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U.S.-JAPAN MAJOR PROJECTS ARRANGEMENTS

What are these Arrangements and what do they do?

Who benefits from these Arrangements?

What projects are designated in these Arrangements?

How can these Arrangements help my company?

Can the U.S. Government help me if I have a problem?

How can I get more information?

What are these Arrangements and what do they do?

The goal of the U.S.-Japan Major Projects Arrangements, commonly known as the MPA, is to enable foreign firms to become more familiar with the Japanese construction market, thereby facilitating greater access to that market. Japan agreed in the MPA that open, transparent and nondiscriminatory procedures would be followed in the procurement of goods and of construction, design and consulting services for certain designated, large-scale construction projects. These projects are listed in an Appendix to the Arrangements. Both public and private projects are included.

The Major Projects Arrangements are set forth in an exchange of letters dated July 31, 1991, between the Japanese Ambassador to the United States and the Secretary of Commerce. The 1991 Arrangements expanded the projects covered by a 1988 agreement, which it replaced.

The MPA will be terminated when the last of the designated construction projects is completed. The Japanese Government will still be obliged to extend nondiscriminatory treatment to foreign companies bidding for government contracts, however, under the U.S.-Japan Public Works Agreement, concluded in January of 1994, and under the WTO Agreement on Government Procurement, which entered into force in January of 1996.

Who benefits from these Arrangements?

Any U.S. or other foreign company that is interested in providing goods or construction, design or consulting services for one of the MPA's designated projects can benefit from these Arrangements.

What projects are designated in these Arrangements?

The list of projects designated under the MPA contains projects commissioned by government and government-related entities, by private entities, and by "third sector" entities. (Third sector entities, with public and/or private participation, may be created to administer a specific project.) While the Japanese Government does not have direct control over procurement by private or third sector entities, it has agreed to "encourage" them to follow open, nondiscriminatory policies.

The following is a current list (as of October, 2000) of MPA projects. It includes all the projects that have been designated under the MPA, including those that have been completed and those for which procurement opportunities are still available. For the current status of specific projects, email the Trade Agreements Negotiation and Compliance at the U.S. Department of Commerce.

PUBLIC PROJECTS

Haneda Airport Expansion Phase III

New Hiroshima Airport

Tokyo Port Redevelopment (Metropolitan Expressway 12)

Akashi Kaikyo Bridge

Ise Bay Highway

Yokohama Minato Mirai 21 (Major Hall of International Conference Center, land consolidation, port construction)

Kansai Science City (land consolidation, second Keihan Expressway, Center for Graduate Studies in Advanced Science and Technology)

New Chitose Airport Phase III

Kurushima Bridge

Makuhari High Rise Apartment (tentative name)

New National Theater (tentative name)

Kansai National Government Building (tentative name)

National Olympics Memorial Youth Center

Postal Savings Nikko Kirifuri Resort Facilities

Research Center for Aging and Health (tentative name)

Social Insurance Hospital (Kanto area)

Tokyo University of Foreign Studies

National Institute of Polar Research, The Institute of Statistical Mathematics and National Institute of Japanese Literature

Synchrotron Radiation Facility (Hyogo)

PRIVATE PROJECTS

Kansai International Airport

Trans-Tokyo Bay Highway

Nippon Telegraph and Telephone Corporation (NTT) Shinjuku Building

THIRD-SECTOR PROJECTS

Technoport Osaka

Rokko Island**

Haneda Airport Terminal Construction (Phase II)

Haneda Airport Terminal Construction (Phase III)

New Hiroshima Airport Terminal Construction

New Kitakyushu Airport Terminal Construction*

Tokyo Teleport

Yokohama Minato Mirai 21 (International Conference Center)

Import Integrated Terminal in Yokohama Daikoku Pier (tentative name)**

Rinku Gate Tower Building

Sendai Airport Terminal Building for International Passengers

New Chitose Airport Terminal Construction (Phase III)*

Kyoto Station Redevelopment

Ueno Station Redevelopment*

* when and if initiated

** when and if third-sector major projects emerge

FUTURE PROJECTS

(If and when these projects become concrete or decisions are made on their initiation, these projects will be added to the MPA project list.)

Fukuoka Airport Terminal Building (West)

Chubu International Airport

Fukushima Airport

Saitama YOU And I

Second National Diet Library

Minami-Aoyama NTT Project

How can these Arrangements help my company?

Thresholds

Contracts for projects covered by the MPA are subject to the procurement procedures set forth in the Arrangements if their values exceed specified thresholds. With one exception, these thresholds are denominated in yen. One is denominated in Special Drawing Rights (SDRs). A Special Drawing Right is the value of a weighted basket of currencies calculated daily by the International Monetary Fund (IMF). It is used between IMF-member states to settle international business transactions. You can obtain the daily value of a Special Drawing Right by calling the International Monetary Fund at (202) 623-7171.

The MPA thresholds are:

For procurement of goods

-Public projects: 130,000 SDRs (approximately $168,600)

-Private projects: 30 million yen (approximately $280,000)

For procurement of construction services

-Public and private projects: 700 million yen (approximately $6,542,000)

For procurement of design and consulting services

-Public and private projects: 25 million yen (approximately $233,000)

For procurement of a combination of design and consulting services with the supply, manufacture and/or installation of goods

-Public and private projects: 700 million yen (approximately $6,542,000)

Procurement Procedures

The following is a summary of the procurement procedures described in the Major Projects Arrangements. (NOTE: In some cases involving the supply of services for public MPA projects, the procurement procedures in the 1994 Public Works Agreement will apply instead of the MPA procedures. The exporter's guide to the Public Works Agreement describes that Agreement's procurement procedures. Suppliers should determine which procedures are applicable in their particular case.)

To participate in public projects, potential suppliers of goods, construction services and design and consulting services must be registered in advance with the relevant procuring entity, which will rank them in accordance with factors listed in Annex D to the MPA.

Track I - Procurement of Goods. A notice that a procurement process has been initiated is published in one of Japan's daily industrial papers listed in Annex E. Key information in this notice must be stated in English. At the same time, information on the contract's terms and conditions and specifications is made available at the procuring entity's office or elsewhere as specified in the notice. Potential suppliers can then express interest in being designated for the submission of bids or cost estimates. The procuring entity is obliged to make these designations 30 days after the publication of the initial procurement notice. Potential suppliers are notified that they have been designated, and a list of designated suppliers is published in an industrial paper. Potential suppliers then have 40 days to submit bids or cost estimates. The contract is awarded to the firm that submits the lowest bid or cost estimate.

Track II - Procurement of Construction Services. As is the case in the procurement of goods, the time period for the designation of companies that will participate in the bidding process is 30 days from the publication of the initial procurement notice. During this period, potential contractors, subcontractors and suppliers are invited to attend a meeting at which the procuring entity explains preliminary specifications for the project and describes equipment that may be required. Companies may express their opinions about the project at these meetings. Once companies are designated, they have 40 days (60 in the case of private projects) to submit bids or cost estimates. The contract is awarded to the lowest bidder.

Track III - Procurement of Design and Consulting Services. Companies are designated to participate in the selection process 30 days after publication of the initial procurement notice. Designated companies then submit detailed technical proposals within 30 days for public projects (40 days for private projects). Proposals for public projects are unpriced, and a screening committee selects the firm that has submitted the best proposal and negotiates a contract with it. Proposals for private companies are priced, and a screening committee negotiates the terms and conditions of a contract with the company that has submitted the best proposal.

Track IV - Procurement of a Combination of Design and Consulting Services with the Supply, Manufacture and/or Installation of Goods. This Track is similar to Track II, but companies are required to submit technical and price proposals in separate, sealed envelopes. The procuring entity evaluates the technical proposals first, and then invites all companies with acceptable technical proposals to attend a public opening of the price proposals. Within a reasonable period of time, the procuring entity makes a final selection of the company that has submitted the best overall proposal.

Complaints Mechanism

An independent Procurement Review Board has been established to receive complaints related to MPA projects, conduct investigations and make recommendations to procuring entities. The Board is required to make its recommendations within 50 days of the filing of a complaint. If it finds evidence of misconduct, it can refer the matter to appropriate enforcement authorities. Otherwise, if it finds that the complaint is justified, it can recommend that new offers for the contract should be sought, that offers should be re-evaluated, that the contract should be awarded to another supplier, or that the contract should be terminated.

Can the U.S. Government help me if I have a problem?

Yes. If your company is experiencing difficulties providing goods or construction, design or consulting services for an MPA project and you believe that Japan is not complying with its obligations under the MPA, contact the Office of Trade Agreements Negotiations and Compliance's hotline at the U.S. Department of Commerce. The Center can help you understand your rights and Japan's obligations under the MPA, and it can alert the appropriate U.S. Government officials to help you resolve your problem. With your concurrence, the U.S. Government can, if appropriate, also raise the particular facts of your situation with the Japanese government and ask Japanese officials to review the matter.

How can I get more information?

The complete text of the Major Projects Arrangements is available on the Trade Compliance Center site.

If you have questions about these Arrangements or how to use them, you can e-mail the Office of Trade Agreements Negotiations and Compliance (TANC), which will forward your message to the Commerce Department's Designated Monitoring Officer for the MPA. You can also contact the Designated Monitoring Officer at the following address:

Designated Monitoring Officer -

U.S.-Japan Major Projects Arrangements

Office of East Asia and APEC

U.S. Department of Commerce

14th Street & Constitution Avenue, N.W.

Washington, D.C. 20230

Phone: (202) 482 - 1147

Fax: (202) 482 - 3316

The Designated Monitoring Officer can also provide you with useful trade leads and contacts.

You can obtain additional information by visiting the following web sites in the International Trade Administration of the Department of Commerce:

The U.S. Commercial Service, American Embassy, Tokyo The American Embassy in Tokyo helps U.S. companies enter the Japanese market and expand their sales there.

The International Government Procurement site of the Department of Commerce's Trade Agreements Negotiations and Compliance contains general information on international government procurement opportunities.