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2007 Assessment

Japan: Integrity Indicators Scorecard

Japan: Integrity Scorecard Report > Sub-Category: Procurement
Indicators		Score
48	Is the public procurement process effective?	70
49	Can citizens access the public procurement process?	88

Indicator and sub-Indicator Details

Is the public procurement process effective?

48a: In law, there are regulations addressing conflicts of interest for public procurement officials.

Score:

YES

Comments: Concerning Japan's government procurement officer, there are a series of strict laws that prohibit officers from pursuing their own interests. Particularly, both the National Public Ethics Act and the National Public Service Act prescribe the ethical standards of procurement officers. All of the referred laws and regulations are consistent with the provisions of the WTO Agreement on Government Procurement since Japan is the member of WTO.

References: The Accountancy Law (Law No.67 of 1947). Cabinet Order concerning the Budget, Settlement of Account and Accounting (Imperial Ordinance No. 165 of 1947). The Local Autonomy Law (Law No.67 of 1947). Act Concerning Elimination and Prevention of Involvement in Bid Rigging etc. (Law No.101 of 2002). [ LINK ] The National Public Service Ethics Act (Act No. 129 of 1999). The National Public Service Act (Act No.120 of 1947). [ LINK ]

48b: In law, there is mandatory professional training for public procurement officials.

Score:

YES

Comments: Government procurement in Japan is conducted by each procurement entity in a decentralized manner. Each procurement entity (for instance, the Ministry of Defense, etc.) have their own general training courses. In short, professional training of each procurement officer depends on what entity they belong to. In additional, Article 20 of the Bidding Correction Law states that the government make efforts to provide for a general education and training program for public procurement officials in charge of bidding and contracts. However, it is not compulsory.

References: There are no specific trainings for procurement officer. [ LINK ].

48c: In practice, the conflicts of interest regulations for public procurement officials are enforced.

Score:

100

Comments: The media scrutiny of the government is a deterrent of crime by procurement officers. But in reality, there are many cases that the ex-procurement official is re-employed by private companies (usually bidders) after two years. These re-employed officials become a coordinator in the process of bid-rigging.

48d: In law, there is a mechanism that monitors the assets, incomes and spending habits of public procurement officials.

Score:

YES

Comments: Both the National Public Service Ethics Act and the National Public Service Act serve to enhance their own self-discipline. But there are no specific mechanisms that monitor the assets, incomes and spending habits of public procurement officials.

References: There is no such a law.

48e: In law, major procurements require competitive bidding.

Score:

YES

Comments: For the types of tendering, please check: [ LINK ]

References: Article 29 of Accountancy Act (Law No. 1, 2, 3 of 1947). Article 167 of the Local Autonomy Law/

Peer Review Comments: This principle may apply to major contracts. However, in November 2007 the Board of Audit submitted a report stating that government organizations had issued 80,000 discretionary contracts worth 1.3 million yen (US$11,581) in fiscal year 2006 ("Spending Without Accountability," Japan Times, Nov. 26, 2007).

48f: In law, strict formal requirements limit the extent of sole sourcing.

Score:

YES

Comments: Before the tendering, it is possible for potential bidders to agree on collusive agreements, such as bid-rigging (in Japanese, Dango). The limit of sole sourcing is related to the Act on the Private Monopolization and Maintenance of Fair Trade.

References: The Accounts Law (Law No.67 of 1947). Cabinet Order concerning the Budget, Settlement of Account and Accounting (Imperial Ordinance No. 165 of 1947). The Local Autonomy Law (Law No.67 of 1947). Act Concerning Elimination and Prevention of Involvement in Bid Rigging etc. (Law No.101 of 2002). The National Public Service Ethics Act (Act No. 129 of 1999). The National Public Service Act (Act No.120 of 1947). Article 3, Chapter 2 of Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No.54 of 14 April 1947). [ LINK ] Article 99 of Ordinance on Budget and Final Accounts of the Expenditures and Revenues.

48g: In law, unsuccessful bidders can instigate an official review of procurement decisions.

Score:

YES

Comments:

48h: In law, unsuccessful bidders can challenge procurement decisions in a court of law.

Score:

YES

Comments: Since the establishment of the Government Procurement Review Board (GPRB) in 1995, GPRB has filed five complaints and resolved many cases through consultation.

References: CHANS (Office for Government Procurement Challenge System). [ LINK ] Outline of Operation of the Government Procurement Review Board (GPRB). [ LINK ] Cabinet decision of December 1, 1995 (guarantees that the review of complaints is independent from government).

48i: In law, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

YES

Comments: At the local level, there are blacklists of the offenders of bidding. Government (local or central) prohibits them from bidding in certain periods, but after the term of prohibition, depending on the degree of violation, offenders can recover their right to bid on public procurement.

References: Article 198 of the Penal Code (Act No.45 of 1907). Article 96-3 of the Penal Code (Act No.45 of 1907). Japanese Fair Trade Commission: [ LINK ] Act Concerning Elimination and Prevention of Involvement in Bid Rigging etc. (Law No.101 of 2002). Article 3, Chapter 2 of Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No.54 of 14 April 1947).

Peer Review Comments: The Fair Trade Commission has the power to prevent companies from soliciting any new orders for defined periods, typically 15 to 30 days. (See "False Steps as Contractors Dance the Dango," by Jonathan Soble, Financial Times, Oct. 19, 2007.)

48j: In practice, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

100

Comments: Offenders can rejoin in public procurement bidding after the termination of their punishment.

References: Media reports. Academic, policy or professional studies. Government studies. Article 96-3 of the Penal Code (Act No.45 of 1907). Japanese Fair Trade Commission: [ LINK ] Act Concerning Elimination and Prevention of Involvement in Bid Rigging etc. (Law No.101 of 2002). Article 3, Chapter 2 of Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No.54 of 14 April 1947).

Can citizens access the public procurement process?

49a: In law, citizens can access public procurement regulations.

Score:

YES

Comments: The law states that citizens can access the information of procurement regulations held by every entity.

References: Act on Access to Information Held by Administrative Organs (Act No.42 of 1999). Administrative Procedure Act (Act No. 88 of 1993). Government Policy Evaluation Act (Act No.86 of 2001).

49b: In law, the government is required to publicly announce the results of procurement decisions.

Score:

YES

Comments: For integrated procurement information, the government provides the Website (Japanese only): [ LINK ]

References: Act for Promoting Proper Tendering and Contracting for Public Works (Act No.127 of 2000). [ LINK ]

49c: In practice, citizens can access public procurement regulations within a reasonable time period.

Score:

100

Comments: The law states that citizens can access public procurement regulations at some administrative cost.

References: Media reports. Academic, policy or professional studies. Government studies. International organization studies. Act for Promoting Proper Tendering and Contracting for Public Works (Act No.127 of 2000). Act on Access to Information Held by Administrative Organs (Act No.42 of 1999). Administrative Procedure Act (Act No. 88 of 1993). Government Policy Evaluation Act (Act No.86 of 2001). [ LINK ] ADB/OECD Anti-Corruption Initiative for Asia and the Pacific (2005). Thematic Review on Provisions and Practices to Curb Corruption in Public Procurement: Self-Assessment Report Japan. [ LINK ] Japanese Government Procurement (prepared by JETRO). [ LINK ]

49d: In practice, citizens can access public procurement regulations at a reasonable cost.

Score:

100

Comments: In practice, the public can access the information with reasonable cost.

References: Media reports. Academic, policy or professional studies. Government studies. International organization studies. ADB/OECD Anti-Corruption Initiative for Asia and the Pacific (2005). Thematic Review on Provisions and Practices to Curb Corruption in Public Procurement: Self-Assessment Report Japan. [ LINK ] Japanese Government Procurement (prepared by JETRO). [ LINK ] Act for Promoting Proper Tendering and Contracting for Public Works (Act No.127 of 2000). Act on Access to Information Held by Administrative Organs (Act No.42 of 1999). Administrative Procedure Act (Act No. 88 of 1993). Government Policy Evaluation Act (Act No.86 of 2001).

49e: In practice, major public procurements are effectively advertised.

Score:

100

Comments: At local levels, such as prefectures, citizens can access the tendering information electronically. Furthermore, electronic data in the official gazette is available, too.

References: Media reports. Academic, policy or professional studies. Government studies. International organization studies. Act for Promoting Proper Tendering and Contracting for Public Works (Act No.127 of 2000). Act on Access to Information Held by Administrative Organs (Act No.42 of 1999). Administrative Procedure Act (Act No. 88 of 1993). Government Policy Evaluation Act (Act No.86 of 2001). The Local Autonomy Law (Law No.67 of 1947). ADB/OECD Anti-Corruption Initiative for Asia and the Pacific (2005). Thematic Review on Provisions and Practices to Curb Corruption in Public Procurement: Self-Assessment Report Japan. [ LINK ] Japanese Government Procurement (prepared by JETRO). [ LINK ] Information of bidding service (Japanese Only): [ LINK ]

49f: In practice, citizens can access the results of major public procurement bids.

Score:

100

Comments: At local levels, most of them also provide the information of the result of tendering for free.

References: Media reports. Academic, policy or professional studies. Government studies. International organization studies. Government Policy Evaluation Act (Act No.86 of 2001). ADB/OECD Anti-Corruption Initiative for Asia and the Pacific (2005). Thematic Review on Provisions and Practices to Curb Corruption in Public Procurement: Self-Assessment Report Japan. [ LINK ] Japanese Government Procurement (prepared by JETRO). [ LINK ] Information of bidding service (Japanese Only): [ LINK ] The Local Autonomy Law (Law No.67 of 1947).