Public Procurement

To ensure the quality and safety of goods and services provided to Japanese government entities, in quite a few categories certain standards need to be met or licenses obtained. In particular, in tenders where a product is produced specifically for the procuring entity suppliers have to meet industrial standards.  

Given the large diversity in the goods and services that are procured by government entities, it rather difficult to give a concise description of the contents of tender documentation. For the procurement of relatively simple items, the documentation can be short, but for complex items, the tender documentation can consist of hundreds of pages of text. 

In case of the procurement of complex goods or services, the procuring entity will organize an explanatory meeting, usually within days after the invitation to tender.  Please note that the information whether an explanatory meeting will be organized, is usually not listed in the English summary of the tender notice. 

For foreign suppliers with no Japanese language capabilities, the English language summary of the tender notice is the first source of information to decide whether there is a business case to tender for a contract.  Below explains in more detail what kind of information is provided, and perhaps more important, the information that is not provided in the English summary.

A number of national government organisations have established mailing list services to announce their calls for tender.  The mailing lists are almost exclusively in Japanese. Listed below are links to registration pages for procurement information mailinglists at a number of government organisations. 

Early announcement of tenders is one of the voluntary measures taken by the Japanese government to facilitate access for foreign companies in the Japanese public procurement market.  As early as possible at the beginning of the fiscal year, in the April-May period procurement of large-scale goods and services are publics in the “Kanpo” Government Gazette.  Early announcement of tenders is largely limited to national government entities and affiliated organizations. 

Kankouju or ‘Public Agency Orders’ relates to the budget of public procurement spending reserved specifically for SMEs.  This earmarked budget is regulated by the Act on Ensuring Receipt of Orders from the Government and Other Public Agencies by Small and Medium-sized Enterprises established in 1966.  

In fact, more than half of the tenders are reserved for SMEs. The Japanese government sets a target for each year, in FY 2013. 56% of the total expected demand of €61.7 billion was reserved for SMEs.

Governments require a vast array of goods and services, to perform their duties, which makes it difficult to give a specific indication for specific products.  Foreign companies are currently primarily active in the following sectors (value-based), but still have relatively small shares:

There are only a few comprehensive statistics available about public procurement in Japan, to obtain a good overview about how and where Japanese government institutions spend their money.  Although various statistics can be found, they are difficult to compare as often different thresholds are applied when compiling the statistics.  On this page you will find a selection of statistical resources regarding public procurement in Japan.

Reports by the Japanese government to WTO

The framework of laws, ordinances and regulations regulating Government Procurement is one of high complexity, involving dozens of legal texts.  Procurement by national entities is subject to the Accounts Law; on the other hand procurement by local government falls under the Local Autonomy Law. This has resulted in the development of two separate legal structures government procurement.