On May 11, TMG published the final outline of its reformed public procurement system. After a one-year trail of a number of new regulations, which were spurred by irregularities surrounding the tenders for construction of the new Toyosu market and a number of new Olympic venues in 2016-2017, and public deliberations a final draft of how TMG is going to conduct its tendering was announced. 

Most reforms concerned construction of public facilities, as the costs were seen spiralling out of control with a small group of construction companies dividing construction contracts among themselves and winning contracts at 99.9% of the projected price.

During the trail, TMG attempted to counter this with measures such as cancelling tenders in case of only one bidder entering the competition, announcing the projected price after the competition instead of before, abolishment of the obligation to have formed a joint venture at the time of a tender and assessment of feasibility of projects in case of a very low bid.

In the outline released, it looks that the biggest point of contention, which was cancelation of tenders in case of 1 bidder, is off the table. The measure led to a doubling of cancelled tenders, during the trail-period.  The absence of a projected price made public beforehand was seen as an increase in the burden for SMEs as they had to calculate a price on their own. From June, TMG plans subject only projects larger that JPY440 miilion under the non-publication regime, in order to take the worries of SMEs into account.  New regulations with regard to joint ventures will remain in place, but for SMEs it will be less stringent.

All in all, it looks that governor Koike’s ambitions to substantially reform TMG’s procurement practice have been successfully thwarted by vested interests and that little change has been achieved. While the reforms, such as the ‘1 bidder=cancellation’ had offered an opportunity to allow more parties to compete in tenders, thus offering more choice and better value for money for Tokyo’s tax payers, the result instead seems to be an even less transparent system that is likely to benefit insiders only.

Source: Nikkei Online