E N F O R C E M E N T   AND   C O M P L I A N C E

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What is this Arrangement and what does it do?

Who benefits from this Arrangement?

How can this Arrangement help my company?

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

How can I get more information?

What is this Arrangement and what does it do?

This Arrangement is designed to increase opportunities for foreign companies to sell medical technology products and services in the Japanese government procurement market. The Arrangement covers procurement by Japanese ministries, other government entities and certain quasi-governmental organizations.

The Japanese Government agreed that its public sector procurement procedures for medical technology products and services would be non-discriminatory, transparent, fair and open to all foreign suppliers. Foreign companies would be entitled to the "national" treatment that is given to Japanese firms competing for the same procurement opportunities.

The Arrangement, the full name of which is "Measures Related to Japanese Public Sector Procurement of Medical Technology Products and Services", is in the form of an exchange of letters dated November 1, 1994, with two Appendices. The first Appendix sets out the Measures; the second contains Operational Guidelines related to the Measures.

Since the Arrangement was concluded, the United States and Japan have held annual meetings to review its implementation. These meetings are scheduled to take place until the end of Japanese fiscal year 2000 (March 31, 2001), when the two governments will decide whether they should be continued.

Who benefits from this Arrangement?

Any foreign company interested in exporting medical technology products or services to Japan's public sector may benefit from the rules and procedures for government contracts that are set forth in this Arrangement.

How can this Arrangement help my company?

Organizations and Products Covered

The central government entities that are covered by this Arrangement are listed in Annex 1 of the Arrangement, and the other government and quasi-governmental entities covered are listed in Annex 2. Several hundred central government hospitals, including Japan's national teaching hospitals, are among the entities covered

The Arrangement governs procurement involving purchase or rental contracts valued at not less that 100,000 Special Drawing Rights (SDRs), or approximately $73,000. (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 the Special Drawing Rights by calling the International Monetary Fund at (202) 623-7171.)

Notification Process

Japanese procuring entities must generally make procurement notices public for at least 50 days (but not less than 40 days) before the submission date for bids. Notices, including specifications, contact information and bid filing procedures, are published in the Kanpo, Japan's official gazette (similar to the Federal Register). Exporters can purchase the Kanpo at certain bookstores in major cities worldwide. (Note: the Kanpo is in the Japanese language.) The Arrangement stipulates that where appropriate, technical specifications must be expressed in terms of international, not national standards, and must be based on performance rather than design.

At least 30 days before the submission date, the entity is obliged to hold a pre-tender conference where suppliers can obtain additional information and ask questions. When the contract is awarded, the procuring entity will publish the award notice in the Kanpo, and all suppliers will be notified of its selection and award price. Finally, all candidates whose bids were not accepted have the right to ask the procuring entity why their bids were not chosen.

The Japanese Government also makes central government tender information available electronically through the Japan External Trade Organization (JETRO), a quasi-governmental organization attached to the Japanese Ministry of International Trade and Industry which disseminates information on trade opportunities to foreign companies. This information can be obtained via the International Government Procurement web site of the Department of Commerce's Office of Trade Agreements Negotiations and Compliance.

Procurement notices and other relevant information can also be obtained directly from the Japanese government ministries and agencies and quasi-governmental organizations listed in Annex 1 and Annex 2 to Appendix A.

Qualification and Bidding

An invitation to suppliers to qualify for procurement opportunities, with specific qualification requirements, is published annually in the Kanpo. Suppliers may be qualified at any time, even after a notice of procurement for a particular product or service has been issued.

Japanese procuring entities are required to provide pre-tender information to all prospective suppliers -- domestic and foreign -- on a non-discriminatory basis, and to give them equal opportunities to participate in the bidding process.

Bids for contracts valued at less than 385,000 SDRs (approximately $287,000) are awarded on the basis of the lowest price. Procuring entities awarding contracts valued at over 385,000 SDRs must use the "overall greatest value methodology" (OGVM). Under OGVM, factors such as the long-term value of the product or service or the sophistication of the technology involved can be considered along with price.

Local Government

Although the Arrangement does not apply to local government entities, Japan's central government is obliged, for procurement contracts valued at not less than 200,000 SDRs (approximately $146,000), to encourage prefectural governments and certain designated cities to follow procedures similar to those that apply to central government agencies. These procurement opportunities appear in prefectural and municipal official gazettes, which can be purchased in local government and other designated bookstores.

While all local government contracts had previously been awarded on the basis of price, the U.S. Department of Commerce has actively sought to expand the use of the "overall greatest value methodology" (OGVM) for public procurement of medical products and services. In the Second Joint Status Report on the Enhanced Initiative on Deregulation and Competition Policy, issued by the United States and Japan in May, 1999, Japan reported that it had issued a cabinet order on February 17, 1999, that allows local governments to use OGVM. This decision has expanded export opportunities for American and other foreign companies.

Dispute Settlement

If a company believes that the government of Japan has not complied with its obligations under the Medical Technology Procurement Arrangement, it is encouraged to seek resolution of the complaint under Japan's established bid challenge system which is described in Annex 3 to Appendix A of the Arrangement. Complaints regarding central government procurement procedures should be filed with the Secretariat of the Government Procurement Review Board in the Office for the Government Procurement Challenge System (CHANS) in Japan's Economic Planning Agency. In the case of complaints at the prefectural or municipal level, firms should contact the respective local entity. Whether you file a complaint at the central or local government level, an independent review board will review the procurement opportunity in question.

A supplier may file a written complaint during any part of the procurement process, but no later than 10 days after the basis of the complaint is known or should have been known. The Board must review the validity of the complaint within seven days after its receipt. In the case of a pre-award complaint, if the Board finds that the complaint has been properly filed, it will notify all suppliers within one working day of the complaint that the bid process will be suspended within 10 days. The procuring entity will then be required to submit a report to the Board in response to the complaint within 14 days.

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

Yes. If your company is experiencing difficulties exporting under this Arrangement, 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 under this Arrangement, and can alert the appropriate U.S. Government officials to make inquiries with Japanese authorities that could help you resolve your exporting problem. This Arrangement is routinely monitored, and officials from both countries hold annual consultations to review its implementation.

How can I get more information?

The complete text of the Measures Related to Japanese Public Sector Procurement of Medical Technology Products and Services is available from the Office of Trade Agreements Negotiations and Compliance's web site.

If you have questions about this Arrangement or how to use it, 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 Arrangement. You can also contact the Designated Monitoring Officer at the following address:

Designated Monitoring Officer

U.S.-Japan Medical Technology Arrangement

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

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.

TANC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.