 of the Government of Japan in AppendixⅠof the Agreement on Government Procurement amended by the Protocol. In addition, services in the field of telecommunications, medical technology and computers are defined by the respective voluntary measures (See Appendix 1). 6 Q.3 What are the methods for selecting the procurement contract’s awardees? Entities subject to the Agreement on Government Procurement use the Open Tendering Procedure, the Selective Tendering Procedure, or the Limited (Single) Tendering Procedure to select the procurement contract’s awardees. These three procedures are outlined as follows: <Open Tendering Procedures> The Open Tendering Procedure is the basic bidding procedure. In this procedure, a procuring entity publishes in the official gazette “Kanpo” or its equivalents at the local level, a notice to invite qualified suppliers to participate in the tendering procedures. The contract is awarded to the tenderer who has made the best offer in terms of tendered prices (Note). <Selective Tendering Procedures> The Selective Tendering Procedure is used when the Open Tendering Procedure is not needed because only a small number of suppliers can participate in the tendering procedures
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